Feb. 22 — Statistics Canada’s Jan. 1 cattle inventory report was viewed as friendly to the cattle complex due to the lower overall inventory; however, the feeder cattle numbers were actually price-negative.
The 2009 calf crop was estimated at 5.11 million head, down marginally from 5.288 million head in 2008. This was largely anticipated by the industry and there was virtually no market effect.
Steers (one year and over) were reported at 1.141 million head, up eight per cent from last year, and heifers for beef production were 0.9 million head, up nine per cent from Jan. 1, 2008. A portion of the heifer increase may be attributed to lower retention for beef cow replacement, as this category was down four per cent. The bulk of the increase for steers and heifers is due to cow/calf producers holding back on sales due to lower prices. Lower exports of feeder cattle have resulted in a backlog of cattle at the grassroots level.
As of Jan. 1, there were 75,000 head of heifers and 83,000 head of steers above year-ago levels. Year-to-date auction market volumes in Western Canada have been running 10-12 per cent above last year. It could take until the end of March to clean up the burdensome supply. Larger available numbers will temper the upside in the short term.
Stronger fed cattle prices, improving feedlot margins and rising consumer incomes will help absorb the larger supplies of feeder cattle. Later in April, the feeder market should start to see the effects of the lower North American calf crop. Increasing feeder values in the U.S. should start to pull cattle south, tightening supplies in Western Canada.
— Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He can be reached by email at [email protected] for questions or comments.
The material contained herein is for information purposes only and is not to be construed as an offer for the sale or purchase of securities, options and/or futures or futures options contracts. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. The risk of loss in futures trading can be substantial. The article is an opinion only and may not be accurate about market direction in the future. Do not use this information to make buying or selling decisions because adverse consequences may occur. This information may be wrong and may not be correct about current market conditions in all areas of Canada. This is an opinion only and not based on verified facts.