Western Canadian cattle prices were extremely volatile this past week, trading $2 higher to as much as $5 lower in comparison to seven days earlier.
The feeder cattle market appeared to stall out at the higher levels, with most auction barns experiencing smaller volumes. Spring-like temperatures and seeding preparation kept the small cattle farmer/producer at bay, while larger feedlot operations were watching weakness south of the border. Alberta packers were buying fed cattle in the range from $199 to $201.50, marginally higher than last week. However, the fed market may be topping out for the time being. The anticipation of softer fed prices later in summer caused buyers to lower bids for replacements over 700 lbs. Cattle under 700 lbs. held value in Alberta, but in the eastern Prairie regions were $2 to $5 lower, largely due to softer demand from U.S. buyers.
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Overall, prices are still very strong from a historical perspective, with a small group of exotic steers weighing just under 800 lbs. selling for $265 in central Alberta. Charolais-cross steers averaging 700 lbs. were quoted at $288 in southern Alberta. The environment was characterized by smaller groups of various quality, which made the feeder market harder to define. The Canadian dollar also appears to be slowly strengthening, hindering the competitive advantage for Canadian beef producers.
U.S. feeder cattle prices were $5 to $8 lower on average, which spilled over into Western Canada. U.S. feedlot and packing margins are very tight amid building stocks of all meat products according to the recent cold storage report. U.S. feedlot placements during March were 1.809 million head, the same as last year but significantly above pre-report trade expectations. After seasonally strong fed cattle prices in late March, the U.S. fed market feels vulnerable moving forward and I believe this stemmed buying enthusiasm for feeder cattle in Saskatchewan and Manitoba.
Canadian barley acres are projected to reach 6.5 million in 2015, up 10.2 per cent over last year, according to Statistics Canada’s initial planting survey. Despite the year-over-year increase in acreage, barley stocks are expected to be historically tight at the end of 2015-16, which should keep prices relatively firm. Canadian feedlots are factoring in higher cost per pound gains for next winter, stemming the upside for lighter-weight feeders.
— 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.
