Glacier FarmMedia COVID-19 & the Farm

Klassen: Lower available supplies support feeder market

Western Canadian feeder cattle prices were relatively flat last week, trading steady with week-ago levels while quality replacements were $2-$3 per hundredweight (cwt) higher.

Feedlot buying interest was not afraid to pay up larger groups of fancier cattle with limited supplies expected in upcoming weeks. In southern Alberta, black steers weighing 785 pounds traded near $193/cwt as the shorter-keep cattle offer lower risk given the steady price of fed cattle. Alberta packers were buying cattle in the range of $145-$146/cwt, which is slightly softer than seven days earlier. However, feeding margins remain favourable and with larger carcass weights, the slippage in fed cattle prices has not tempered demand for feeders.

The U.S. Department of Agriculture’s cattle inventory report showed lower then expected placement numbers during March, which suggests demand from south of the border will remain strong moving forward. Upcoming U.S. beef production may be lower than expected as overall inventories were also below pre-report estimates. The USDA reported steers weighing 830 lbs. sold for $182/cwt in South Dakota. U.S. values continue to percolate higher, setting the tone for price discovery in Western Canada.

The market for lighter-weight feeders under 700 lbs. were also steady to $3/cwt higher but the uncertainty in upcoming feed grain prices appeared to stem upside potential. Statistics Canada estimated Canadian seeded barley area at 6.3 million acres, down 10 per cent from 2013. Cash barley traded at $195 per tonne delivered Lethbridge this week and new-crop values will likely trade $10-$15 per tonne above current levels given the tighter fundamental structure. Quality larger-frame well-documented steers weighing 500 to 550 lbs. are edging close to $250/cwt in northern Manitoba, with aggressive buyers from Ontario and U.S markets. Cow-calf producers have been rewarded for waiting and this psychology may bring out some quality yearling packages later in spring.

Wholesale beef prices are off the highs, but each segment in the overall beef pipeline appears to be healthy financial condition, which is providing confidence for the feeder cattle complex.

— 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.

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