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Klassen: Mixed tone for feeder cattle

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Published: February 14, 2012

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Western Canadian feeder cattle were steady to $2 per hundredweight weaker while heavier feeder cattle were down $2-$4/cwt. Fed cattle in Alberta sold for $112/cwt, also down $2 from the previous week, which spilled over into shortkeep replacement cattle.

Larger groups of quality cattle continue to hold value but buyers are more willing to discount any adverse characteristic.

The stronger Canadian dollar and softer wholesale prices weighed on all weight categories. Charolais-cross steers averaging 565 pounds sold for $176/cwt at a pre-sort sale in central Alberta. A larger group of mixed exotic steers weighing 885 lbs. reached $140/cwt at a regular auction ring sale in east-central Alberta.

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Alberta crop conditions improve: report

Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.

The U.S. market was mixed last week; feeder cattle in the southern Plains were steady to $3 higher while the market in northern states was actually down $2-$3/cwt. Ranchers in Texas, Kansas and Oklahoma continue to aggressively purchase stocker cattle, given the favourable winter wheat and pasture conditions.

The U.S. Department of Agriculture estimated 2012 corn acres at 94 million on its baseline projections, down from analysts’ estimates of 95 to 97 million. Cattle feeders have been anticipating weaker feedgrain values in the second half of 2012 but this may not be the case. Keep in mind the Canadian barley carryout is also expected to drop to historical lows this July. Stronger feedgrain values will temper additional strength in the feeder market.

Fed and feeder cattle will have a difficult time moving higher unless we see an increase in wholesale beef prices. Choice product is trading below the March 2011 highs while fed cattle are 20 per cent higher. Packers are cutting back on the weekly slaughter given the negative margin structure.

— Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He writes an in-depth biweekly commentary, Canadian Feedlot and Cattle Market Analysis, for feedlot operators in Canada. He can be reached by email at [email protected] or at 204-287-8268 for questions or comments.

About The Author

Jerry Klassen

Contributor

Jerry Klassen 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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