Western Canadian feeder cattle prices resumed the upward trend after a brief dip during the first major snowstorm of the year. Feeder cattle weighing above 750 lbs. traded $2-$4 above week-ago levels while calves were readily selling for $4 to as much as $8 higher.
Optimism abounds in the feedlot sector, as Alberta fed cattle prices reached up to $155. Breakeven pen closeouts are near $143 and margins are easily above $125 per head. The previous “year of trials” was forgotten and the excess quickly spilled over into the feeder complex. It was a year-end Vanity Fair, with aggressive bids coming forward from all major feedlot operators for weaned pre-conditioned calves. Lighter-weight bawlers didn’t have the same flare of attention but often ended up trading for minute discounts off premium strings. Certain auction barns were off for the season and many sales experienced smaller volume. This made the environment ripe for a year-end surge on the smaller available supplies.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
Mixed steers weighing 550 lbs. were readily selling in the range of $195-$200 across the Prairies; however, a larger-frame string of semi-weaned Charolais-cross steers weighing from 515 to 550 lbs. from southern Saskatchewan were quoted at $220 landed in the Lethbridge area. Southern Saskatchewan markets have been rather hot over the past couple of weeks, drawing a fair amount of attention. In central Alberta, 625-lb. mixed steers traded for $190 but most auctions reported this weight from $180 to $185. Larger-frame black Angus-based 725-lb. steers traded for $175 just south of Edmonton but run-of-the-mill 700-lb. steers tended to move at $170.
April live cattle futures reached four-month highs and wholesale beef prices are also percolating higher. Equity markets are trading near all-time highs and the Trump administration may get the 50 million Americans on food stamps back into the work force over the next year. The industry is bracing for lower weekly beef production in the first quarter of 2017. At the same time, restaurant traffic may not experience the seasonal slump in January and February, given the current economic environment.
— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.
