Excessive snowfall and colder temperatures in Alberta and Saskatchewan have tempered feeder cattle movement over the past week. Therefore, we haven’t seen a major test of market activity.
Lightweight calves have continued where they left off in 2010 with 300- to 400-pound animals trading in the range of $140 to $150 per hundredweight Heavier replacement steers in the 7-weight category were $115 to $125 in central Alberta, similar to December 2010.
Nearby supplies of feeder cattle in Western Canada are relatively tight and comments from the industry suggest a short run of replacement cattle in January. The seasonal increase in available numbers from the farmer backgrounding operator will only come on the market in February and March.
The Nebraska and Kansas feedlot regions will receive snow and experience below-normal temperatures this week. This should keep the fed market well supported because feedlots are very current with production.
The live cattle market has potential to incorporate a risk premium due to the uncertainty in beef production. Prolonged periods of wet and cold tend to drive the slaughter market higher, but dampen buying enthusiasm for feeder cattle in the short term. However, once feedyard conditions improve, feedlot managers will be well positioned to bring in replacement cattle. This usually causes a slight spike in the feeder market as demand experiences a temporary surge.
Looking forward, feeder cattle prices for May show a slight premium over the nearby market. Beef production is expected to decline in the final quarter of 2011, which should keep late spring and summer feeder prices well supported near record highs. Beef demand is also expected to improve longer-term, with lower unemployment, higher consumer confidence and an increase in consumers’ disposable income.
— Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He writes an in-depth biweekly commentary, Canadian Feedlot and Cattle Market Analysis, for feedlot operators in Canada. He can be reached by email at [email protected] or 204-287-8268 for questions or comments.
The material contained herein is for information purposes only and is not to be construed as an offer for the sale or purchase of securities, options and/or futures or futures options contracts. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. The risk of loss in futures trading can be substantial. The article is an opinion only and may not be accurate about market direction in the future. Do not use this information to make buying or selling decision because adverse consequences may occur. This information may be wrong and may not be correct about current market conditions in all areas of Canada. This is an opinion only and not based on verified facts.