Compared to last week, western Canadian yearling markets traded $4-$6 higher on average; some packages in Alberta sold $8 to as much as $10 above week-ago levels. Larger feedlot operations were very aggressive on 750- to 900-pounders.
The quality of yearlings is excellent at this time of year. Comments from the front row suggest most groups are uniform, healthy, lower flesh and a higher percentage of medium to large frame cattle. When steers weighing 820-830 lbs. are dropping the gavel over $200, it’s a sign of unique market conditions. October feeder cattle futures are near contract lows but the western Canadian cash market is at 52-week highs. It appears supplies are down from year-ago levels, which is underpinning the market. Feed barely prices continue to grind lower, while feedlots have an optimistic outlook for 2020 first-quarter fed cattle prices.
In central Alberta, larger-frame Simmental mixed steers with minimal butter weighing just over 950 lbs. were quoted at $185; larger-frame lower-flesh Charolais-blended steers weighing 826 lbs. were quoted at $202. In southern Alberta, Angus-based steers weighing 977 lbs. were quoted at $174 and similar-quality heifers weighing 903 lbs. were valued at $167. North of Saskatoon, a small group of mixed steers weighing 860 lbs. was quoted at $182. The market was quite variable, with the strongest prices in central Alberta.
Small groups of bawlers were unchanged from last week but higher quality calves traded $2-$4 higher compared to seven days earlier. Larger feedlots are securing ownership in the lighter categories but pen space is a premium in custom backgrounding lots. Steers weighing around 700 lbs. were readily selling for $212 to as high as $215 in central Alberta, while 600-lb. steers were quoted from $215 to $218. Unlike the yearlings, the market for calves was slightly higher in Saskatchewan this week. There are limited numbers available, so the market can be quite variable in this environment.
Friday’s cattle on feed report from the U.S. Department of Agriculture had a year-over-year decline in the lighter weight categories, which is somewhat bullish for first-quarter fed cattle prices. Feedlots are waiting for Friday’s Statistics Canada semi-annual cattle inventory report, which should provide a good idea of the fall calf supply. In any case, the basis is very strong for yearlings and ranchers should be selling into this strength.
— 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.