Cheaper Feed Seen Leading To Better Feeder Prices

– Herb Lock, Farmsense Marketing

“It looks at this point like we’ll have a lot of cattle feed, one way or the other.”

Ac t i v i t y in the Manitoba cattle market was relatively quiet during the week ended July 2, with many auction yards either closed for the summer or running at reduced capacity. While the market should remain on the subdued side in the lead-up to the fall run, the outlooks in the grain markets could bode well for feeder values going forward. Demand for the few cattle that were moving was steady on the week, with the usual premiums for higher-quality animals.

“It looks at this point like we’ll have a lot of cattle feed, one way or the other,” said analyst Herb Lock of FarmSense Marketing in Edmonton. In addition to the likelihood that more of Canada’s grain crops will grade as feed, he said, there will also be ample supplies of DDGS (dried distillers grains with solubles) from the U. S. Canadian cattle numbers are also declining, lessening the demand for those ample feed supplies.

“Lots of feed always translates into lower prices for feed, and that always translates into better prices on the feeder and the calf side,” said Lock. He expected U. S. feedlots would be aggressive buyers of Canadian feeders this fall, which would be supportive for prices, especially as those buyers weren’t in the market at all a year ago.

However, that demand won’t be for the younger calves, as they need to stay in restricted feedlots. He estimated current feeder prices are about five to 10 per cent better than they were a year ago, and should continue to improve.

“Our packers here are killing good numbers, and seem to be fairly competitive with the U. S. guys,” Lock added.

While feeder cattle prices may have room to improve, the same can’t be said for the fat cattle market. Fat cattle prices were slipping, he said, and leaving the feedlots in a difficult situation. As soon as the feedlots pay less for grain, they need to pay more for the feeder cattle, cancelling out any potential benefit to them from the reduced feed costs. If slaughter values decline at the same time, that squeezes them out further still, causing margins to deteriorate.

While feed supplies are expected to be large this year, Lock said the quality of that feed remains to be seen and localized feed issues could come to play in the cattle markets.

In Manitoba, pastures and hay crops are generally in good shape, although on the wet side in some areas. The latest reports from Manitoba Agriculture, Food and Rural Initiatives said the saturated soils were leading to reduced fibre content in some areas, which cuts into weight gain.

As a result, the government said, some producers were feeding their cattle at home in an effort to improve weight gain, while also limiting the damage to pastures from hoof action on the saturated ground.

FROM THE AUCTION FLOORS

Note: All prices in Canadian dollars per hundredweight. These prices also generally represent the top one-third of sales reported by the auction yard.

Ashern Livestock Mart: Closed until mid-August.

Gladstone Auction Mart: Too few cattle were marketed this week for a report. The last auction for the summer will be held July 13 and the market will reopen Aug. 16.

Grunthal Livestock Auction Mart: A report is not available due to the small number of cattle at the auction. Auctions will be held at Grunthal every other week in July and August.

Heartland Livestock Services, Brandon: A total of 307 cattle were on offer in Brandon during the week. A1 and A2 steers traded from $78 to $82.50; D1-D2 cows, $52-$60, age verified $56-$64.25; feeder cows, $45-$52; shells $30-$44; and good bulls, $68-$74.

Feeder steers weighing 800-900 lbs. sold from $95 to $104.25; 700-800 lbs., $100-$113; 600-700 lbs., $105-$114.25; 500-600 lbs., $110-$121.75; and 400-500 lbs., $110-$124.

Feeder heifers weighing 800-900 lbs. sold from $85 to $92.50; 700-800 lbs., $95-$106.50; 600-700 lbs., $98-$107.25; 500-600 lbs., $100-$108; and 400-500 lbs., $100-$110.

Auctions will be held at Brandon every Tuesday during the summer.

Heartland Livestock Services, Virden: A report was not available from Virden this week. Auctions will be held every Wednesday during the summer.

Killarney Auction Mart: Closed until mid-August.

Pipestone Livestock Sales: Closed until the end of August.

Ste. Rose Auction Mart: The next sale will be held Aug. 12.

Taylor Auctions, Melita: The next sale will be held Aug. 19.

Winnipeg Livestock Sales: There was no sale held in Winnipeg this week due to the Canada Day holiday. Sales will be held on Fridays only during the summer.

– Phil Franz-Warkentin writes for Resource News International

(RNI), a Winnipeg company specializing in grain and

commodity market reporting.

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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