Klassen: Feeder market in consolidation mode

Feeder values in West showing premium over U.S.

(Photo courtesy Canada Beef Inc.)

Compared to last week, western Canadian feeder cattle prices were quite variable depending on the weight category. Replacement cattle weighing over 800 lbs. were steady to $4 lower while feeders weighing 700-800 lbs. traded steady to $4 higher on average. Feeder cattle under 600 lbs. were unchanged from seven days earlier.

The fed cattle market appears to be quite soft for late August and September, which has weighed on shorter keep replacements. Feeders under 800 lbs. are percolating higher in line with deferred fed cattle futures. Keep in mind these feeders will also have a lower cost per pound gain with the bulk of the weight from new-crop feed grains.

The quality last week was once again quite variable. Late-blooming stragglers were heavily discounted. Markets were characterized by small groups with many singles running through the ring. However, there was no shortage of buying interest on good-quality feeders and major feedlot operators were very aggressive on 700- to 800-pounders.

In central Alberta, larger-frame Simmental-blended steers weighing just over 850 lbs. coming off small grain ration on full health program were quoted at $185; similar-quality and -weight heifers were valued at $174. In east-central Saskatchewan, a small group of mixed steers averaging 850 lbs. were quoted at $182 and black mixed thin heifers averaging 840 lbs. were quoted at $165. The steer-heifer spread appeared to be wider in Saskatchewan this past week — partially due to very strong demand for 800-pound-plus steers. Small groups of top-quality steers from 800 to 825 lbs. were reaching up to the range of $190-$194.

South of Edmonton, larger-frame lower-flesh tan mixed steers weighing 775 lbs. were reported at $207 and similar-quality 714-lb. steers reached up to $220. In southern Alberta, black mixed larger-frame steers weighing 675 lbs. were quoted at $219 and mixed heifers weighing 625 lbs. were quoted at $196. There were few packages under 500 lbs. this past week, which made the market hard to define. Comments from the country had a small group of mixed steers weighing 535 lbs. valued at $235 and mixed heifers averaging 510 lbs. valued at $210 in central Saskatchewan.

Alberta packers were buying fed cattle on a dressed basis at $275 delivered; this equates to $1,565 on a live basis using a 60 per cent grading. Prices in Nebraska were quoted at US$120 (C$144) on a live basis. This Canadian premium in the fed market has also spilt over into the feeder complex. Western Canadian feeder cattle prices appear to reflect a sharp premium over U.S. values which has limited the upside in domestic prices. At the same time, we’ve seen an increase in feeder cattle imports from the U.S. through the spring period.

— 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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