Glacier FarmMedia COVID-19 & the Farm

Klassen: Feeder market searching for direction

Western Canadian feeder cattle markets were quite variable from seven days earlier. Prices were unchanged in the eastern Prairie regions; however, Alberta markets traded $3 to as much as $7 below week-ago levels. Alberta and Saskatchewan feedlot inventories are running 16 per cent above year-ago levels, so there’s limited buying power available.

Calves are fleshier at this time of year and feedlot efficiencies are below average on late-season purchases. Weakness in August live cattle futures also weighed on nearby feeder prices. The market has little reason to strengthen under the current environment.

Quality packages of vaccinated and weaned calves carried a slight premium over regular run-of-the-mill cattle. U.S. and Ontario demand was minorly supportive in the eastern Prairie regions.

In central Alberta, tan heifers weighing 825 lbs. were quoted at $167 while Simmental-blended larger-frame fleshier steers averaging 830 lbs. were valued at $188. The price differential between the eastern and western Prairie markets become more noticeable in the lighter weight categories. For example, in Manitoba, black Limousin steers weighing just over 700 lbs. traded for $201 and Charolais mixed heifers averaging 720 lbs. dropped the gavel at $191. In central Alberta, Charolais-blended steers averaging 690 lbs. sold for $196 and Hereford heifers averaging 710 lbs. were quoted at $165.

Medium-frame Angus mixed steers averaging 600 lbs. were valued at $213 in southern Manitoba; tan mixed steers averaging 600 lbs. were quoted at $205 landed in southern Alberta feedlot. The market is in a very precarious situation because these calves are going to be under water come March.

Alberta packers were buying fed cattle in the range of $250-$252 on a dressed basis and $150 on a live basis. U.S. fed cattle prices reached up to $118.50 in Nebraska. U.S feedlots are in a positive margin structure while Alberta feedlots are struggling in red ink. Secondly, U.S. feedlots also have a feed grain advantage this year with lower corn prices. U.S. demand for feeder cattle, along with the weaker Canadian dollar, has been a saving grace for the Manitoba and Saskatchewan cow-calf producer.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339.

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