Klassen: Feeder cattle markets remain firm at feature sales

Western Canadian feeder cattle markets experienced extreme volatility over the past week. Strong buying interest was noted on pre-conditioned calves while unweaned bawlers traded $2-$5 per hundredweight (cwt) lower.

Alberta packers showed limited interest for fed cattle due to uncertainty in wholesale beef values. However, by the weekend, fed cattle in the U.S. southern Plains were a whopping $7/cwt higher, reaching a fresh record of $170/cwt.

Heavier calves over 700 pounds and yearlings ended the week on a firm tone with larger-frame quality cattle trading steady to $3/cwt higher. Many auction barns held feature calf sales and the larger available supplies caused feedlot operators to show more discretion. Discounts of $5-$7/cwt were noted on calves showing any signs of health issues.

The Canadian dollar appears to have stabilized, but U.S. orders outperformed domestic interest in Manitoba and eastern Saskatchewan. Corn stockpiles are the main focus on most market commentaries — and this burdensome feed grain outlook south of the border enhanced buying interest from U.S. feedlots.

Alberta prices once again led the market, with Charolais-based steers weighing 600 lbs. trading at $275/cwt in central Alberta. Exotic pre-conditioned larger-frame steers weighing just over 700 lbs. were quoted at $255/cwt landed in the Lethbridge area. Auction barns are in full attendance now that harvest has wrapped up and the small farmer/backgrounding operator is starting to reload for the winter. Feather-light calves were well bid as major feedlots place these babies in a backgrounding operation. Major operators want ownership and don’t want to risk price uncertainty 120 days forward.

Feed barley edged higher trading at $183 per tonne delivered Lethbridge, but this did little to temper overall buying interest as the focus remains on the live cattle trade.

Feedlot operators wiped their brow and breathed a sigh of relief as cattle markets shrugged off economic woes for another week. Packers are gearing up for the holiday season and it appears the slower consumptive fall period is behind us. Feeding margins look healthy for the next few months, with an allowable risk premium for volatility in the fed cattle markets. Now that U.S. fed cattle prices have jumped into a new range, I’m expecting renewed buying enthusiasm in the feeder complex from western Canadian feedlots over the next couple of 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] for questions or comments.

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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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