I know this may sound redundant, but western Canadian feeder cattle traded $2 to $5 higher last week and in some cases as much as $10 above week-ago levels. Strong gains were noted across the Prairies on all weight categories.
Feather-light steer calves under 500 pounds touched the magical $400 level in eastern regions; 700-lb. steers reached above the psychological $300 level, touching $315 in many cases; heavier weight classes were noticeably stronger as Charolais-cross steers just under 900 lbs. traded near $250 landed in southern Alberta feedlot. The market was difficult to define, because each day new highs were being made and astonishing reports surfacing after each sale. Auction market volumes were surprisingly larger than anticipated.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
The bullish market action may have spurred the cow-calf producer to stretch out sales and sell smaller parcels on their previous calf crop. A used car is more attractive if it’s shiny and clean, and cow-calf producers were waiting for favourable weather and greening pastures to move cattle. The steer/heifer spread appeared to narrow, with demand for breeding heifers surging over the past couple weeks, tightening supplies available for feeding. The cow-calf producer can’t avoid expansion, given the current margins, and those older producers who wanted to liquidate have likely done so at this time in the cycle. We now see fresh expansion activity noted across Western Canada, with cow-calf producers coming to the market for new breeding quality.
The Canadian dollar strengthened this past week to levels not seen since late January. I always note caution when expert analysts forecast crude oil to drop to $10 a barrel, because the most bearish forecasts generally come out when markets are in bottoming action. I think cattle producers have to watch this Canadian dollar, as the lows may be in place for the time being. However, feedlots usually bid up the price of feeder cattle until there is no margin in the feedlot sector. Margins are currently near $150 per head, so unless we see fed cattle prices come under pressure, the feeder market has breathing room to percolate higher.
– 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] for questions or comments.
