NEW FEATURE: Jerry Klassen, an independent commodity trader well known to readers of Canadian Cattlemen and the Cattleman’s Corner section in Grainews for his analysis of the livestock markets, now brings a new weekly column on cattle markets to AGCanada.com and its affiliated sites.
Nov. 9 — U.S. feeder prices are $3-$4 per hundredweight (cwt) over the past week while Canadian prices are unchanged to $4 higher. Feeder cattle prices are expected to slowly trend higher from now until the end of the year. Strength in the deferred live cattle futures has set a positive tone to the nearby feeder cattle market.
Strength in the Canadian dollar has offset some of this benefit, but there seems to be fresh enthusiasm with the potential for stronger feeding margins in the first quarter of 2010. Favourable weather in Western Canada has also enhanced feeder cattle movement and buyers appear to be more aggressive with purchases.
Forage and feed grain supplies in Alberta and Saskatchewan will not be as tight as earlier anticipated. This is partially due to better growing conditions in the latter half of summer and larger imports of dried distillers grains with solubles (DDGS). Therefore, herd liquidation appears to have eased and many cow-calf producers are now looking to background their own calves.
Ranchers were holding back on sales earlier in fall in hopes of higher prices, but adverse weather also hindered feeder cattle movement. The yearling run was also quite long compared to normal. We now find year-to-date auction numbers are slightly ahead of last year and we are probably over the seasonal hump in supplies.
The Canadian dollar surged on Monday, limiting demand from south of the border. However, U.S. buyers were quite active during the first week of November as prices in Manitoba and eastern Saskatchewan were more competitive with U.S. feeder cattle values, f.o.b. the U.S. feedlot.
— Gerald Klassen is a cattle and hog market analyst in Winnipeg and also maintains an interest in the family feedlot in southern Alberta.
Table 1. Prices based on weekly averages for week ending Nov. 6 (US$/cwt)