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Klassen: Feeder cattle prices gaining momentum

Compared to last week, western Canadian yearling prices were steady to $4 higher while calves and grass cattle markets were relatively unchanged.

Once again, there was a wide range of prices across the Prairies as feedlots adjust to higher feed grain prices. Secondly, buyers were quick to discount fleshier cattle; backgrounded calves fed too much grain over the winter can be deceiving to the untrained eye.

Alberta packers were buying fed cattle in the range of $278-$282 on a dressed basis, which was unchanged to $2 higher than week-ago levels. Despite the weaker live cattle futures, the weaker Canadian dollar appears to be enhancing the fed cattle prices. Feedlot operators are in good shape from a margin perspective but buying interest is tepid at best. Available yearling numbers appear to be down from last year due to the sharp year-over-year increase in placements last fall.

Charolais-cross medium-flesh steers weighing just under 850 lbs. traded for $176 in east-central Alberta; Simmental-blended heifers with heavier butter levels averaging 850 lbs. sold for $166 in the same region. Southern Alberta feedlots woke up last week after a long dreary winter causing 900- to 925-lb. larger-frame medium-flesh steers to trade from $174 to as high as $176. Barley and feed grain prices continue to percolate higher and this rally is not over.

The U.S. Department of Agriculture estimated the number of cattle outside feedlots as of Jan. 1 at 26.105 million head, down 2.27 per cent from last year. Despite the year-over-year increase in the calf crop, the number of cattle available is down from last year and this is driving the price in the lighter weight categories. Canada is in a similar situation. Come August and September, yearling supplies could be extremely tight so these lighter calves and grassers are rather hot. Mixed steers averaging just over 500 lbs. were readily trading from $248 to $252 in southern Alberta; similar-weight heifers were quoted from $220 to $224.

— 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.