Klassen: Feeder market experiences fortuitous bounce

Last week, the feeder market started on a very sluggish tone. Buyers were sitting back waiting for the market to establish direction. By Friday, yearling prices were up $2-$4 compared to seven days earlier, while calves were trading $4 to as much as $8 above week-ago levels.

Cow-calf producers and backgrounding operators have been holding back on sales while at the same time, pent-up demand caused the market to ratchet higher. Given the limited supplies of lighter calves, buyers of grass cattle were stepping forward more aggressively for mid-weight feeders. We’re not seeing 800- to 850-lb. feeders being purchased for grass purposes in some areas. Buyers will be stretching these cattle out for the yearling market this fall.

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In central Alberta, mixed steers averaging 800 lbs. were trading in the range of $172-$175 early in the week; however, by Friday, similar weight cattle were moving from $180 to $185. North of Calgary, red mixed steers weighing 920 lbs. were quoted at $164 while medium- to larger-frame tan heifers averaging 930 lbs. were valued at $142. Prices in the eastern Prairie regions were also stronger, with some auctions reflecting a premium over major Alberta markets. However, there were limited volumes available and prices were quite variable.

Calves were surprisingly strong. In Manitoba, Charolais-blended steers weighing 575 lbs. were valued at $229 and black heifers weighing 560 lbs. were quoted at $191. In central Alberta, red mixed steers weighing 550 lbs. were reported at $234 and similar-quality heifers averaging 530 lbs. were valued at $198.

Alberta packers were buying fed cattle in the range of $262-$265 on a dressed basis, up $17-$20 from seven days earlier. This unexpected surge in buying interest spilt over into the yearling market. Finishing feedlots appeared to shrug off the volatility in the live cattle futures. U.S. feeder cattle markets traded $8-$15 above week-ago levels, which also set a positive tone in Western Canada despite the strengthening Canadian dollar. Wholesale beef prices traded near 52-week highs for the second week in a row supporting the overall cattle complex. Consumer demand has surged while beef production comes in sharply above year-ago levels.

— 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.

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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.

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