Western Canadian feeder cattle prices were steady to $2 higher in comparison to week-ago levels. Very light auction volumes were reported with many sale barns closed for summer holidays.
Feedlot buying interest started to improve late in the week but with limited supplies available, there wasn’t a significant test of the market. Feedlot operators continue to contend with adverse pen conditions and weight gain inefficiencies. Alberta fed cattle prices are currently $3 per hundredweight (cwt) below break-even.
The weather pattern is changing to a drier system and feedlots are undergoing significant liquidation. Therefore, strong demand is expected when yearlings start to come on stream later in summer. Available yearling supplies will also be historically tight, causing the Alberta feeder cattle to trade at a slight premium to the U.S. market. The function of the Canadian feeder cattle market is to ration demand, which means the market needs to cut off exports through higher prices.
The U.S. Department of Agriculture’s most recent report was considered negative for the corn and feedgrains complex. Corn stocks as of March 31 were approximately 300 million bushels larger than average trade estimates. Despite the wet spring, U.S. corn acres will reach 92.3 million, which was also sharply higher than average expectations. Corn stocks will not be as tight as earlier anticipated.
This report was construed as very bullish for feeder cattle futures as the October contract made a fresh all-time high, reaching $142/cwt. Top U.S. cash prices included a group of Nebraska steers averaging 825 pounds selling for $152.60 for September delivery.
— 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] or at 204-287-8268 for questions or comments.