Western Canadian feeder cattle prices were steady with week-ago levels. The yearling run is basically finished and a larger volume of calves are coming on the market.
A larger group of exotic medium-flesh steers weighing just over 500 pounds sold for $154 per hundredweight (cwt) in central Alberta. Black Angus-cross steers weighing 650 lbs. moved at $142/cwt at the same sale. A smaller group of Charolais-cross steers also weighing 650 lbs. sold for $139/cwt. It appears heavier replacement cattle were under pressure, with tan heifers weighing 800 lbs. selling for $122 just north of Calgary.
Alberta packers were buying fed cattle in the range of $113-$115/cwt and closing cattle break-even prices are hovering at $122/cwt. We have seen equity erosion over the past couple of months and the feeder market now starting to adjust. Cash barley prices in southern Alberta were quoted at $278 per tonne, despite the selloff in grain futures markets last week.
Feedlot pen conditions are slowly improving but adverse weather has provided a noticeable market influence, with discounts shown on cattle with no preconditioned features.
The U.S. Department of Agriculture will release its Oct. 31 cold storage report on Wednesday and the industry is looking for record pork supplies and a year-over-year increase in beef stocks. There is no shortage of meat moving into the holiday season, which will limit the upside in the fed market. October weekly carcass weights in the U.S. were the highest on record despite lower cattle-on-feed numbers. Alberta feedlot margins will continue to hover in red ink for the rest of the calendar year.
U.S. October feedlot placements came in at 87.5 per cent of year-ago levels which reflects a sharp decline for the third month in a row. However, this is likely factored into the market.
Look for feeder cattle prices to trade sideways over the next month. Barley prices are expected to stay firm and there is little reason for the fed market to move higher given the larger beef supplies. Packing margins are also in red ink and most companies are working on a shorter work week due to U.S. Thanksgiving.
— 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.