Klassen: Feeder market stronger but volatile

The Western Canadian feeder cattle market appeared to gain momentum this week.  Feeder cattle prices were extremely volatile compared to last week trading $5 lower to as much as $10 higher in the Eastern Regions.  When April live cattle futures were higher, the bids flowed more aggressively but on days when the futures struggled, buyers pulled in the reins as if the fed market fell apart. Secondly, breakeven pen closeout values on 800 pound steers are near $200 for next spring. Hoping for a $30 rally from now until May in fed cattle prices is a bit optimistic. Having said that a small group of mixed steers weighing just under 900 pounds sold for $247 in the Edmonton area. Shorter keep cattle were rather firmer this week but justifying every tick the market is a futile experience.

The quality of calves is improving at this time of year and cow calf producers are not holding back on sales. Western Canada experienced one of the largest volume weeks of the year which also limited the upside. Yearling volumes are on the downswing and pre conditioned vaccinated weaned calves traded at $5 to $10 premium above the average. Some producers prepare for the market and others simply accept the “fate of the price”.  Buyer beware mentality usually results in a discount. Manitoba and Eastern Saskatchewan values appeared to trade at a $8 to $12 premium over Alberta at times. There was talk of Central Alberta calves moving all the way to Ontario given the current price spreads, which is uncommon.

Mixed steers averaging 560 pounds with no special features were quoted at $285 landed in Southern Alberta; heifers averaging 550 pounds came in at a cost of $266 in the same region. Larger frame mixed steer calves averaging just over 600 pounds were quoted at $287 in Southwest Manitoba.

It’s amazing how negative media news always comes out when the market is near the highs. However, knowing the public memory is good but short didn’t seem to inhibit buying activity.  Next April, a study may show that beef prevents cancer.

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.

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