After the buying frenzy in mid-March, western Canadian feeder cattle prices were generally steady last week, with stronger demand noted in the lighter-weight stocker categories. The market is now experiencing 650-pound steers readily trading at $210 per hundredweight (cwt), with favourable pasture conditions expected in most regions of Western Canada.
In certain cases, higher prices have a tendency to draw in more interest similar to “madness of crowds,” perpetuating the activity from previous weeks. Owning feeder cattle is something to be proud of this past winter, and if one neighbour is loading up on grassers, it’s common to see two or three other small farmer/cattle producers in close proximity do the same thing, regardless of the economics. Grain farmers who have never owned cattle are starting to come into the fold of the business, similar to 1996 when the Crow Rate rail subsidies were eliminated and livestock production was the future of Western Canada.
At the same time, quality cattle were well wanted and order buyers exemplified “just get ’em” market orders on professionally backgrounded yearlings and lighter-flesh cattle which underpinned the overall complex. Larger-frame exotic steers weighing just over 800 lbs. were reported at $187/cwt in southern Alberta. It appears buyers have become psychologically comfortable with the new price range of feeder cattle. Alberta packers were buying fed cattle in the range of $140-$144/cwt, approximately $10-$12/cwt above close-out break-even prices. Profitability throughout the industry continues to sustain the feeder complex at the current price levels.
Beef production continues to lag year-ago levels by 6.3 per cent and the recent hog and pig report reflects that third- and fourth-quarter pork supplies will be lower than earlier anticipated. Beef wholesale prices continue to trade near historical highs and consumers have adjusted to the increase in retail prices. It appears the feeder market will need further upside in fed cattle prices to sustain the upward trend.
The U.S. Department of Agriculture’s stocks and plantings report was considered neutral to slightly bullish. Feed grain fundamentals are tightening and the corn and barley markets will be very sensitive to growing conditions. This will temper the upside in the feeder cattle complex.
– 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.