Klassen: Feeder cattle market firm, erratic

(Photo courtesy Canada Beef Inc.)

Western Canadian feeder cattle prices were generally stronger this past week, with increased volatility at the higher price levels. Larger volumes were noted in Alberta, while Saskatchewan and Manitoba auction markets have yet to come on in full force.

Buyers were more finicky in regards to quality features, causing some of the diverse price action. However, major feeding operations were actively biding up the market on shorter-keep cattle this weekm which set the tone for all weight categories. Yearlings weighing 850-plus lbs. continued to climb, trading steady to $8 above week-ago levels. Approximately 225 head of mixed steers averaging 925 lbs. sold for $260 in central Alberta, while a larger group of red heifers just under 900 lbs. were quoted at $245 in southern Alberta.

Feeders weighing 600 to 850 lbs. were $5 lower to as much as $10 higher, with buyers quick to incorporate risk discounts on fleshier calves. Quality larger-frame medium-flesh steers just over 700 lbs. traded from $295 to $305 at various auction markets central Alberta and central Saskatchewan. Mixed steers weighing 775 lbs. were quoted at $285 landed in southern Alberta. A group of black heifers weighing 867 lbs. traded at $252 in the Lethbridge area.

Calves under 600 lbs. were extremely precious, trading $5 to as much as $15 higher. Demand for lighter-weight cattle was very strong in regions of abundant forage supplies and decent pasture conditions. Feather-light calves under 400 lbs. reached an astounding $424 in central Saskatchewan. The market appeared to run out of steam in drier regions of Alberta and a softer tone was noted in the Lethbridge area.

Western Canadian feeder cattle prices have divorced from the U.S. market, where prices were once again steady to softer. The economic uncertainty appears to be short-term in the minds of the feedlot operator. Despite the narrowing feeding margin structure in nearby positions, the fear is not having ownership to sell during the peak seasonal demand of the holiday season. Seasonally, beef demand increases from late November through December, resulting in firmer fed cattle prices.

Alberta packers were buying fed cattle at $180 this past week, down $2 from seven days earlier, but this had no effect on the feeder cattle market.

Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.

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Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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