Klassen: Man., Sask. feeder prices jump

April 26 — Feeder cattle prices in Manitoba and eastern Saskatchewan jumped by $4-$7 per hundredweight (cwt) last week. Buying interest for grass cattle skyrocketed after the snowfall in southern Alberta along with the rains in central Saskatchewan. U.S. grass cattle supplies are also tightening, improving the export program.

April feeder cattle exports are on pace to reach 35,000 head, the largest monthly export number since April 2009. Domestic feedlot demand is starting to wane at the higher prices, but cattle on feed numbers are nine per cent higher than last year’s. Feedlot operators appear to be content with their current levels of ownership.

The U.S. Department of Agriculture’s data shows first-quarter cow slaughter slightly above 2009 levels. Canadian cow exports are also up 29 per cent; it’s now inevitable that we will see a smaller 2010 calf crop in North America.

Slaughter cow prices are expected to trend higher into the summer and are expected to remain strong in 2011.

If past history is any indication, the U.S. cow/calf producer needs one year of historically high calf prices before the expansion phase begins. Heifer retention is projected to start on a larger scale next year and the first year-over-year calf crop increase is forecast to begin in 2013.

The U.S. economy is moving into one of the strongest expansion phases of all time, while the calf crops are the lowest since the 1950s. There is potential for cattle prices to move into a new price range, longer-term. Domestic beef demand is improving but it will take six to eight months before consumer spending patterns are back to normal.

Table 1. Feeder steers, week ending April 23 (US$/cwt).

Weight range (lbs.) Alberta Sask. Manitoba Nebraska Kansas
500-600 118 117 120 123 127
600-700 110 110 110 112 119
700-800 100 100 100 100 109

— 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 called Canadian Feedlot and Cattle Market Analysis for feedlot operators in Western Canada.  He can be reached by email at  [email protected] or at 204-287-8268 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 decision 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.

About the author

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Columnist

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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