Western Canadian feeder cattle values were steady to $2 per hundredweight (cwt) higher last week as year-end pent-up demand stepped forward more aggressively.
While winter conditions tempered buying enthusiasm from major feedlot operators, there appeared to be more interest from the small farmer/feedlot operator that will place cattle in the custom lot. Demand from backgrounding operators was also noted for feather light calves.
Alberta packers were buying fed cattle in the range of $127 to $128/cwt, which is about $4/cwt above most pen closeouts. Feedlots have experienced a period of positive margins which has rejuvenated the overall feeder complex. A weaker Canadian dollar, along with firm wholesale beef values, helps secure positive packing margins so the feeder market appears to be on solid footing with the healthy economics throughout the industry.
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Larger-framed Simmental heifers weighing just over 600 pounds sold for $145/cwt landed in a southern Alberta feedlot. Black Angus-based steers with all records averaging 620 pounds were quoted at $169/cwt in the Lethbridge area. Quality discounts were noted on cattle that would struggle through the transition, but any animal that looked to withstand the transport and weather conditions was well bid. Backgrounding operators were picking away at pee-wee calves under 400 lbs., which traded from $160 to $170/cwt. The smaller operations can cuddle these bawlers through the cold spell and time is on their side for lower cost per pound gain.
Statistics Canada estimated the all-wheat crop at a whopping 38 million tonnes and barley at 10.2 million; both sharply higher than last year. Feedgrain values will remain under pressure given these larger supplies and I’m expecting an onslaught of farmer selling after the holiday season. Weaker barley values will continue to support replacement cattle prices.
I’m a little concerned about fed cattle prices after the New Year, but the weaker Canadian dollar will temper the downside. In the past couple of years, consumers have severely reined in food spending in January and February, resulting in slower beef movement. This may stem the upside in the feeder market over the next couple of months.
— 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] for questions or comments.
