Klassen: Softer beef complex weighs on feeders

Western Canadian feeder cattle experienced a week-over-week decline of $3 to $6 on average. In central Alberta, the market appeared to hold value on larger strings of quality feeders but the market in all other regions of the Prairies appeared to lack buying enthusiasm. Alberta fed cattle prices were quoted in the range of $186 to $192 and with pen closeout breakeven prices at $186, margins are close to moving into negative territory.

U.S. choice beef values finished the week at $234/cwt which was down from $242/cwt last week. Wholesale beef values are now below year-ago levels when choice product was quoted at $250/cwt in mid-July. The feeder cattle market is experiencing the spillover effects of a softer beef complex and weaker fed cattle values.

While drought continues in parts of Saskatchewan and Alberta, there were flash floods in the foothills of Alberta and continued rains in eastern Saskatchewan and Manitoba. The diverse weather pattern across the Prairies could influence the feeder market due to the larger variation in feed grain and forage prices.

Mixed steers with no special feature weighing just over 700 pounds traded in the range of $280 to $290 in southwest Manitoba. Central Alberta saw similar quality cattle quoted in the range of $285 to $290. However, lighter steer calves averaging 500 pounds reached up to $350 in central Alberta but similar cattle were quoted at $340 in southern Manitoba. The market should be more defined next week with certain auction markets advertising a larger run of yearlings. U.S. values were steady to $5 lower last week which also spilt over into Western Canada. Many cattle buyers were on holiday, resting up for the fall run, which should be earlier compared to past years.

The feeder cattle market is contending with many uncertainties. Feed grain prices are in a new price range while the industry is watching if beef supplies increase in line with analysts’ forecasts. Canada appears to be in recessionary mode and U.S. consumer confidence was slightly below expectations in early July. The feeder market is in a new environment compared to last year.

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.