Klassen: Adverse weather tempers feeder market

Compared to last week, western Canadian feeder cattle markets traded $3-$5 lower. Excessive snow in Alberta and ongoing rains across Manitoba and Saskatchewan set a negative tone. The market appeared to incorporate a risk discount, although many auction barns had limited numbers on offer. Buyers once again focused on local cattle and avoided transportation over longer distances. U.S. and Ontario demand was also very quiet.

Calf prices were quite variable with buyers shopping for pre-conditioned or vaccinated animals. The mid-weight 700- to 800-lb. calves appeared to bring the best return while buyers avoided bawlers and skinnier yearlings. The market was hard to define this past week, with each order buyer drawing different conclusions on the market structure. This isn’t uncommon when conditions are so variable. Feedlot margins continue to struggle and this is one factor that is certain. The market is at a point where all characteristics and quality features are defined and valued accordingly.

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In central Alberta, larger-frame medium-flesh Simmental blended steers weighing 985 lbs. were valued at $181 while similar quality heifers weighing just over 950 lbs. were quoted at $176. Hereford blended steers with very little butter attached, weighing just over 850 lbs., were quoted at $190 in southern Alberta. In central Saskatchewan, black larger-frame steers with medium flesh weighing 815 lbs. were quoted at $197 and mixed larger-frame heifers weighing 830 lbs. were valued at $179. The spread between heifers and steers was quite narrow for yearlings.

Calf numbers were limited last week. Ranchers were not anxious to move cattle as the market always takes a breather during the first major snowfall. Timing will be crucial for receiving the top dollar this year because the weather is so unpredictable. Calves appeared to hold value in central and eastern Saskatchewan where precipitation was limited. Unweaned Charolais steers with no shots weighing 520 lbs. were quoted at $228 in central Saskatchewan while vaccinated mixed steers weighing 550 lbs. were valued at $217 in central Alberta.

The barley market took a fortuitous bounce, which also contributed to the defensive tone. We can say that 20 to 30 per cent of the barley and wheat crops will only be harvested next spring. Feed grain fundamentals are not as burdensome as earlier anticipated.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP  SA Grains and Produits Ltd., and is president and founder of Resilient Capital specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204 504 8339.

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