Klassen: Feeder market stabilizes on U.S. inventory data

(Photo courtesy Canada Beef Inc.)

Compared to last week, western Canadian feeder cattle prices were relatively unchanged but there was a wide variation across the Prairies.

Major markets in Alberta traded steady to as much as $5 higher, while Saskatchewan and Manitoba prices were quoted $3 higher to as much as $5 lower. Major finishing operations in Alberta focused on local cattle due to extremely cold temperatures. Buyers were hesitant to ship cattle farther distances and these cattle will need extra work and time to adjust to new surroundings. Early backgrounded yearlings are coming on stream and the sharp eye was quick to discount fleshier-looking replacements. Pushing these calves too hard over the winter can have serious price consequences. Ontario feedlots have backed away for the time being, resulting in a vacuum of demand, and feeder cattle exports have dropped down to a trickle.

A smaller group of medium-frame tan steers weighing just over 850 lbs. were quoted at $177 in east-central Saskatchewan; smaller, fleshier groups were trading below average levels as buyers picked away to build up a load. Similar-weight and -quality steers were quoted from $180 to $183 in central Alberta. Mid-weight categories appeared to hold value. Medium- to larger-frame steers with medium-flesh smoky steers averaging 750 lbs. were quoted at $187 in southern Alberta.

The U.S. Department of Agriculture’s cattle inventory report was considered constructive for the feeder market, with noticeable buying interest surfacing on calves and grassers. The number of feeder cattle outside of feedlots as of Jan. 1 was slightly below year-ago levels despite the year-over-year increase in the U.S. calf crop. Strength in the deferred feeder cattle futures late last week quickly spilled over into Western Canada. In central Alberta, mixed red steers averaging 550 lbs. were quoted at $237 while 500-lb. similar-quality bawlers were as high as $255.

Rising interest rates, along with a major selloff in the stock market, have painted all commodities with the same brush for the time being. There’s a positive sentiment from a fundamental perspective; however, buyers tend to lack confidence when financial markets experience severe volatility.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339.

About the author



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.


Stories from our other publications