Western Canadian feeder cattle prices were steady to $2 lower last week as weaker fed cattle prices and stronger feedgrain values set a negative tone.
Wholesale beef prices have come under pressure due to weaker consumer confidence and softer equity values. Labour Day beef demand was somewhat disappointing and retailers were discounting ground beef in order to move stocks. The cattle market is starting to feel the effects of the economic contraction.
Alberta packers were paying $102 per hundredweight (cwt) for fed steers last week, which is down $5/cwt from late August. A beautiful group of 100 Angus-based steers weighing 875 pounds from a Verified Beef operation sold for approximately $128, which is a bit softer in comparison to a month earlier. Pfizer Gold age-verified steers averaging 525 lbs. sold for $158 in central Alberta, which is also down $2/cwt to $3/cwt from late August.
Feedlots are starting to be more cautious now that they see we are not going to run out of feeder cattle and the initial hype of the fall run has eroded.
Feed barley prices in the major feeding regions jumped $8-$10 per tonne last week and there is potential for further upside given the tighter fundamental structure. The U.S. Department of Agriculture estimated average corn yields at 148.1 bushels per acre, down from the August estimate of 153 bu./ac. and also down from the 2010 yield of 152.8 bushels per acre. The bullish sentiment in the corn complex continues to pull all feedgrains higher and temper strength in the feeder market.
Our feeder market will likely consolidate in the short term. U.S. fed cattle prices jumped $4 last week, reaching $118, and our currency is also poised for further weakness. These two factors should be supportive to Canadian cattle prices over the next two weeks.
— 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 at 204-287-8268 for questions or comments.