Compared to last week, western Canadian yearling prices were $2-$4 higher on average while calves were steady to as much as $5 higher. Alberta packers were buying fed cattle on a dressed basis in the range of $273-$275 delivered; live prices were quoted at $161 f.o.b. the feedlot.
There is a severe backlog of market-ready supplies in Alberta. After two weeks of lacklustre trade for fed cattle, all three packers were showing interest steady bids for nearby and deferred delivery. Favourable basis levels for fed cattle in the deferred positions appears to be supporting the cash feeder market. As soon as feedlots stop moving fed cattle out, they stop buying replacements and vice-versa. Packer buying activity tends to trickle down throughout the whole supply chain. Last week, packers were more aggressive and feeder market responded immediately.
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The spring sales campaign is starting off on a firm tone. Alberta pen conditions are favourable. Steers averaging 800-850 pounds were quoted in the range of $195-$200 landed in a southern Alberta feedlot and 850- to 900-pounders were valued $184-188 delivered feedyard. In central Alberta, mixed medium-frame steers with light flesh averaging 825 lbs. on small grain ration with full health records dropped the gavel at $195. In the same region, a small beautiful package of Angus-blended heifers with full health background averaging 850 lbs. were valued at $166 in the ring.
Northwest of Winnipeg, Charolais-based steers with very little butter averaging 760 lbs. were quoted at $206 in the ring; Simmental-blended heifers weighing 725 lbs. were reported at $187. In central Saskatchewan, red mixed steers averaging 730 lbs. were valued at $209 in the ring while similar-quality and -weight heifers were reported at $178.
Calves appeared to hold a small premium outside the major feeding regions of southern Alberta. Major feedlots appeared to focus on mid-weight to heavier replacements and pastures south of Highway 1 are on the dryer side. North of Calgary, 630-lb. mixed steers dropped the gavel at $232 and run-of-the-mill red heifers weighing 605 lbs. sold for $195. South of Edmonton, a larger group of tan steers averaging 450 lbs. soared at the sky-high level of $265. In central Saskatchewan, red mixed steers weighing 525 lbs. were valued at $239. In Manitoba, Charolais steers weighing 525 lbs. dropped the gavel at $244 and Angus-based heifers weighing 540 lbs. were quoted at $209.
Placements in Canada and the U.S. have been larger than anticipated over the past few months. We now find feeder cattle supplies outside feedlots down from year-ago levels and the tighter supply situation is resulting in higher prices. Feeder cattle prices tend to experience a seasonal rally from May 1 through July 15. Feedlot operators are jumping ahead and securing ownership ahead of this surge in the price structure.
— Jerry Klassen 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 or via his website at ResilCapital.com.
