Klassen: Feeder market surges like a rocket — steers hit $330

Western Canadian feeder cattle prices were extreme volatile and relatively undefined as the market made fresh historical highs. U.S. weekly beef production continues to come in below expectations and the market appears to be in a “supply shock.”

At the same time, market-ready supplies of slaughter cattle are rather tight moving into August causing packers to be more aggressive for their upcoming requirements. Alberta packers were buying fed cattle in the range of $166/cwt to $167/cwt while cattle in Nebraska traded from US$162/cwt to US$166/cwt.

Favourable margins in the feedlot sector have renewed buying enthusiasm for replacement cattle and no price seems to be too high. Cattle buyers are starting to get busy with the “just get’em” orders and with minimal numbers available, the market has provided new meaning to the phrase “madness of crowds.”

Feeder cattle prices have surged like a rocket and if buyers blink a couple times, the quotes are $20/cwt higher. A small group of Charolais-based steers just over 400 pounds sold for a whopping $330/cwt in southern Alberta. The industry is starting the new-crop yearling campaign with smaller groups of 900-pound plus cattle trading in the range of $205/cwt to $210/cwt delivered southern Alberta. USDA reported fancier 600 pounds steers weighing 600 pounds sold for $300/cwt in Bassett, Nebraska. The Canadian market has some catching up or U.S. buyers will drain supplies out of Western Canada.

Fresh market news had the USDA forecasting the 2014 calf crop down 2 per cent in comparison to 2012. There were no inventory numbers last year due to budget constraints but the market speaks louder than any reports because all the information is factored in. The U.S cow slaughter has slowed sharply the last couple of months but beef cows and replacement heifers were both down 2 per cent in comparison to July 1 2012.

It will be difficult to define the feeder market until volumes increase. Feeder cattle price discovery is now focused on breakeven purchase price foJerry Klassen r the winter period and then add about 20 per cent in order to stem the demand.

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.

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