Your Reading List

Klassen: Feeders higher on lower Canadian dollar

NEW FEATURE: Jerry Klassen, an independent commodity trader well known to readers of Canadian Cattlemen and the Cattleman’s Corner section in Grainews for his analysis of the livestock markets, now brings a new weekly column on cattle markets to AGCanada.com and its affiliated sites.

Nov. 3 — Feeder cattle prices in Western Canada have been ratcheting higher over the past week. The Canadian dollar has dropped from the high of US98 cents to under US94 cents, which has spurred on additional demand from south of the border.

Prices in Alberta are now more in line with prices in the U.S. Midwest as the markets have appeared to move into equilibrium. Adverse weather during October delayed feeder cattle marketings but we should see supplies increase over the next couple weeks, especially from eastern Saskatchewan and Manitoba.

Strength in nearby fed cattle prices, along with higher values in the deferred live cattle futures, has renewed buying enthusiasm from finishing feedlots. Given the feeding margin structure for first and second quarters of 2010, current feeder cattle prices will be well supported.

Therefore, I don’t see much downside risk and there is potential for higher prices later in November and December. 

Feeder cattle exports to the U.S. should increase in November and December. In 2007, we saw very strong exports during this time frame, despite the Canadian dollar moving to a premium over the U.S. greenback.

Lower calf crops in the U.S. have increased demand for Mexican and Canadian feeder cattle. While year-to-date Mexican feeder cattle exports to the U.S. are up 38.3 per cent, Canadian feeder cattle exports are actually down nearly 50 per cent. U.S. buyers are expected to be more aggressive with Canadian purchases in the upcoming months.

— Gerald Klassen is a cattle and hog market analyst in Winnipeg and also maintains an interest in the family feedlot in southern Alberta.

About the author

Contributor

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.

Jerry Klassen's recent articles

explore

Stories from our other publications