Compared to last week, western Canadian feeder cattle markets traded $3-$5 on either side of unchanged.
The market was quite variable across the Prairies. Demand from south of the border evaporated due to adverse weather while southern Alberta experienced favourable spring conditions. Alberta packers were buying fed cattle at $260 on a dressed basis, up $2-$4 from seven days earlier. Feedlot margins have improved but remain in negative territory by $20-$40 per head. Larger supplies of backgrounded yearlings are coming on the market at this time of year. Feedlots continue to exhibit a cautious tone because feed grain prices are strengthening in the short term and fed cattle prices for the third quarter are expected to be quite weak.
In central Alberta, black Angus blended steers with medium to lower flesh levels weighing 910 lbs. sold for $168; exotic-based mixed heifers weighing 910 lbs. with very little butter sold for $161. Near Lethbridge, a small group of black medium- to lower-flesh heifers averaging just over 900 lbs. dropped the gavel at $158. In southern Manitoba, reports had Simmental steers weighing 820 lbs. selling for $177 while Charolais blended heifers weighing 845 lbs. were valued at $154.
Stronger buying interest for calves from backgrounding operators and finishing feedlots kept prices in the light and mid-weight categories well supported. These buyers are looking at April 2020 live cattle futures which closed over $122 on Friday. Secondly, there is a high probability that feed barley will be $40-$50 cheaper come harvest.
In southern Alberta, a larger group of black steers weighing 715 lbs. sold for $203 and red heifers weighing 695 lbs. were quoted at $183. In southern Manitoba, Charolais blended steers weighing around 550 lbs. were valued at $238 while tan mixed heifers averaging 525 lbs. were quoted at $199.
There were no significant year-over-year changes on the Statistics Canada cattle inventory report. The 2018 calf crop was estimated at 4.297 million head, down from 4.358 million head in 2017; however, U.S. feeder cattle outside feedlots on Jan. 1, 2019 were at 26.38 million head, up 255,000 head from year-ago levels. The industry is looking for a surge in U.S. feedlot placements over the next eight weeks as feeder cattle move off small-grain pasture. This could cause downward pressure on Canadian yearling prices.
— 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.