Fed and feeder cattle markets have incorporated a risk premium due to the uncertainty in beef production. Adverse weather has plagued much of the U.S. Midwest over the past couple of months and the six- to 10-day forecast calls for above-normal precipitation.
Compared to last week, western Canadian yearling markets traded $2-$3 higher on average while calves were $3 to as much as $6 higher. Alberta packers were buying fed cattle at $270 on a dressed basis, which is on the high side of the range from seven days earlier. Alberta feedlot margins are in positive territory, which is rejuvenating demand for replacements. The quality of feeders was quite variable last week; fleshier cattle appear to be more prevalent, especially for heifers. Finishing feedlot operators were more aggressive on calves because they can control the rate of gains in the critical 600- to 800-lb. growth stage.
Larger-frame Angus-blended steers with medium flesh levels weighing 890 lbs. were quoted at $174 in central Alberta, Fleshier mixed and tan heifers averaging 900-925 lbs. were valued between $153 and $156 in the same region. Near Lethbridge, a larger group of tan medium-flesh steers weighing just under 900 lbs. was quoted at $185.
Pen conditions in southern Alberta are considered fair to good, which is making it easier to bring in the lighter weight categories. Feedlots in the irrigated regions have sufficient forage while fodder or silage supplies are rather snug in other regions of Western Canada. This situation has favoured demand for calves from southern Alberta feedlots while major feeding operations north of Calgary are focusing more on yearlings.
Charolais blended steers weighing 510 lbs. were valued at $252 landed in Lethbridge area feedlot; black and mixed heifers averaging 525 lbs. were quoted at $208 in the same area. In southern Manitoba, Simmental-based steers averaging 580 lbs. were quoted at $226 while Hereford blended heifers weighing just over 600 lbs. sold for $186. Higher-quality packages in the eastern Prairies were also very strong but demand was limited at the higher levels.
— 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.