Compared to last week, Western Canadian feeder cattle markets traded $2 to $3 on either side of unchanged. Most auction barns held feature sales over the past week and steady demand was noted across the prairies. Calves appeared to gain momentum late in the week with favorable weather enhancing buying interest; however, yearlings were quite variable with fleshier cattle coming on stream this week. Pen conditions in Southern Alberta have improved but corn silage operations are ongoing. On top of this, many farmer cattle producers are struggling to finish up harvest operations before bringing in fresh replacements. Talk in the industry is that pen space for custom feeding is once again hard to come by this year.
In Central Alberta, larger frame lower flesh Charolais blended steers weighing 815 pounds were quoted at $197 while medium to larger frame fleshier mixed steers averaging 825 pounds were valued at $190. In Southern Alberta, larger frame medium flesh black heifers averaging just over 850 pounds were valued at $184. Available yearling supplies were limited in the Eastern prairie regions which contributed to the firmer tone. Ontario buying interest was evident in Manitoba where red and white face steers weighing 840 pounds reportedly sold for $196.
Buyers report that there appears to be larger volumes of calves under 550 pounds this year. The adverse weather has taken its toll. The market was hard to define with 600 to 800 pound feeders often trading at similar values. Steers had to be under 500 pounds to reach into the 220’s in many locations. In Central Alberta, mixed steers weighing 530 pounds were quoted at $212; however, in Manitoba, Charolais based steers averaging just over 550 pounds reached up to $223. In Eastern Saskatchewan, Simmental based steers weighing 645 pounds were quoted at $211 and similar quality heifers weighing 630 pounds were valued at $184.
The February and April live cattle futures appear to be incorporating a risk premium due to the uncertainty in 2020 first quarter production. On the flip side, 2020 second quarter production looks to be extremely burdensome. Next spring, the fed cattle market will trade from one extreme to another and feedlots are adjusting their purchase prices accordingly.
– 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.