All weight categories posted higher prices this last week in Western Canada. In central Alberta, quality Charolais-based stockers weighing 535 pounds touched the magical $250 per hundredweight (cwt) level; shorter-keep, medium-flesh exotics weighing just over 800 lbs. traded at $196/cwt at the same sale.
Scarcity was the main concern amongst buyers this week. Stronger prices can sometimes draw in new surges of buying enthusiasm and this week’s market makes month-ago purchases look like a steal. Pastures are in excellent condition across the Prairies and recent strength in feed grain prices has done little to temper the upward momentum.
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Feedlot inventories in Alberta and Saskatchewan have been running 10 per cent above year-ago levels throughout the winter. Given the current margin structure, operators once again sent the “just get ’em” orders to ensure sufficient numbers into the summer months. The year-over-year increase in feedlot inventories continues to enhance demand for all categories of replacements. Healthy cow-calf pairs were selling in the range of $2,800 to $3,400 this week, which is also a historical high.
Alberta packers bought fed cattle in the range of $148/cwt; Canadian wholesale beef prices held value but softer weekly values were noted in the U.S. Keep in mind wholesale beef prices are up 28 per cent over year-ago levels. April U.S unemployment numbers came in at 6.3 per cent, compared to 7.5 per cent last year and 8.2 per cent in 2012. Employment appears to be improving at a faster pace and higher income levels continue to drive retail beef consumption. The U.S. Department of Agriculture estimates second-quarter beef production will experience a year-over-year decline of three per cent, while third-quarter production will be down 4.6 per cent from 2013. Fed cattle have held up fairly well, somewhat counter-seasonal for this time of year.
Southern Alberta barley prices were on fire this week. It was not long ago that feed grain supplies were burdensome but the dynamics have changed. The fundamentals for feed barley are significantly tighter than earlier anticipated and acres will be down 10 per cent this spring. USDA also lowered the 2013-14 corn carryout once again on Friday. This is a red flag for the feeder market and the feed grain complex will be extremely sensitive to weather conditions this summer.
— 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.
