Western Canadian feeder cattle prices were relatively stable with week-ago levels despite the softer tone in the U.S. market. Limited volumes at most auction markets were met with firm buying interest as feedlot margins remain in positive territory.
The fed cattle market in Alberta remains near historical highs, with packers buying steers in the range of $165-$166 per hundredweight (cwt). Below-average volumes of fed cattle traded last week, and with average carcass weights running 28 pounds below last year, market-ready supplies are rather tight in Western Canada. Alberta feedlot break-even prices for the December timeframe are near $164/cwt (all costs) based on 800-lb. steers bought at $210/cwt. Therefore, if Alberta fed prices start to erode, we may see similar pressure on the feeder market.
Auction volumes are starting to increase at certain locations but the market was quite variable across Western Canada. Strong demand was noted on early calves with 500- to 600-lb. animals trading in the range of $263 to $287/cwt. However, buyers noted smaller non-feature groups were discounted as much as $10/cwt. Larger-frame mixed steers with medium flesh weighing just under 850 lbs. were quoted at $220/cwt, landed in southern Alberta feedlot.
Feed barley was readily trading at $177 per tonne delivered Lethbridge, down $3 per tonne from last week. New-crop barley is expected on the market by late August, which should keep feed grain prices under pressure and be somewhat supportive for the feeder complex. Feedlot inventories are at seasonal lows, resulting in limited short-term feed demand.
Related: Southern Alta. barley harvest underway, Aug. 13
U.S. wholesale beef prices appear to be softening, so this may signal weaker fed and feeder values moving forward, especially if the Canadian dollar strengthens. Keep in mind, hog prices are down sharply from July highs and competing meats are limiting further gains in retail beef prices. Feedlot managers are expecting a correction in the fed market resulting in a cautious attitude when purchasing feeder cattle. There is no need to be aggressive on purchases with prices at historical highs and larger volumes coming on the market in upcoming weeks.
— 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.