Compared to the previous week, western Canadian yearling prices were $2-$4 higher on average while calves traded unchanged to as much as $8 lower. Larger feedlot operations were actively bidding for 800-plus-lb. feeders across the Prairies due to the limited supply. Lower volumes were available this past week which was supportive for the market.
Southern Alberta was a hot pocket, with Lethbridge-area auction barns trading at a premium to other areas of Western Canada. Many auction barns had smaller packages of late stragglers or fleshier cattle and these feeders were heavily discounted. The quality of calves coming on the market was also quite variable. Buying interest for calves and grassers appeared to subside this past week. Seeding was in full force given the favourable weather, which may have contributed to the softer demand. Unweaned calves suffered heavier discounts especially on smaller packages.
In the Lethbridge area, a larger group of controlled-weight-gain mixed steers weighing just over 905 lbs. dropped the gavel at $172; a larger group of red heifers averaging 860 lbs. were valued at $156. If buyers knew where the cattle came from, they were not afraid to raise their hands. In central Alberta, a small group of black steers weighing 908 lbs. were quoted at $160 while black mixed heifers averaging 985 lbs. were reported at $131. In northern Manitoba, a small group of black steers weighing 817 lbs. reached up to $186 and Simmental-based heifers weighing 770 lbs. were quoted at $168.
The market for calves and grassers was hard to define because prices were all over the map. Small groups, of 10 head or fewer, characterized many sales and buyers tended to shy away from the lighter categories. In central Alberta, a larger group of vaccinated semi-weaned mixed steers weighing 575 lbs. were quoted at $207 and vaccinated semi-weaned red heifers averaging 600 lbs. were valued at $185. In the Lethbridge area, black larger-frame steers averaging 645 lbs. were valued at $219 and similar-quality heifers weighing 600 lbs. were quoted at $198. Larger groups of calves were well bid.
Seeding progress is in the final stages in many areas of Western Canada. Alberta and Saskatchewan received timely precipitation over the past week, which enhanced crop prospects. U.S. corn is offered into southern Alberta at similar values to barley. Alberta packers were buying fed cattle from $142 to $148 this past week as the slaughter pace improves. Feedlot margins will remain in negative territory over the next couple of months; however, if the fed cattle cash market holds value into the fall and feed grain prices drop as expected, we should see equity rebuilding in the final quarter of 2020.
— 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.