Western Canadian feeder cattle prices were generally steady to $3 per hundredweight (cwt) higher while lighter weight stockers under 600 pounds were $3-$5/cwt higher. Order buyers are telling feedlot managers that quality cattle are in tight supply and despite record-high prices, the “just get ’em” orders continue to flow into auction rings.
There was no fear in southern Alberta, with red medium-flesh steers averaging 740 lbs. trading at $193/cwt landed in the feedlot. Similar excitement caused exotic steers with no special feature, averaging 530 lbs., to trade at $225/cwt in central Alberta.
Markets in Manitoba and eastern Saskatchewan experienced stronger buying interest from Eastern Canada and the U.S last week. Feeder cattle prices in the U.S. were generally $2-$4/cwt higher, with stockers $6-$8/cwt higher, and this strength spilt over into these regions. U.S. contracts for fall delivery were trading at a premium to nearby sales, which enhanced demand for mid-weight categories.
There is a sense of optimism that favourable feeding margins will continue through the summer period. Alberta fed cattle traded in the range of $140-$142/cwt but the U.S. market was $2/cwt higher in the Southern Plains at $150-$152/cwt. In the Lethbridge area, breakeven values for summer are in the range of $130-$133/cwt, so the feeder market has some breathing room if the fed market stays firm.
Wholesale choice beef continues to trend higher, with choice product trading at $242/cwt, up 30 per cent from the same time last year. However, the key will be if consumer demand remains robust after the seasonal March peak. Consumer at-home food spending is expected to show a year-over-year increase by only three to five per cent in the second quarter, while away-from-home food spending is forecasted to be up seven to 10 per cent.
The market for replacement heifers and bred cows remains firm at current levels but isn’t reflecting the present value of future earnings. Looking at past history, we need to see record-high feeder prices for almost a year before this market experiences a surge in values. I’ve received calls from cow-calf producers asking if they should sell now but I’ve advised them to hold on at least one more year.
Barley prices in Lethbridge continue to percolate higher, reaching $185 per tonne delivered. There are ideas the 2013 crop was overstated and the stronger domestic demand has offset the slower export pace. Looking forward, a seven to 10 per cent decline in barley acres suggests values will be sensitive to growing conditions during the summer and feedlots are starting to factor in higher cost per pound gains for the summer and fall period.
— 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.