The western Canadian feeder cattle market continues to trade in a volatile fashion. Similar-quality cattle varied by as much as $10 per hundredweight (cwt) in some cases, especially on calves under 600 pounds.
There are three key factors enhancing the volatility in the feeder market at this time. First, wholesale beef prices are under pressure due to softer retail and restaurant spending during the fall period. Secondly, Alberta fed cattle prices were $4/cwt lower this week, trading at $160/cwt; feeding margins are narrowing, which has Lethbridge feedlot managers on the defensive. We all know the economy is quite vulnerable during September and October, and the Ukraine situation is a negative factor weighing on world growth and could further influence overall meat values on the next round of sanctions.
Finally, larger feeder cattle volumes are starting to come on stream and buyers feel the market is due for a correction. Looking at past history, it is hard not to argue that a retracement is inevitable. The market is running out of buyers at the higher levels because of the poor risk/reward environment.
Despite the defensive attitude, buyers were aggressive on quality cattle with feature lots trading at similar prices to week-ago levels. Medium-frame Angus-based steers averaging just under 800 lbs. bought in central Alberta were quoted at $230/cwt landed in the Lethbridge-area feedlot. Lower-flesh mixed steers with no special feature from eastern Saskatchewan, weighing 780 lbs., were quoted at $235/cwt landed in Lethbridge. In southeastern Saskatchewan, steer calves just over 600 lbs. were up to $258/cwt while in central Alberta, top prices were in the range of $240-$245/cwt for similar quality cattle. The feature sales are drawing the buying interest from U.S. and Eastern Canada buyers, while southern Alberta feedlot operators have a more cautious tone. Pee-wee calves under 400 lbs. were trading at in the range of $300-$350/cwt.
Feed grain values continue to trend lower and adverse rains across the Prairies have enhanced prospects for larger feed wheat supplies this fall. Corn is trading into southern Alberta more readily as the market functions to encourage demand.
— Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He writes an in-depth biweekly commentary, Canadian Feedlot and Cattle Market Analysis, for feedlot operators in Canada. He can be reached by email at [email protected] for questions or comments.