Klassen: Feeder cattle exports way down

Nov. 23 — Feeder cattle markets were steady to $2 lower in Western Canada for the week ending Nov. 20. Margins for the finishing feedlot remain deep in red ink and there is very little buying enthusiasm among feedlot managers these days. The fed cattle market in Alberta traded in the range of $76-$78 per hundredweight (cwt) last week and these are the lowest prices so far in 2009.

Canadian feeder cattle exports continue to lag year-ago levels. For the week ending Nov. 6, exports were 2,641 head compared to 7,905 head last year. Feeder cattle prices in the U.S. were steady to $3 lower on average. Prices for feeder steers in Alberta are US$3/cwt premium on average compared to values in Oklahoma.

The market is keeping the export program to a minimum, which is rather surprising given the expected supplies in Western Canada. U.S. feeder cattle placements during October were one per cent above year-ago levels; this is the fourth straight month of higher placement numbers.

The environment is that we have larger U.S. feedlot placements, significantly lower Canadian feeder cattle exports and lower placements in Canadian feedlots. We are not seeing U.S. heifers held back for herd maintenance.

It appears the U.S. cattle herd will stay in contraction phase for 2010, given the cow slaughter and heifer placement numbers. The Canadian cattle herd will also stay in contraction mode for 2010 and possibly 2011.

— Gerald Klassen is a cattle and hog market analyst in Winnipeg and also maintains an interest in the family feedlot in southern Alberta. He can be contacted by email with any questions or comments.