Western Canadian feeder cattle sold steady with week-ago levels based on the positive outlook for fed cattle market during the winter period.
Buying enthusiasm among feedlot operators remains very strong, due to the positive margins experienced over the past year. Despite the higher price structure for replacements, financial constraints are non-existent, with many cattle buyers receiving the “just get ’em” orders at the beginning of the fall run.
While the U.S. fed market has backed off from the highs, Alberta packers continue to show bids in the range of $164-$166 per hundredweight (cwt) in an effort to cover nearby demand. Alberta feedlot inventories are at seasonal lows and market-ready supplies are relatively tight. This may provide temporary support, but with slippage in wholesale beef values, one has to wonder how long the fed market can hold up here. In any case, the feeder market is based on ideas for fed cattle five months forward and the outlook remains positive, with lower beef production and stronger consumptive demand emerging over the winter.
A mixed group of larger-frame, low-flesh, Charolais-based steers weighing just under 850 lbs. was quoted at $222/cwt landed in southern Alberta. An auction market report stated black steers weighing 784 lbs. sold for $229/cwt in the Lethbridge area. The market is not defined for calves from 500 to 600 lbs. Large price variations have been noted across Western Canada, with 550-weight cattle selling with price spreads of nearly $20/cwt for similar quality cattle. In the non-major feeding regions, these mid-lightweight cattle are not reflecting true value compared to southern Alberta, so cow-calf producers need to be aware. If you’re not short on feed, put some extra weight on these cattle for the time being. Perhaps the farmer/backgrounding operator is focused on the grain harvest, but these prices should stabilize next month.
Barley prices are grinding lower and renewed optimism has resurfaced. September is a slow period for retail and restaurant demand, but market may have adjusted for this minor setback in demand. Beef production will experience a sharper year-over-year decline in production during December, at which time consumptive interest is at seasonal highs.
– 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.