Klassen: Feeder market digests rising COVID-19 cases

CME January 2021 feeder cattle with 20-, 50- and 100-day moving averages. (Barchart)

Compared to last week, western Canadian yearling prices were relatively unchanged while calves traded steady to $2 lower on average. The grain harvest is in its final stages and buying interest was noted from the farmer/backgrounding operator. The buying frenzy over yearlings has eased and finishing feedlots were active on all weight categories.

Feather-light calves under 500 lbs. were extremely strong in Alberta but didn’t garner attention in other regions of the Prairies. Buyers were attracted to weaned or semi-weaned calves on some type of health program, but there were minimal premiums. Alberta feedlots focused on local cattle, causing Manitoba and Saskatchewan markets to trade at a slight discount. The calf market appeared to be in a price discovery mode and many buyers had a “wait and see” attitude.

In central Alberta, mixed medium- to larger-frame lower-flesh steers weighing 950 lbs. were valued $185 while similar quality mixed heifers weighing 960 lbs. were actively trading around $170. In southern Alberta, medium- to larger-frame Angus-based steers with lower flesh averaging 850 lbs. were quoted at $192; larger-frame Charolais heifers with minimal flesh levels averaging 862 lbs. were valued at $185 in the same region. Fleshier yearlings appeared to be discounted $3 to as much as $8 in some cases across the major feeding regions.

In southern Saskatchewan, semi-weaned Charolais-based calves averaging 620 lbs. were quoted at $211 and similar-quality heifers were valued at $183. In central Alberta, age-verified, weaned, vaccinated Simmental-based steers averaging 665 lbs. dropped the gavel at $206 while similar-quality unweaned bawlers averaging 550 lbs. were quoted at $207. In Manitoba, black steers averaging 490 lbs. were quoted at $229 while a small group of mixed heifers averaging 400 lbs. were reported at $190.

Feeder cattle futures were under pressure and there is no signal this rally in the feed grains is over. At the same time, the Canadian dollar ratcheted higher this past week. Rising COVID-19 cases in Canada and reversals of opening processes in the states of California, Texas, Colorado, Illinois, Michigan and New York have caused market uncertainty. Back in spring, the feeder market fell apart as states shut down; buyers experienced a feeling of “déjà vu” while monitoring daily announcements.

— 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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