But while the future can’t be known for sure, there are certain trends that analysts look for when making market forecasts.

Heifer retention is a big one, said Lee Irvine, a beef specialist with ATB Financial, during a recent the Cattle, Commodities and Market Insights conference in Brooks, Alta.

“I watch it religiously, with every single kind of cattle on feed and placement side. That tells me where our numbers are at. If the heifers are hitting the feed yard, they’re not going to get bred back,” said Irvine.

However, a deeper dive into the numbers is necessary.

Heifer retention is down by approximately six per cent in the last cattle-on-feed reports.

However, the number jumps to 30 per cent when looking at the 600- to 800-pound weight category.

Irvine has not seen the latest cattle-on-feed reports from the United States because of the U.S. government shutdown, but is seeing similar trends there as well.

“So the question now that we can’t answer from a key performance indicator is, ‘OK, are those cattle going to stay on the ranch and actually go into the cow herd and continue to expand the cap, or are they just waiting until the fall to market them?’” Irvine said.

Checking the price of beef at the grocery store can help gauge consumer patterns, said Anton Bellot, director of agri-business and agri-food for ATB Wealth.

He last checked numbers that showed that for every dollar Canadians earn, they are $1.40 in debt.

“It is quite substantial, and that’s making a huge impact on the grocery shelves. That’s probably the number-one leading indicator I look at. Whether it’s on a beef producer, or on the cropping side, that commodity has to get value added to end up on a grocery store or in a restaurant,” said Bellot.

Canadian consumers have responded to American tariffs with “buy local” efforts, but in the end, he said, the price tag reigns supreme when family budgets are so tight.

The post Want to track the cattle industry? Follow the heifers appeared first on Alberta Farmer Express.

Buying interest appeared to fade moving east, with Manitoba markets dropping $4-$8 from seven days earlier. Markets in the non-major feedlot regions experienced lacklustre demand, especially in lighter weight categories.

Southern Alberta set the stage with Angus-based steers averaging just over 800 lbs. dropping the gavel at $210; very little slippage was noted between 800 and 900 lbs. as lower-flesh Charolais-cross steers averaging 900 lbs. were quoted at $194. We’ve seen larger exports of slaughter cattle helping alleviate the backlog of market-ready supplies. In Manitoba, 800-lb. steers topped out in the range of $190-$195 as the market ran out of gas. Buyers had scale-down orders because feedlots clearly had no interest in ownership on unseen cattle.

Calves and grassers were up $10 to down $6, depending on who you talked to. It can be difficult to explain every tick in the market, but certain groups of grassers were a hot commodity. Backgrounding operators, who had a futile experience over the winter are starting to reload and a spec trace of demand from the larger feedlot operator was also noted. In central Alberta, 600-lb. steers edged up to $245 but closer to the Saskatchewan-Alberta border, similar cattle were as much as $12 lower. Heifers weighing just over 500 lbs. were quoted at $238 in southern Alberta.

U.S. wholesale choice beef finished the week near US$232/cwt, up $10/cwt from mid-March. However, Alberta packers were buying fed cattle from $167 to $169, unchanged from last week. The U.S. Department of Agriculture’s Cattle on Feed report was considered bearish because placements were above expectations. However, this is largely factored into the market, given the number of feeders outside feedlots last fall. We knew these feeders were coming and U.S. markets jumped $4-$6 over the past seven days.

When prices behave in such an extreme fashion, this is usually a signal the market is turning a corner. Positive economic data from Canada and the U.S. is supporting the recovery in wholesale beef prices and this will eventually spill over into the feeder market. Consumer food spending is running sharply above year-ago levels, which is surprising.

— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.

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Hope is fading that the fed cattle market will experience any type of recovery and feedlots are extremely defensive, with June live cattle futures $10 below the April contract. Wholesale beef prices continue to slip and retail prices have been grinding lower in order to encourage demand. Major feedlot operators that hedged fed cattle heavily at the higher levels are now basing purchases on the margin structure in the deferred positions. I call it the “wisdom competitive advantage,” which appears to be eroding.

