Western Canadian feeder cattle prices were steady to $2 per hundredweight (cwt) higher last week; light-weight calves were uneven, down $3 to up $4/cwt in comparison to seven days earlier.
Strength in the fed cattle market renewed buying enthusiasm from major feedlot operators for yearlings and heavier calves. However, adverse wet and snowy weather continued caused volatility, especially late in the week.
Barley prices remain firm as logistical delays hindered farmer selling for nearby delivery.
Auction markets were reporting larger volumes again, with pre-sort sales trying to extract a small premium in values over mixed groups of cattle. Cow-calf producers should avoid selling during the heavy snowfall periods, as buyers discount calves in anticipation of increased deathloss.
Steer calves under 400 pounds were selling in the range of $190-$195/cwt in east-central Alberta. A group of 154 black larger-frame steers weighing 518 lbs. sold for $163 east of Edmonton. Simmental cross steers weighing 750 lbs. traded for $135/cwt in central Alberta. In southern Alberta, red Angus cross steers weighing 680 lbs. sold for $145/cwt. Alberta packers were buying significant volumes of fed cattle at $114/cwt, relatively the same levels as a week earlier.
Feedlots are liquidating market-ready supplies and appeared to be more aggressive this week. Managers are trying to target that mid-March to late-April marketing period which also enhanced demand for feeders weighing over 750 lbs. The Canadian dollar continued to soften after the U.S. election moving under the par level, further supporting fed and feeder cattle prices.
Demand for light-weight feeders is reflecting the market for the May-June timeframe. In past years, there has been a seasonal tendency for the feeder market to decline from March through June, in line with the fed cattle market. However, the May feeder cattle futures show a $3 premium over the March contract, and the August contract a $4 premium to May. The U.S. cow slaughter remains relatively high, reflecting tighter feeder cattle supplies longer-term. I mentioned last week that the U.S. should replenish corn stocks with a record crop. The market is also factoring in a sharper year-over-year decline in beef production in the third quarter of 2013. Feeder cattle futures are factoring in a counter-seasonal trend from March through August, which will keep current prices for feather-light calves strong.
— 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.