Klassen: Beef demand uncertainty weighs on feeder market

For the week ending November 15, Western Canadian feeder cattle markets traded $8-$10/cwt below values from seven days earlier.

The cash market held value early in the week as the feeder cattle futures experienced a fortuitous bounce. However, weaker feedlot margins and longer term uncertainty regarding beef demand resulted in a softer tone in the latter half of the week.

Adverse weather conditions plagued Southern Alberta which caused buyers to focus on pre-conditioned, vaccinated calves. Feedlot operators also focused on local cattle but there were no noted premiums in the major feeding regions in Alberta.

The Ste Rose Auction Mart in Manitoba had a smaller group of mixed (black/tan) steers weighing 1,004 pounds that traded for $439/cwt. At the Lloydminster ring sale on Thursday, larger frame, medium to lower flesh, Simmental based steers averaging 961 pounds traded for $432/cwt. At the same sale, medium to larger frame, exotic, yearling heifers averaging 867 pounds sold for $421/cwt.

In central Alberta, a pen-sized package of Angus cross, short-weaned, steer calves with a mean weight of 805 pounds with full processing records and implants, coming off silage and hay diet were valued at $470/cwt fob farm. North of Calgary, a cattle producer reported a smaller package of black mixed heifer calves averaging 800 pounds sold for $405/cwt.

The Prince Albert market report included a group of 17 black steers with a mean weight of 733 pounds valued at $500/cwt. At the Killarney sale, a four pack of mixed steers averaging 701 pounds dropped the gavel at $548/cwt.

At the Westlock sale, a smaller group of Charolais cross steers coming off cows and grass with full processing records with a mean weight of 646 pounds sold for $564/cwt. In central Alberta, a smaller package of Charolais heifers weighing 615 pounds coming off cows and grass diet with full health records but no implants apparently sold for $535/cwt.

The Ponoka market report had a group of 20 red mixed steers coming off their mothers and pasture diet weighing 535 pounds with full health records priced at $650. At the same sale, a smaller group of Charolais cross steer calves evaluated at 482 pounds notched the board at $730/cwt.

The feeder market is incorporating a risk discount as feedlot operators anticipate the opening of the U.S. border to Mexican feeder cattle over the next six to eight months.

It appears that North American restaurant traffic is slowing down. The U.S. is contending with rising unemployment levels. Beef demand makes seasonal lows in January and February. Feedlot margins will move into negative territory during the winter.