Klassen: Cold weather slows feeder cattle market activity

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Compared to last week, western Canadian feeder cattle prices were relatively unchanged. Extreme temperatures blanketed Western Canada last week. Many auction barns cancelled sales or had limited numbers on offer. Buyers attended sales either in person or via the internet, which was supportive to the overall price structure. Many backgrounders and cow-calf producers delayed sales by one or two weeks, hoping favourable weather may enhance buying enthusiasm.

Steers weighing 800-850 lbs. were actively moving in the range of $180-$185 across the Prairies. Feeder cattle under 700 lbs. were quite variable depending on the health program and weaning timeframe. For example, there were reports of steers ranging from 650 to 675 lbs. trading as low as $195 to as high as $215 in central Alberta. If feedlots knew where the cattle came from, they bid up fairly aggressively. Some of the yearlings and lighter calves are fleshier at this time of year and the thicker coats don’t help the discerning eye. Lethbridge barley prices are reaching $325 per tonne for May and June; therefore, risk discounts were severe on cattle that will not gain efficiently.

In central Alberta, a small group of Charolais-based steers weighing just over 850 lbs. were valued at $176 and larger-frame medium-flesh Angus-blended steers weighing 810 lbs. were quoted at $182. In Manitoba, red and white face heifers weighing 810 lbs. were valued at $162 and Charolais mixed steers weighing 805 lbs. were quoted at $180. Certain pockets in central Saskatchewan reflected a small premium over Alberta and Saskatchewan prices this week but the lower volumes in this region may have contributed to the firm tone.

In the Lethbridge area, weaned red steers with full health program on light grain ration weighing just over 700 lbs. were reported at $204 and similar-quality and -weight heifers were quoted at $176. The price of barley is so strong that the farmer-cattle producer and backgrounders are using limited barley. Some producers are using oats. In central Alberta, steers weighing 470 lbs. were quoted at $270. Grass cattle are firm, there is no doubt about it.

Alberta packers were buying fed cattle on a dressed basis at $255 delivered or $151 f.o.b. the feedlot in Alberta. Prices are nearing break-even if the feedlot purchased feed grains earlier in fall. There are two rules for feeding cattle over the next two years. Rule 1: Purchase the feed grains and then buy the feeder cattle. Rule 2: Read rule 1. Don’t leave your feed grain requirements uncovered, because this rally is not over.

— 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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