Western Canadian feeder cattle prices continue to ratchet higher due to spillover strength from the fed cattle. Prices for seven-weight steers were steady to $2 higher last week but volumes were rather light.
Many auction markets are still in holiday mode and few cattlemen are willing to put grassers on the market at this time. Pasture conditions remain favourable across the Prairies and feed supplies are abundant. This could cause the yearling run could be drawn out into October because there will be no pressure to sell grass cattle early.
Another factor to consider is that the “farmer cattle producer” may background through the winter, instead of selling in September or October. There is a fair amount of greenfeed around, especially in Saskatchewan.
For the first six months of 2010, the U.S. cow slaughter ran above year-ago levels, confirming the U.S. cow herd remains in a contraction phase. Lower calf crops and lower feedlot placements will cause a sharp drop in U.S. beef production during the first quarter of 2011. Usually, feeder cattle prices make seasonal highs in the first week of September and then trend lower into October as larger supplies come on the market.
However, current fed cattle prices are $10 to $12 higher than last year and with the deferred futures showing a premium over the nearby price structure, feeder cattle have a good probability of making a counter-seasonal price swing. Look for feeder cattle prices to stay firm or slowly strengthen throughout September and October.
Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He writes an in-depth biweekly commentary, Canadian Feedlot and Cattle Market Analysis, for feedlot operators in Canada. He can be reached by email at [email protected] or 204-287-8268 for questions or comments.