Market sentiment can be extremely variable and this week, we saw a large divergence in the price structure across the Prairies. Alberta feeder cattle prices were generally $3 to $6 higher and in some cases as much as $10 above week-ago levels.
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.