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Klassen: Feeder cattle up $2-$3/cwt in West

Light-weight feeder cattle prices in Western Canada were up $3-$5 per hundredweight on average last week while heavier feeders were up $2-$3/cwt. October and December live cattle futures made new contract highs, reaching over $131/cwt, which enhanced buying enthusiasm in the feeder complex.

Large-frame age-verified Charolais-cross steers weighing 497 pounds sold for $212/cwt at a pre-sort sale in central Alberta. A small group of exotic cross heifers weighing 484 lbs. sold for $163/cwt. There is no premium for replacement heifers at this time, with steers reflecting significantly stronger values. Most heifers are still moving into feedyards in Western Canada.

U.S. feeder cattle prices were $2-$3/cwt higher on average. The U.S. Department of Agriculture reported in Bassett, Neb., quality replacement heifers averaging 692 lbs. sold for $183/cwt. USDA also reported drug-free age-verified steers weighing 650 lbs. sold for $187/cwt.

Additional strength is expected next week in the U.S. feeder market, given Friday’s cattle inventory report.

All cattle and calves in the U.S. as of Jan. 1, 2012 totaled 90.8 million head, down two per cent from 92.7 million head on Jan. 1, 2011. This is the lowest Jan. 1 inventory since 1952. All cows and heifers that have calved were 39.1 million, down two per cent from 40 million on Jan. 1, 2011. The 2011 U.S. calf crop was estimated at 35.3 million head, down one per cent from 35.7 million head in 2010. The 2012 feeder cattle pool could be down almost one million head in comparison to 2011, given the lower calf crop and large-scale heifer retention across the U.S.

Fed cattle prices were slightly softer last week; Alberta packers were buying cattle in the range of $114-$115/cwt. Soft beef wholesale prices and the stronger Canadian dollar set a negative tone to the fed market. Prices are just hovering at break-even levels for many feedlot operators. Therefore, this feeder market may be overextending itself for the time being. This is definitely a sellers’ market for feeder cattle.

— 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 at 204-287-8268 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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