Klassen: Winter conditions weigh on feeder market

(Photo courtesy Canada Beef Inc.)

Western Canadian feeder cattle prices traded steady to $3 lower compared to seven days earlier. The market tends to soften during the first major snowstorm each year, but the established risk discount was not as severe as in past years.

Notwithstanding the cold temperatures and adverse weather conditions, feedlot operators continued to step forward fairly aggressively on all weight categories. Order buyers who could easily discern fleshier types at the same time appreciated the fact that these cattle will fare better in the feedlot under these conditions.

Transportation issues interrupted the western flow of feeders to Alberta from Manitoba and Saskatchewan; however, the markets in eastern Saskatchewan and Manitoba experienced minimal slippage.

A smaller group of Charolais-cross steers with medium flesh levels averaging just over 550 lbs. traded for $205 landed in southern Alberta feedlot. A string of larger-frame, medium-flesh mixed steers averaging 675 lbs. sold for $185 in east-central Alberta. Larger-frame lower-flesh mixed tan steers averaging 775 lbs. traded for $174 in the same region. The markets were relatively flat across the Prairies but the northern regions of Alberta and Saskatchewan traded at a minor discount to the main markets of central and southern Alberta.

Alberta fed cattle prices traded at $150 for the second week because available supplies are somewhat tighter than anticipated. Nearby feeding margins remain in positive territory but deferred margins for June are struggling. The expected surge in second-quarter beef production may temper the upside in nearby feeder cattle prices, especially if the Canadian dollar continues to percolate higher.

Statistics Canada on Tuesday estimated the barley crop at 8.8 million tonnes, up from 8.2 million last year. There is no shortage of feed grains with the larger barley crop and sharp year-over-year increase in feed wheat supplies.

— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.


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