Klassen: Feeder cattle market grinds lower

Compared to last week, western Canadian feeder cattle prices were steady to $4 lower on average. Small packages were available and buyers were picking away with subdued interest.

There were some “green” strings of yearlings in Alberta and Saskatchewan which were well bid; however, most cattle were characterized by medium to smaller frames. Some of these yearlings appeared to be rather “hard.” These cattle were fed too much grain relative to the frame size. The cost per pound gain will be higher on these cattle in the finishing lot so buyers discounted accordingly.

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Calves on offer were mostly mixed varieties with no outstanding genetics or features to enhance buying interest. Therefore, uniform groups of calves carried a premium.

Major feedlot operations are carrying larger volumes of market-ready supplies. Lower margins are on the horizon so buyers were the defensive. Demand from south of the border has been non-existent. U.S. feeder cattle prices were $3-$5 lower last week despite the steady futures board. Most auction barns in Manitoba and Saskatchewan are in summer holiday mode.

In central Alberta, mixed steers with medium to lower flesh levels averaging 975 lbs. were valued at $168. Medium- to larger-frame black Angus-based heifers with medium to lower flesh weighing 880 lbs. were valued at $163. North of Calgary, Simmental-blended steers weighing 830 lbs. were valued at $187. In southern Alberta, medium-frame red heifers with medium to lower flesh averaging just over 800 lbs. were quoted at $174. A small group of Charolais-based greener steers weighing 745 lbs. were valued at $2020 in the Lethbridge area.

In central Saskatchewan, mixed steers weighing 675 lbs. were quoted at $206 and mixed heifers weighing 690 lbs. were valued at $187. In east-central Alberta, tan steers weighing just under 550 lbs. were reported at $236 and black heifers weighing 510 lvs. were valued at $208. Mixed medium-frame steers with no special features weighing around 600 lbs. were quoted at $219 in the Lethbridge area.

Alberta packers were buying fed cattle in the range of $128-$130 f.o.b. the feedlot, down from last week’s range of $135-$138. Breakeven fed cattle pen closeout values for June are in the range of $155-$160; for July and August, breakeven closeout prices are in the range of $150-$153. Feedlots are in a phase of negative margins for a prolonged period of time.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and 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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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.

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