Klassen: Feeder market bounces off the lows

(Photo courtesy Canada Beef Inc.)

Western Canadian feeder cattle markets experienced a week-over-week gain of $5 to $8. Strength in live cattle futures, along with the weaker Canadian dollar, rejuvenated buying interest amongst feedlot operators across the Prairies. Alberta packers were buying fed cattle in the range of $222 to $227 on a dressed basis, which was also up $2 to $7 from week-ago levels.

Feedlot margins are moving closer to a break-even and with plants short bought for nearby delivery, it appears that feedlots have the upper hand for the time being. This quickly spilled over into the feeder complex, with margins looking to move into positive territory for the late winter and spring positions. The yearling run has come to an end with most auction markets featuring pre-calf sales.

Quality shortkeep steers were well bid on short supply, with a few groups of late-blooming stragglers available. Heifers made up a larger portion in the heavier-weight categories. Mixed heifers with no special features averaging 950 lbs. were trading around $150 in central Alberta while their younger sisters weighing 825-860 lbs. traded in the range of $165-$170.

The focus this week was on calves, with feedlots and backgrounding operators bidding more aggressively, especially on pre-conditioned weaned steers. Larger-frame Simmental-based 650-lb. steers traded for $175 in central Alberta while lower-flesh Charolais-cross steers were quoted at $187 landed in southern Alberta feedlot. However, steers weighing 500-550 lbs. were averaging around $180 across the Prairies and heifers of similar weight readily traded from $150 to $160. The discerning eye was quick to discount heavy bawlers, which feedlots left to smaller backgrounding farmers.

Feed barley was readily trading at $170 per tonne delivered in the Lethbridge area, up from the lows of $150 per tonne earlier in fall. However, this had little effect on the price structure. U.S. feeder markets were also $5 to as much as $10 higher this past week, which spilled over into Western Canada. We may be over the hump of burdensome beef and pork production and stronger consumptive demand is projected in November and December.

— 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.

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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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