Klassen: Feeder cattle market tenacious

Western Canadian feeder cattle prices appeared to shrug off all negative economic news and divorce from the fed cattle complex this past week.

Volumes were once again quite thin, characterized by varying quality. Feedlot operators were active on all fronts, especially in southern Alberta where the barley harvest is in full swing. Heavier yearlings on offer were well bid, with a small string of red Angus-based steers weighing just over 975 lbs. selling for $248 in central Alberta. Mixed heifers averaging around 900 lbs. traded at $244 at the same sale. Cattle weighing 800-plus lbs. traded at a small premium over values reported in Manitoba, but overall, the markets felt quite robust. Cattle buyers coming back from holidays had active open orders and if you wanted cattle, you were going to pay up.

In Saskatchewan, the drought conditions from June are history, with pastures rejuvenated from the recent rains. Above-normal temperatures have revived optimism, with cow-calf producers in position to hold off on sales for the time being. Mixed calves were trading at prices similar to the spring time frame, with a firmer tone in Manitoba where forage supplies are abundant. Mixed steer calves just over 500 lbs. reached up to $365 in Manitoba. U.S. values for all weight categories were $4 to $6 higher this week, which spilled over into the eastern Prairie markets. In southern Alberta, a small group of mixed heifers weighing around 550 lbs. was quoted at $320, while mixed steers averaging 650 lbs. were astronomical at $310.

Alberta packers were buying fed cattle at $184, similar to seven days earlier. Alberta and Saskatchewan feedlots are having a hard time moving fed cattle, with packers showing little interest on both sides of the border. Ideas are that packers are using contracted — or their own — cattle, which may include larger numbers than earlier thought.

Wednesday’s U.S. Department of Agriculture report had corn yields above expectations, which shocked the trade. Ongoing harvest progress in Western Canada, along with the recent USDA report, alleviated fears of rising feed grain prices in the upcoming crop year. The Chinese currency devaluation pressured the grain markets with a vengeance, which only set a positive tone for feeder cattle.

— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.