Klassen: Yearling prices stay sluggish, calves hold value

Compared to last week, western Canadian yearling prices were steady to $4 lower; calves and grass cattle were relatively unchanged.

Early in the week, the mood was quite depressing; yearlings were under pressure with feedlot buyers on the sidelines. By Friday, the market appeared to be well established. Backgrounding operators have been active sellers over the past couple of weeks, especially in Saskatchewan and Manitoba. It’s that time of year when forage and silage supplies tighten up on smaller operations.

At the same time, major feedlot operators have been buying small volumes on a scale-down basis. Flesh levels are also quite on certain packages and heavier yearlings are severely discounted. Feedlot operations that were not well hedged earlier are waiting for lower values. Order buyers are not speculating on ownership; if they don’t have the orders, they’re not raising their hands. Yearling cattle don’t pencil out given the deferred live cattle futures. Secondly, the fact that many packers are not showing bids reflects basis uncertainty.

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In central Alberta, mixed steers weighing just over 1,000 lbs. were quoted at $134; mixed medium- to larger-frame steers fed a higher grain ration averaging 900 lbs. were valued at $142. In southern Alberta, a larger group of black steers weighing 925 lbs. were valued at $147 and red mixed heifers averaging just under 800 lbs. were reported at $150. In Manitoba, Charolais-based steers weighing 855 lbs. were quoted at $154 and similar-quality heifers weighing just over 900 lbs. were valued at $139.

Calves and grass cattle were firm last week. In southern Manitoba, black steers averaging 540 lbs. were quoted at $231 and their older brothers weighing just under 700 lbs. were valued at $207. In central Saskatchewan, mixed steers weighing 710 lbs. were quoted at $187. A small group of black steers weighing 730 lbs. were quoted at $182 in southern Alberta. South of Edmonton, reports had a small group of mixed steers weighing 610 lbs. trading for $215 and black heifers averaging 615 lbs. selling for $185.

Ideas are that once these lighter calves come on the fed market next winter, beef demand will have returned to normal. There is no doubt that U.S. feedlots will have a competitive advantage next fall with lower corn values. This may be underpinning prices in Manitoba and eastern Saskatchewan.

— 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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