Western Canadian feeder markets experienced a mixed volatile tone over the past week. Replacement cattle over 800 lbs. were $3 lower to $8 higher on average, while lighter weight categories traded $10 lower to $10 higher in comparison to week-ago levels.
Larger volumes of backgrounded yearling cattle are coming on the market at this time of year and buyers focused on flesh levels. Even the untrained eye can have a good idea after cattle stand for nearly a day in the auction yard. Feedlots in southern Alberta were quoting mixed steers averaging 850 lbs. in the range of $190-$195. Replacement steers just over 900 lbs. were quoted in the range of $188-$192 in the same area. Despite these cattle not penciling out, the eternal-hope feedlot operator needs to stay in the game.
Calves and lighter yearlings under 800 lbs. experienced a defensive tone. Charolais-based steers averaging 550 lbs. were quoted at $265 in central Alberta, which was fairly representative value across the Prairies. In eastern Saskatchewan and Manitoba, U.S. buying interest lead the market at times, while major feedlots in Alberta and Saskatchewan had orders below the market. Mixed steers averaging 650 lbs. sold for $238-$242 in southern Manitoba, and with similar prices in Alberta, feedlots focused on local cattle.
Fed cattle traded from $167 to $169 in Alberta this week. The October live cattle futures are trading at a $17 discount to the April contract, so the lighter feeders were under pressure. Secondly, uncertainty in feedgain prices longer-term also weighed on the market.
The Canadian dollar continues to strengthen, tempering the upside in the feeder market. Feedlots are counting on further upside during the summer months and are factoring this into the margin structure. Wednesday’s U.S. Department of Agriculture report once again projected the surge in year-over-year beef production in the second quarter, confirming the lower price structure for the summer timeframe.
— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.