Feeder cattle prices in Western Canada were steady to $3 per hundredweight higher last week after stagnating in the first half of February.
A small group of medium-flesh Angus-cross steers averaging 548 pounds reached over $180/cwt at a presort sale in central Alberta. A large group of exotic steers weighing 855 pounds sold for $141 at a regular sale in the same region. Regular run-of-the-mill mixed steers weighing 800 to 900 lbs. averaged $137 in southern Manitoba. There is a very even market across Western Canada with minimal feeder exports to the U.S.
The Alberta fed market was under pressure with packers paying $111 to $114 for slaughter cattle. However, fed cattle in the U.S. southern Plains reached record highs touching $129.50/cwt.
U.S. feeder cattle surged $3 to $4 on average in the latter part of the week once buyers felt the fed market would trade higher. Feeder cattle and fed cattle futures made fresh all-time highs as the market incorporates a risk premium due to the uncertainty in supplies, especially in the latter half of 2012.
There is a fairly strong seasonal tendency for fed and feeder cattle to strengthen in late February through to the first week of April. This is largely due to a surge in restaurant demand. Consumers start to eat out more in March and April after the Christmas bills are paid off and the New Year’s diet resolutions fade. Packing margins remain under pressure and the slaughter pace is running behind year-ago levels. Analysts are looking for a rise in wholesale beef prices which should underpin the feeder market.
— 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.