Glacier FarmMedia COVID-19 & the Farm

Klassen: Feedlot operators aggressively bid up feeders

Photo: Canada Beef Inc.

Western Canadian feeder cattle continued the upward trend trading $5 to $8 above week-ago levels on average with higher quality feeders as much as $12 higher. Alberta packers were buying cattle near $177 on a live basis, which is about $35 above breakeven pen closeouts. Ongoing strength in the fed cattle market set a positive tone as feeding margins remain near historical highs. Packers have been scrambling to secure supplies and some cattle are moving out of the feedlot just over 1100 pounds. This same sentiment was noted at most auction barns. Major Alberta operations that had been relatively quiet stepped forward with “just get’em” orders at local auctions. Ontario buying interest was prevalent in the Eastern Prairies but Alberta feedlots were more aggressive this week. Central Alberta values were trading at a $4 to $6 premium to Manitoba and Saskatchewan.

In Central Alberta, Charolais cross steers averaging 520 pounds reached up to a whopping $240; similar quality heifers weighing from 500 to 530 pounds were actively moving from $200 to $203. Simmental cross larger frame lower flesh steers averaging just over 700 pounds were actively moving from $210 to 213 in the Calgary area. In Central Saskatchewan, medium frame mixed steers that were somewhat fleshy averaging around 715 pounds were quoted at $205. Larger frame lower flesh angus cross steers averaging 925 pounds were quoted at $172 landed in Southern Alberta feedlot.

We’re seeing feeder cattle numbers tighten as backgrounded cattle supplies dwindling. Off farm direct sales have eased this time of year causing more feedlots needed to show their hand in the ring. Cattle feeders have closed their eyes to the futures market, which remains a sharp discount to the cash trade. Every cattle feeder was pinched in the side this week and woke up; fed cattle are trading at a premium to the 925 high quality steers buyers were bound determined to put this spread back in line.

Usually, feedlots bid up the price of feeder cattle until there is no margin. This year, the fed market was expected to fade in the second quarter but beef production is lower than anticipated while demand remains firm. This feeder market has upside potential even if we see some slippage in fed cattle prices.

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