Klassen: Stronger demand supports feeder market

Western Canadian feeder cattle markets jumped $2-$5 last week, after adverse weather caused buyers to shy away earlier in October. Major feedlot operators were very aggressive on quality yearling packages and heavier weaned vaccinated calves.

Many operations have limited ownership at this time of year because wet, cold weather conditions delayed purchases. The market appeared to have pent-up demand which added a shot of adrenalin to the buying enthusiasm. Order buyers were overwhelmed with calls from all players in the industry. Demand surfaced from all angles, including the cattle-feeding investor and the smaller backgrounding operator. The risk tolerance on lighter calves was enhanced due to the favourable seven- to 10-day weather forecast.

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In central Alberta, larger-frame tan steers averaging 835 lbs. were quoted at $205 while Angus-based heifers averaging 880 lbs. were valued at $172. In southern Alberta, bulkier-frame thin steers weighing 810-830 lbs. traded in the range of $210-$212. In southern Alberta, Angus-based mixed heifers averaging 950 lbs. were reported at $178.

Calves in eastern Saskatchewan and Manitoba carried a small premium over major Alberta markets. Vaccinated short weaned red mixed steers averaging 620 lbs. sold for $238 in east-central Saskatchewan; unweaned vaccinated mixed calves averaging 605 lbs. sold for $227 in central Alberta.

Alberta packers were buying fed cattle in the range of $151-$152 and feedlot margins are now hovering in positive territory. There’s been a minor rebuilding of equity over the past month, which is contributing to the stronger buying power. April live cattle futures continue to trade near contract highs, which confirms the price structure for the 800-plus-lb. feeder. Despite the firm feed grain market, the stars are aligning for a favourable spring period.

— 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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