Klassen: Feeder cattle market volatility continues

Compared to last week, western Canadian feeder cattle markets traded steady to $5 higher on average. For the second week in a row, the markets were quite variable across the Prairies but shorter-keep yearlings appeared to lead the charge higher.

In Alberta, quality 900-lb. steers were once again touching the $190 level and 800-lb.-plus steers were readily moving from $193 to $197. Feeders in the 600- to 800-lb. category experienced minor strength while calves under 600 lbs. were solidly $3-$6 higher.

Nearby live cattle futures made fresh contract highs, which set the tone for the overall feeder complex. The improving margin structure enhanced buying enthusiasm and year-end buying contributed to the stronger prices; however, there were pockets where prices were similar to week-ago levels. Feedlots were focusing on local cattle or those that didn’t have to be transported longer distances. This may have caused some auctions in Manitoba and Saskatchewan to trade at a minor discount to major Alberta markets. Colder temperatures were evident in Western Canada and southern Alberta received light snow almost every day.

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In central Alberta, medium- to larger-frame fleshier tan steers weighing just over 900 lbs. were quoted at $189 and medium-frame fleshier mixed heifers averaging 850 lbs. were valued at $175. In central Saskatchewan, larger-frame medium- to heavier-flesh black steers weighing 910 lbs. were quoted at $184.

Feeders that will come on the fed market from June through August will experience tighter margins. North of Calgary, larger-frame Angus-blended steers weighing 650 lbs. were quoted at $199 and black heifers averaging 680 lbs. were valued at $180. Red mixed steers averaging 740 lbs. were quoted at $195 in southern Alberta.

In Manitoba, Simmental mixed steers averaging 540 lbs. were valued at $236 and black mixed heifers weighing just over 500 lbs. were quoted at $199. In southern Alberta, tan mixed steers with some vaccination shots averaging 485 lbs. were valued at $247 at the feedlot and mixed black heifers weighing just over 450 lbs. were reported at $208.

U.S. feeder cattle prices were steady to $3 lower on average and this may have also tempered the upside in Western Canada. Feeder cattle imports from the U.S. are coming in larger than expected as Alberta and Saskatchewan feedlot inventories are running 18 per cent above the five-year average.

— 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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