Feed weekly outlook: Demand shifting at Alberta feedlots

(Photo courtesy Canada Beef Inc.)

CNS Canada — Demand has shifted at Alberta feedlots this year with more forward contracting and less business taking place in the spot market, according to an analyst.

“In a lot of years we’ve seen the demand has stayed in the spot market but this year there were more forward purchases that were done by the feed lots in southern Alberta. So that’s taken the demand off of the spot month,” said Allen Pirness of Market Place Commodities in Lethbridge.

According to Pirness, the change in demand hasn’t translated into lower prices. The market is currently paying farmers to hang on to their grain longer and deliver it later, as long as they sell it now.

In the key cattle feeding area of Lethbridge, the feed grain price spread has widened as of last Friday (Jan. 26), according to information from the provincial government.

Feed wheat was sitting at $219-$225 per tonne compared to $221-$223 per tonne the previous week. Feed barley was similarly priced at between $218-$225 per tonne compared to $219-$224 the week before.

This year as well there has been a shift in the type of grain making its way onto Alberta feedlots. According to Pirness, last year fusarium-damaged wheat was being used for feed, whereas this year Manitoba corn has become popular. Corn has been similarly priced to feed wheat and feed barley, in the high $210 per tonne range.

While Pirness said he suspects most of the corn coming into Alberta is from Manitoba, he does think there is probably some coming up from North Dakota as well, due to similar shipping distances.

According to the Prairie Ag Hotwire on Feb. 1, corn prices in North Dakota were between US$2.81 and US$3.06 per bushel, a two-U.S.-cent increase over the week.

In the U.S., feed prices have been lower due to the cheaper price of corn. According to a release Friday from the U.S. Department of Agriculture, ranchers sent nearly one per cent more cattle to U.S. feedlots in December 2017 than in 2016.

Most analysts said the increase was due to drought conditions, leading to less available winter wheat grazing; however, other analysts cited cheaper feed costs as a factor for the increase.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @ashleymr1993 on Twitter.

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