Backgrounded cattle are starting come on the market and buyers are extremely fussy in regards to flesh characteristics. Medium-flesh larger-frame mixed steers weighing just over 800 lbs. were quoted at $198 in west-central Alberta. If feedlots don’t have an idea on the previous feeding program, they are extremely risk adverse. Light flesh black steers just under 800 lbs. were quoted at $218 in Lethbridge. Simmental mixed steers averaging 740 lbs. were quoted at $228 north of Calgary but this was in the upper end of the range. Similar-weight cattle steers were trading around $215-$220 across the Prairies. Southern Alberta markets appeared to show premiums especially on the lighter flesh categories. Quality feeder in the 700- to 850-lb. range were $10-$15 above markets in other regions. There’s a fair amount of pen space available in the Lethbridge area because market-ready supplies of fed cattle are now cleaned up. Secondly, spring-like temperatures in southern Alberta and southwestern Saskatchewan also enhanced buying interest.

Feed barley is quoted at $221 per tonne for April-May delivery in Lethbridge, almost $10 higher than nearby shipments. The feed market is building in a premium because barley stocks are expected to tighten late in the crop year.

Recessionary type factors are setting a negative tone for beef demand in the Canadian market. Weaker consumer spending comes at a time when fruit and vegetable prices are up 18 per cent over year-ago levels. Wholesale beef values have further downside potential in the second and third quarters due to the sharp year-over-year increase in beef production.

— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.

The post Klassen: Buyers risk-averse on feeder cattle appeared first on Alberta Farmer Express.

Alberta packers were buying fed cattle in the range of $174-$176, up $2 from the previous week and up nearly $12 from mid-December. Feedlot operators stepped forward with cautious optimism, now that the fed market is above the break-even price for May pen closeouts of $173. U.S. feeder cattle prices were also up $10-$15, leading the charge higher in eastern Prairie regions. U.S. orders, along with Alberta feedlot demand, resulted in stronger competition for Saskatchewan and Manitoba cattle because most Alberta auction barns were in holiday mode.

In central Alberta, mixed heifers averaging just over 600 lbs. sold for $222 while steers around 550 lbs. sold from $240 to $250. The market was quite variable across the Prairies, especially on the lighter weight categories. However, buyers for major operations were extremely aggressive. In southern Alberta, mixed steers with medium flesh averaging 800 lbs. were reported at $226, reflecting the immediate response to the jump in live cattle futures; this is up about $25-$30 from the December lows.

The beef pipeline has become current and packers are looking to pick up cattle sooner than anticipated. Secondly, the U.S. Department of Agriculture’s lower November placement number will likely reduce second-quarter beef production and the market is adjusting to the recent change in fundamentals. Barley prices are also a bit softer to start off the New Year and the Canadian dollar continues to deteriorate.

All factors influencing feeder cattle prices were more positive this past week, which should keep the market well supported in the short term. Consumer spending usually experiences a sharp contraction in January and February, so this is a major risk limiting the upside potential.

— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.

The post Klassen: Feeder cattle jump on renewed buying interest appeared first on Alberta Farmer Express.

“About six or seven per cent of people’s spending in a year is just on gasoline,” said Michael Burt, director of industrial economic trends with the Conference Board of Canada.

“If you’re suddenly giving people back two or three per cent of their expenditures, they’re able to spend on other things.”

So what kind of a bump might that mean for local food, particularly products that cost a little more because of the way they are produced?

Very little, said Burt.

“Food, in general, is a fairly stable consumer item,” he said. “We don’t see big swings in the amount of money that people spend on food.”

When money is tight, people tend to cut back on quality — buying ground beef instead of steak, for instance — but in general, people trim other areas of their budget before cutting back on food spending.

And when times are good, food spending is typically the last thing that gets increased.

“There is a small improvement in consumer spending on food when times are good, but it tends to be more cyclical things, like cars, that see much bigger ups and downs depending on economic conditions,” said Burt.

Consumers may start to shift from “commodity-based items” to “higher-quality, higher-priced” foods, like implant-free beef or organic produce, but the shift should be minor.

“It’s possible that there could be a benefit for food, but I wouldn’t overstate it. It’s likely to be very small.”

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