Compared to last week, western Canadian yearling markets were relatively unchanged with the exception of southern Alberta where 800-plus-lb. feeders traded $5 to as much as $8 higher.
Strength in deferred live cattle futures and weakness in barley prices were the main factors driving demand in the Lethbridge area. The U.S. Department of Agriculture’s bullish Cattle on Feed report also contributed to the stronger tone. This buying interest spilled over into other regions, although major operations focused on local cattle. Recent rains have caused respiratory problems when transporting feeders longer distances, so there was a definite premium in the major feeding regions of Alberta. A defensive tone was noted if feedlot operators didn’t know the diets over the past month and minor discounts were evident on fleshier cattle, especially on feeders over 1,000 lbs. Feeding margins have been struggling in red ink over the summer. Order buyers were busy but there were strict limits to follow. If orders weren’t filled this week, feedlot operators were content to wait. No one wanted to overextend themselves as every cattle feeder has a lower risk tolerance this year.
In the Lethbridge area, larger-frame Charolais blended steers weighing just over 900 lbs. were valued at $194 landed in the feedlot; the Perlich Bros. auction market report had red white face steers weighing 849 lbs. selling for $208. In central Alberta, larger-frame lower-flesh mixed heifers averaging 855 lbs. were quoted at $184. Near Saskatoon, medium-frame thin black steers weighing just over 815 lbs. were reported at $195.
There will be more farmer-cattle producers backgrounding calves this fall due to the burdensome feed grain situation. Calves continue to trade $12-$15 below year-ago levels. In central Alberta, red mixed steers weighing 540 lbs. were valued at $218; in Manitoba, Charolais steers weighing 520 lbs. were quoted at $216, while mixed heifers averaging 550 lbs. were valued at $180.
Nearby live and feeder cattle futures jumped US$5-$6 over the past week and there is potential for further upside. The downward slide in feed barley and feed wheat is not over. Farmers have saturated feedlot demand in the short term and offshore movement is limited. The spring wheat harvest is only about 50 per cent complete in Western Canada as of Monday, and there’s an overwhelming amount of feed wheat to come on the market.
— 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 or via his website at ResilCapital.com.Tagged calves, cattle futures, cattle markets, fed cattle, feed barley, feed wheat, feeder cattle, feeders, Feedlot, heifers, Klassen, steers, yearlings