Klassen: Feeder market softens on adverse weather

Compared to last week, western Canadian feeder cattle prices were quite variable due to adverse weather. Rain and snow plagued much of the Prairies, which dictated buying behaviour.

Yearlings traded within $5 on either side of unchanged; major feedlots focused on local cattle, which caused the Alberta markets to trade at a small premium to other areas of Western Canada. Calf markets were $3 to as much as $10 lower in some cases. Unweaned calves were a drag on the overall market, with buyers incorporating a risk discount. Many feedlots are focused on corn silaging, which has been delayed this year. There are only so many hands available. This environment resulted in a softer market sentiment, especially on those feeder cattle that need immediate processing.

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Larger-frame Simmental-based yearling steers with minimal butter averaging 885 lbs. were valued at $205 in central Alberta; black mixed heifers weighing 850 lbs. traded for $182. In central Saskatchewan, Charolais-based steer calves averaging just under 800 lbs. were valued at $206 landed in the feedlot; similar quality heifer calves averaging 700 lbs. traded at $199 in the same region.

Higher-quality vaccinated pre-conditioned calves traded at a sharp premium to unweaned bawlers. Those cow-calf producers that put in the extra work were rewarded this past week. Larger feedlots simply backed away on feeders that would need extra care and attention. Buyers were given orders similar to menus with many constraints. In southern Manitoba, red mixed unweaned treated heifers weighing just over 500 lbs. were quoted at $201; similar-quality steers weighing 510 lbs. traded for $238.

Alberta packers were buying fed cattle in the range of $150-$152 on a live basis, up $2-$3 from week-ago levels. The deferred live cattle futures are also percolating higher. There are quite a few feature calf sales over the next week, so the market will continue to consolidate at the current levels. Buyers are becoming more finicky because there’s limited margin for the June-July fed cattle market and they want cattle that will perform.

— 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.


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