Your Reading List

Klassen: Feeder cattle edge higher

The feeder cattle market for 2011 started where 2010 left off. Last week’s prices were comparable to values in late December on the first real market test for the year.

In southern Alberta, lightweight steer calves under 400 pounds brought back $160 to $175 per hundredweight; 400- to 500-lb. steers sold for $140 to $155/cwt. Five-weight cattle were selling in the range of $130 to $140/cwt. We continue to see very strong prices with no lack of buying interest at the higher levels.

Major feedyards continue to experience positive margins and they are very quick to pass on their good fortune to the cow-calf producer. Feeder cattle supplies are expected to increase in February as the backgrounding operator liquidates inventory. The market should stay firm as feedlots are fairly current with production.

Fed cattle in the U.S. southern plains reached $108/cwt, a historical high. Excessive rains in Australia have dampened its export program into Southeast Asia. South Korea is expected to cull 15 per cent of its hog and cattle herds due to foot and mouth disease. These two factors should bode well for North American beef producers as exports will continue to exceed year-ago levels.

Lower unemployment numbers and an increase in average disposable income have enhanced domestic beef demand. Select wholesale values reached $169/cwt last week and packing margins are now in positive territory. The industry, and the cattle market as a whole, feels very healthy at the current price levels.

— 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 204-287-8268 for questions or comments.

The material contained herein is for information purposes only and is not to be construed as an offer for the sale or purchase of securities, options and/or futures or futures options contracts. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. The risk of loss in futures trading can be substantial. The article is an opinion only and may not be accurate about market direction in the future. Do not use this information to make buying or selling decision because adverse consequences may occur. This information may be wrong and may not be correct about current market conditions in all areas of Canada. This is an opinion only and not based on verified facts.

About the author

,

Columnist

Jerry Klassen

Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Products Ltd. and also president and founder of Resilient Capital, a specialist in commodity futures trading and commodity market analysis. He can be reached at (204) 504-8339 or visit his website at www.resilcapital.com.

explore

Stories from our other publications