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Klassen: Stronger fed cattle market underpins feeder complex

Alberta fed cattle prices surged $11-$12 this past week, with packers buying fed cattle in the range of $262-$264 on a dressed basis.

While most feedlot operations are carrying sufficient numbers at this time of year, quality packages of heavier replacements were extremely precious. Yearlings and calves above 850 lbs. sold steady to $5 above week-ago levels; prices in the lighter weight categories were steady to as much as $8 lower. Wider discounts were noted on unweaned calves and there appear to be larger volumes of weaned pre-conditioned calves coming on stream. Buyers were more discerning on quality features, which caused a variable price structure to develop. The steer/heifer spread also widened this week, especially for calves under 650 lbs.

Buyers were on the defensive early in the week, which caused minor price erosion. Mixed medium-frame fleshier red steers weighing 840 lbs. were quoted at $192 in southern Alberta; however, with the fed market percolating higher, premium sales were noted by Friday. A group of steer calves weighing just over 920 lbs. sold for $205 in central Saskatchewan while larger-frame tan steers with medium to heavier flesh levels weighing 845 lbs. sold for $201 in central Alberta. Simmental-cross medium- to larger-frame heifers weighing 860 lbs. sold for $180 in the same region. Yearlings definitely ended the week on a firmer tone as the deferred live cattle futures also turned higher.

Pre-conditioned 710-lb. Angus-based calves were quoted at $212 in southern Alberta; similar-quality medium-frame heifers weighing 655 lbs. traded for $190 in the same region. These were premium sales but in most cases, the gavel dropped with prices $5-$10 below these levels depending on various quality features. The “madness of crowds” illusion continues on featherlight calves. Angus-based steer calves weighing 445 lbs. were quoted at $265 in central Alberta.

Feeder cattle prices are expected to hold value into January. Feedlots are fairly current and with margins improving, operators will be anxious to reload.

— 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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