Feeder cattle prices in Western Canada were steady with week-ago levels with strong feedlot demand noted for heavier yearlings.
The recent CanFax Alberta and Saskatchewan cattle on feed report showed feedlot supplies at four-year lows. Feedlots are running at below normal capacity for this time of year and enthusiasm for replacements has stayed strong, despite the higher feedgrain values. Age-verified 880-weight cattle in northwestern Saskatchewan traded for $108 last week. Prices in Western Canada are eight to 12 per cent higher than year-ago levels, limiting the export movement to the U.S.
U.S. feeder cattle prices were $2 to $4 lower last week. For example, Nebraska 850- to 900-pound steers averaged $105. Given the current price relationships, Canadian feeder cattle are trading at sharp premium to U.S. values. Canadian cow-calf producers are contending with abundant forage supplies, which have delayed marketings of calves and yearlings.
Therefore, we expect a surge in feeder cattle marketings in October which could weigh on the western Canadian cattle market. Limited export movement will also weigh on the feeder market at this time, given current price relationships to U.S. and Canadian feeder cattle.
The feeder cattle market in Western Canada is expected to soften over the next month. Feedlot managers are starting to factor in significantly higher feedgrain costs, resulting in lower bids for replacement cattle. The current environment is making it difficult for feeder cattle prices to move higher in the short term.
— 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 204-287-8268 for questions or comments.
The material contained herein is for information purposes only and is not to be construed as an offer for the sale or purchase of securities, options and/or futures or futures options contracts. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. The risk of loss in futures trading can be substantial. The article is an opinion only and may not be accurate about market direction in the future. Do not use this information to make buying or selling decision because adverse consequences may occur. This information may be wrong and may not be correct about current market conditions in all areas of Canada. This is an opinion only and not based on verified facts.