Klassen: Challenging weather influencing feeder market

Compared to last week, western Canadian yearling prices were relatively unchanged; calves appeared to trade $3 lower to as much as $5 higher.

Weather conditions have played a larger role in the price structure this fall. Major finishing feedlots continue to focus on preconditioned calves and have left the unweaned or unvaccinated feeders to the smaller backgrounding lot. Therefore, prices were quite variable for similar-weight cattle and the steer-heifer spread appeared to widen in the lighter weight categories. Buyers were quite fussy on quality features and smaller framed fleshier calves were discounted accordingly.

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One buyer stated there’s just not the buying enthusiasm that’s been evident in past years. The past couple of months have been extremely challenging and silage supplies are considered tight for some southern Alberta feedlots. Given the current conditions, comments suggest feedlots are factoring in a slightly higher death loss due to adverse pen conditions. The market was harder to define this week and prices were quite variable across the Prairies.

In central Alberta, medium-frame fleshier mixed steers weighing just under 900 lbs. were quoted at $185 while similar-quality mixed heifers averaging 860 lbs. were valued at $178. In central Saskatchewan, larger-frame medium-flesh tan steers averaging just over 900 lbs. were quoted at $188 while similar-quality mixed heifers averaging 860 lbs. were valued at $174.

In southern Alberta, black Angus-based steers with health records and averaging 600 lbs. were valued at $206 while similar-quality heifers weighing 640 lbs. were quoted at $182. North of Calgary, larger-frame mixed vaccinated steers weighing 525 lbs. sold for $232. In Manitoba, Charolais steers weighing 550 lbs. reportedly sold for $230 and similar-quality heifers weighing 524 lbs. were valued at $194. Buyers appeared to step up to the plate if they knew there was some pre-conditioning.

Wednesday’s selloff in feeder cattle futures also contributed to a defensive tone in the latter half of the week. The non-commercial or managed-money futures trader pushes the market off of its equilibrium. While this is a double-edged sword, the backgrounding operator has been able to purchase price insurance to secure a profit which may have tempered the downside.

— 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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