Western Canadian feeder cattle prices traded steady with week ago levels. The winter storm forecasted over the holiday season had little influence on buyer behaviour. Limited volumes were noted at most auction barns with many off for the holiday season. However, the market appeared to hold value with feedlot margins in positive territory and surprisingly top quality cattle came on stream late in the year. Buyers were rather tenacious, showing no hesitation on heavier weaned calves which were actually a bit firmer, despite the smaller crowd. Colder temperatures tend to harden up calves at this time year and cattle show their true colours, enhancing confidence amongst buyers.
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Order buyers had a book of interest at or slightly below the market so those players looking for ownership had to be aggressive at times. Available cattle were well bid with limited slippage on smaller frame animals; demand was firm for all categories and classes.
Mixed steers weighing from 600 to 650 pounds traded readily for $190 in Central Alberta; however, 625 pound larger frame steers reached up to $195 in Southern Manitoba. Average quality heifers of similar weight tended to trade at a $20 to $25 discount but this spread did narrow up to $17 on top quality strings. A small group of Angus cross mixed steers averaging 725 pounds were quoted at $179 in Southern Alberta.
Analysts have made downward revisions on U.S. second quarter beef and pork production which has supported price forecasts for the April May timeframe. The USDA cattle on feed report reflected a marginal year-over-year decrease in Dec. 1 feedlot inventories. Feedlot margins are hovering around $80 to $110 per head and there is potential for this structure to continue into the spring period. This will be supportive for the feeder market and strengthen the position of backgrounding operators moving forward.
I’d like to take this time to thank all those who have provided valuable insight of market activity over the past year. Comments from the front lines are always welcome and very useful. Wishing all readers a Merry Christmas and all the best in 2017.
— Jerry Klassen is manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits. He is also president and founder of Resilient Capital, which specializes in proprietary commodity futures trading and commodity market analysis. Jerry owns farmland in Manitoba and Saskatchewan but grew up on a mixed farm/feedlot operation in southern Alberta, which keeps him close to the grassroots level of grain and cattle production. Jerry is a graduate of the University of Alberta. He can be reached at 204-504-8339.
