Western Canadian feeder cattle prices were relatively unchanged from week-ago levels. Many auction barns are in holiday mode and the shortened holiday week further shrunk market activity. In any case, feedlot operations on both sides of the border are focused on selling fed cattle and assessing current financial damage rather than bringing in replacements.
The feeder market is viewed like a deceptive poker hand; it continues to bluff that it can’t go lower, only to turn another trump round. Indeed, the year-over-year increase in beef production is always overhanging the market, but the economic uncertainty is the wild card. Equity markets are at pre-Brexit levels and the Canadian dollar has staged a comeback with firming energy prices.
Alberta fed cattle prices also posed a minor recovery, trading in the range of $144-$147, $3-$5 above week-ago levels; however, this time feeder cattle remained under pressure. Feedlot operators are not falling for this minor bounce because the market is experiencing lower lows and lower highs on each wave.
Comments were sparse from the country this week. The market is hard to define on thin volumes, especially with the variation in quality. Most groups are made up of stragglers with wide weight ranges of fleshier cattle. In central Alberta, mixed steers averaging 700 lbs. were quoted at $210; Angus-based heifers weighing just over 700 lbs. were quoted at $171. Larger-frame steer calves averaging 500 lbs. were quoted from $220 to $230 while heifers of similar weight were trading from $195 to $200. Feedlots are basing purchases on a fed cattle price of $140, which is stemming any potential strength.
Statistics Canada’s latest report pegged Canadian barley acres at 6.3 million, down from 6.5 million last year. However, yield potential is rivaling the 2013 record and the trade is anticipating a barley crop of 8.7 million tonnes, compared to the 2015 production of 8.2 million. The barley market needs to encourage demand through lower prices, which is somewhat supportive for feeder cattle longer-term.
— 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.