After the recent rally, cattle buyers noted that price spreads between weight categories came back in line with traditional levels this week.
Shorter-keep yearlings were steady to $4 weaker compared to seven days earlier; mid-weight cattle from 700 to 800 lbs. were relatively unchanged while feeders under 700 lbs. were $4 to $8 higher. On the heavier weight categories, feedlot operators had little incentive to stick their neck out. Given the current price of 850-lb. steers, feeding margins are expected to come under pressure and could move into negative territory for September and October. Talk in the trade also suggests feedlots are carrying sufficient numbers for the time being, which cooled buying enthusiasm. A small group of larger-frame medium-flesh Simmental-cross steers weighing just over 900 lbs. was quoted at $196 in central Alberta but the market in Saskatchewan and Manitoba was trading at a $3-$5 discount to Alberta. Southern Alberta prices were relatively unchanged from last week on heavier yearlings.
Prices for heavier calves continued to percolate higher. Feedlots stepped forward more aggressively in an effort to secure yearling numbers later in August. A 500-lb. steer at $267 is an 800-lb. steer at $195 in late September, about $15 below current levels. These lighter-weight feeders lagged the overall market through the recent rally but are now trading at traditional premiums over the heavier weight groups. A small group of mixed steers weighing just over 500 lbs. reached $272 in southern Manitoba, while similar-weight cattle were $258-$262 in Alberta. Small groups were on offer at most auction markets but buyers patiently built up a load, keeping the market well supported.
Feed barley prices were quoted from $180 to $183 per tonne delivered Lethbridge and the fundamental structure looks to tighten for new-crop. The eastern Prairies are on the drier side, experiencing less than 40 per cent of normal precipitation over the past 30 days. U.S. feeder markets were trading steady to $4 higher compared to last week. The U.S. Department of Agriculture’s Cattle on Feed report confirmed expectations for a sharp year-over-year increase in third-quarter beef production.
— 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.