Klassen: Renewed confidence lifts feeder cattle market

Western Canadian feeder cattle markets traded $3-$5 above week-ago levels on average; stronger buying interest was noted on short-keep cattle with prices quoted $5 to as much as $8 higher.

Feedlot operators stepped forward more aggressively with ideas that yearling supplies will dwindle over the next month. Quality cattle are starting to thin out at this time year. Orders from Ontario stretched all the way into western Saskatchewan and this demand appeared to set the price structure. Discounts were noted on fleshier types, especially in the heavier weight categories; however, the risk-averse sentiment from past weeks was cast to the wayside. We’ve seen feeding margins near record levels over the past month and strength in the nearby and deferred live cattle futures reinforced confidence.

A mixed group of steers averaging 925 lbs. sold for $1.67 direct off-farm in southern Alberta; in western Saskatchewan, lower-flesh backgrounded 900-lb. steers reached up to $171 for first-week-of-June delivery. The market has a bit of a premium for deferred delivery, which is odd for this time of year. A small group of Simmental-cross heifers weighing 820 lbs. sold for $170 in central Alberta.

Grassers and lighter-weight cattle were also well bid, with interest from all angles. Alberta- and Ontario-based interest was noted with ideas that yearling supplies will be quite snug in the late summer period. Large-frame lower-flesh Angus-based steers averaging 730 lbs. were quoted at $195 in central Alberta; quality Charolais-cross and Simmental-based steers averaging 725 lbs. reached up to $197 in southern Manitoba. Larger-frame lower-flesh 700-lb. heifers traded for $175 just north of Calgary. Cow-calf operators continue to look for quality replacement heifers, which is also underpinning the feeder complex.

News that China was lifting its ban on U.S. beef also set a positive tone. This could be a main demand factor that absorbs the surge in second- and third-quarter beef production. The feeder market has some bullish features to absorb in the short term.

— 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.

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