Klassen: Feeder market experiences softer demand

Compared to the previous week, western Canadian yearling markets traded $4-$6 lower on average; calves were down $5 to as much as $10 in some cases. U.S. feeder cattle markets were also down $5-$8 from seven days earlier.

The extended period of negative feeding margins appears to be taking a toll on the feeder market. Many feedlot operators sat on the sidelines last week and were content to watch how the market develops. Buyers have been rewarded for waiting and many auction barns will hold feature sales over the next couple of weeks.

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The quality of yearlings and calves was quite variable, especially in southern regions of the Prairies. Tight supplies of feed and forage this past summer caused cow-calf operators to be creative with diets. However, recent rains have made pastures quite green and rich; therefore, feedlot operators are unsure how cattle will perform once entering the feedlots. The delayed harvest has resulted in a volatile feed grain market, with some premiums noted on barley for immediate delivery. Western Canada will likely have burdensome feed wheat supplies this winter but costs per pound gain will remain uncertain until the harvest is completed.

In southern Alberta, medium- to larger-frame mixed steers with minimal flesh weighing 930 lbs. reportedly sold for $174; south of Edmonton, medium-frame tan mixed steers with little flesh weighing just over 850 lbs. were quoted at $185 while mixed heifers of similar quality averaging 805 lbs. were valued at $175. Prices for yearlings were flat across the Prairies and the Alberta premium has eroded.

Near Lethbridge, a small group of red steer calves weighing just under 650 lbs. were valued at $203; in southwestern Manitoba, black steer calves weighing around 520 lbs. reached up to $216.

Alberta packers purchased fed cattle this week from $226 to $230 delivered this week, down $6-$7 from last week. Live bids were quoted from $135 to $137, which is $15-$20 below breakeven pen closeout values.

— 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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