Western Canadian feeder cattle prices were well supported this past week, with strong buying interest from both larger feedlot operators and the “year-end buyer” custom cattle feeder. Fed cattle prices continue to trade near historical highs, causing feedlots to aggressively liquidate market-ready supplies. Empty pens can have significant opportunity cost in this environment, so there is a sense of urgency for all weight categories of feeder cattle.
Auction markets reported prices that were basically steady with week-ago levels while discounts and premiums were a major feature. In this environment, cow-calf producers can usually be rewarded for vaccinating and holding calves 30 to 45 days off their mothers. These types of feeders generally demand a premium and the larger operation is quick to pounce on these cattle, especially with the colder wintry conditions. Healthy cattle need less babysitting and have lower death loss risk so the market functions accordingly. The bulk of the fall run is now behind us and the market has not flinched, absorbing the surge in auction market volumes.
A larger group of exotic steers weighing just under 500 pounds fresh off their mothers traded at $310 in central Alberta. Larger-frame Simmental-based lighter-flesh steers weighing just under 700 lbs. traded at $268 landed in Lethbridge-area feedlot. Feeding margins are starting to look tighter for the April-through-June positions and feedlots are looking at the lighter weights for longer-term efficiencies. Cattle over 800 lbs. (the few that are available) are not reflecting the recent price gains evident in fresh lighter-weight calves.
The beef complex is gearing up for the December holiday season as restaurant traffic tends to increase in December. The fed cattle market looks firm, which will support feeder prices, but barley continues to ratchet higher, reaching $203 per tonne delivered Lethbridge this week.
Look for the feeder market to stay firm through December. Given the current feeding economics for the deferred months, it may be difficult to justify further upside January forward.
— 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.