Western Canadian feeder cattle prices experienced extremely aggressive buying interest this past week. Feeder cattle in the 700-pound-plus category were trading $2 to as much as $8 higher in some cases, while lighter-weight cattle were steady to $5 above week-ago levels.
I was extremely surprised by prices and comments after the dismal January market behaviour. Major feedlot operators shrugged off activity in the futures market and the focus turned to replenishing feedlot inventories amongst a frenzy of buying enthusiasm. Early placed backgrounded calves are starting to come on the market and these cattle were well-wanted by larger operations. Feedlot conditions have improved with the colder temperatures, which may have spurred on the positive tone. Cattle purchased at this time of year have less risk and are better quality in most cases withstanding the winter conditions; therefore, the market appears to be adjusting for the enhanced features.
Alberta packers were buying fed cattle in the range of $183 to $185, keeping the feedlot margins in positive territory. Feeder cattle exports to the U.S. were up 22 per cent during January and this trend will likely continue, bolstering the demand equation. Despite the higher price structure, interest in grass cattle is starting to come forward, with favourable pasture conditions anticipated this spring.
In central Alberta, red Angus-based steer calves averaging 675 lbs. were quoted at $275. Larger-frame Simmental medium-flesh steers were quoted at $262 landed in southern Alberta feedlot. This was the first week in 2015 that the market experienced a surge in buying interest for shorter-keep cattle. Certain auction markets reported quality groups of 800-pound-plus cattle up $10 over week-ago levels.
Statistics Canada’s Dec. 31 grains stocks report, released last Wednesday, was considered somewhat bearish for the feed grain complex in Western Canada. Lower feed usage was noted for barley and wheat, which may suggest the crop size was larger than earlier estimates. Feed barley traded down to $195, delivered Lethbridge, with farmers looking to sell barley prior to road ban season and spring seeding.
The fear over rising input costs has evaporated for the time bein,g which has added confidence for margins during the summer time frame.
– 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.