Klassen: Feeder market ends year on firm tone

Compared to last week, western Canadian feeder markets traded $3-$5 higher. Auction barns in the major feeding regions of Alberta had limited numbers on offer last week; therefore, major operations were sourcing feeders from farther distances.

While most feedlots are carrying sufficient numbers, year-end buying was able set the market on a firm tone. April live cattle futures continue to hover at contract highs, which spurred buying late in the heavier weight categories. There were not many 850-plus-lb. cattle on the market last week so buyers had to be more aggressive to secure ownership. On Thursday, a U.S. Department of Agriculture report showed lower overall placements with the bulk of the year-over-year decrease coming in the lighter weight categories. The report was viewed as somewhat positive for the fed cattle market during the summer of 2019 which bolstered buying interest for calves under 600 lbs.

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Higher-quality larger-frame steers averaging 850 lbs. were quoted from $187 to $190 in southern Alberta while heifers of similar weight sold for $172-$175. In central Alberta, red and tan mixed steers averaging 700 lbs. sold for $195 while Angus-based heifers averaging 715 lbs. were quoted at $176. A small group of red mixed steers averaging just over 700 lbs. was quoted at $204 in southern Manitoba.

In central Alberta, vaccinated larger-frame Simmental mixed steer calves averaging 605 lbs. sold for $210; heifers of similar quality and weight were quoted at $175 in the same region. The market in southern Manitoba reflected a $1-$2 premium over Alberta in the lighter weight categories. Hereford mixed medium-frame steers with fleshier qualities averaging 610 lbs. were quoted at $213 in western Manitoba while similar-weight and -quality heifers were valued at $184.

Canadian year-to-date feeder cattle exports to the U.S for the week ending Dec. 8 were 191,863 head, up a whopping 66 per cent over year-ago levels. The Canadian dollar continues to deteriorate, enhancing feeder cattle demand from south of the border; however, this is a double-edged sword for the feedlot operator. Feed grain prices have also edged higher due to the year-over-year increase in offshore movement of barley and wheat. The forecast is calling for colder temperatures next week, which could temper off-farm logistics. This could cause the feed grain market to incorporate a risk premium.

— 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.

About the author

Columnist

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. Klassen 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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