Feeder cattle prices in Western Canada were steady with week-ago levels. A stronger fed cattle market along and higher live cattle futures in the deferred months set a positive tone for lighter-weight feeders.
Heavier replacement cattle were under pressure as current feeding margins continue to struggle in red ink. Comments from the industry were that cattle weighing over 900 pounds made fresh yearly lows.
Feeder steers in central Alberta weighing just over 600 lbs. sold for $167 per hundredweight (cwt) in central Alberta. Cattle in the 850- to 900-lb. category sold for $134/cwt in the same region. Alberta packers were buying fed cattle in the range of $112-$113/cwt, up $4/cwt from the lower values a week earlier.
The U.S. Department of Agriculture’s cattle on feed report was considered bullish for fed and feeder cattle. On feed numbers as of April 1 were down 0.6 per cent in comparison to April 1, 2011. This is the first time on-feed numbers have been below year-ago levels in the past two years. Placements were down a whopping 14.8 per cent from April 2011. Both of these numbers were below analysts’ expectations. It now looks like third- and fourth-quarter beef production will be lower than earlier projections.
Favourable weather across the U.S. and Canada has enhanced demand for ground beef. Despite the European financial crisis, North American economic data appears to show improving conditions, which will increase consumer spending. Restaurant consumption and retail beef movement are poised to increase in June.
Lower on-feed numbers and improving demand should keep the cattle market stable during into the summer months.
— 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.