Western Canada’s feeder cattle markets continue to show signs of exorbitant strength as the fall run moves into full gear. Many auction markets were featuring the first calf sales of the season, defining the market structure for the next few weeks.
Major feeding regions such as southern Alberta saw quality 500-pound steer calves readily trade over the magical $300 per hundredweight (cwt) level. Yearlings were solidly $2-$4/cwt higher and lighter-weight calves notched a jump of $8-$10/cwt on average, in some cases up to $13/cwt. Alberta packers continue to buy fed cattle in the range of $161-$163/cwt and feeding margins remain in healthy territory.
However, December live cattle futures surged to all-time highs incorporating a risk premium due to uncertainty in production. Feedlot operators stepped forward with reinforced buying enthusiasm for replacement cattle with a positive margin structure in the deferred positions. Adverse weather late in the week didn’t stem order flow to cattle buyers, because feedlot managers realize waiting is not an option. All feedlot hands are babysitting these bawlers because death loss is extremely costly this year.
A larger group of exotic semi-weaned calves weighing just under 600 lbs. was quoted at $286/cwt landed in a Lethbridge-area feedlot. Larger-frame Simmental medium-flesh 725-lb. steers were quoted at $262/cwt in the same area. Non-major feeding regions did not realize the full gains as in southern Alberta but the markets should even out as more feature sales occur in Saskatchewan and Manitoba.
Exogenous forces remain positive for the cattle and beef complex. The Canadian dollar weakened this past week, which was supportive for all weight categories. U.S. feeder cattle prices were $3-$6/cwt higher on average, so there will be a natural pull south of the border. Feed grain prices continue to trend lower, with approximately 30 per cent of the western Canadian crop still in the field. Positive U.S. economic data showing U.S. unemployment dropped to 5.9 per cent was constructive for beef demand longer-term.
– 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.