Western Canadian feeder cattle prices were steady to $2 higher than week-ago levels. Auction market volumes remain very thin with medium quality cattle coming on the market this time of year. In central Alberta, none-weight steers averaged $118/cwt; 850-pound steers brought back $128/cwt. There was very little selection to choose from with larger feedyards absorbing any group of cattle with some quality features.
Feedyard managers are starting to bring in replacement cattle now that pen conditions are drying out. However, many feeder cattle purchases this past week were for August delivery. Feedlots need extra time for maintenance after the destructive spring rains.
Alberta fed cattle were $2/wt to $3/cwt higher with steers reaching $105. Prices are now in line with breakeven values but feeding efficiencies have been poor resulting in added costs.
The barley market will function to ration domestic and export demand during 2011/12. Favourable weather has aided wheat crop development and feed wheat supplies may be lower than earlier anticipated in the upcoming crop year. Western Canada may have to import 1.2 million tonnes of expensive U.S. corn or DDGS next year to adjust for the feed deficit. This would temper the upside in local feeder cattle values during the fall period.
U.S. feeder cattle jumped $3/cwt to $5/cwt on average last week. U.S. auction market volumes were abnormally high despite the heat wave across most of the country. Beautiful top quality nine-weight steers averaged $138 in Bassett Nebraska.
The U.S. cow slaughter was slightly above the five-year average during the first half of 2011. To reiterate earlier comments, the USDA will probably report a smaller cow herd in its July inventory report. Friday’s USDA cattle on feed report is expected to show a year over year decline in placements for the second month in a row. This was fairly bullish to the feeder cattle futures after the June report.
— 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] or at 204-287-8268 for questions or comments.