Some imports may resume as soon as this month, once Mexico implements new trade protocols, said Jenny Lester Moffitt, undersecretary for marketing and regulatory programs.

The agency is tapping $165 million (C$235 million) from the Commodity Credit Corporation to bolster the fight against flesh-eating screwworm in Mexico and Central America, she said. It approved $109.8 million (C$156.4 million) last year.

The U.S. is working to block the pest that has spread through Central America because it can infest livestock, wildlife and in rare cases, people. Maggots from screwworm flies burrow into the skin of living animals, causing serious and often fatal damage.

Mexico identified screwworm in a cow in a southern state near the Guatemalan border in November, prompting Washington to halt imports.

Lifting the suspension would remove a barrier for the U.S. agricultural sector, as farmers and consumers prepare for rising prices and supply-chain disruptions if President-elect Donald Trump follows through on plans to slap tariffs on goods from Mexico and Canada.

To resume shipments, Mexico must set up USDA-approved holding pens where inspectors will check and treat Mexican cattle for screwworm before they cross the border, Moffitt said. USDA will start inspecting Mexico’s pens soon, she added.

“We could have some (imports) certainly before the holidays,” Moffitt said, and more in January.

U.S. meat companies and cattle feeders are eager for trading to restart after drought slashed the nation’s herd to its smallest size in decades.

“They’re just holding their breath right now,” said Ron Gill, a Texas A&M University livestock specialist.

USDA’s funds will aid the production and dispersal of sterile screwworm flies in Central America, Moffitt said. A Panama-based facility increased production to about 95 million sterile flies a week from 20 million over the past year, she said.

Sterile male flies are bred to mate with fertile female flies, so the screwworm population decreases until it eventually dies out. USDA said it eradicated screwworm from the U.S. in 1966 using this technique.

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There were limited yearlings on offer but quality packages were well bid. In Central Alberta, mixed larger frame medium flesh steers weighing just under 950 pounds were valued at $193 while red white-faced heifers with very little butter averaging 960 pounds reportedly sold for $173. In Southern Alberta, Simmental blended fleshier steers weighing 835 pounds were valued at $186. In Central Manitoba, Charolais based steers weighing just over 800 pounds were quoted at $188.

Calf prices were quite variable across the prairies. Vaccinated unweaned mixed steers averaging 510 pounds were quoted at $236 in Southern Alberta; unvaccinated unweaned black steers averaging 525 pounds in Southern Manitoba were quoted at $218. In Central Alberta, vaccinated weaned Charolais blended steers weighing 700 pounds were valued at $203 while similar quality heifers averaging 750 pounds reportedly sold for $183.

Notice the October 2020 feeder cattle futures are trading at a $7 premium to the January contract. There were instances were 400 to 500-pound calves traded $4 to $5 above week-ago levels.  Without going into detail, there are ideas that yearling numbers next fall will be rather snug due to the year-over-year decline in the 2019 Canadian and U.S. calf crops.

The 2019 Ontario corn harvest is only 20 per cent complete. This delayed harvest is coming on the heels of a very tight corn carryout.  Alberta barley prices jumped $10 to $15 last week.  Approximately four to eight per cent of the barley crop may remain out in the field over the winter so stocks are not as burdensome as earlier expected. Finally, cattle feeders have experienced significant equity erosion over the past six months.   All these factors are straining nerves. As one feedlot operator stated, ‘I’m on my last leg and it’s starting to wobble; if the buyer can’t get the cattle where I need them, I’ll just feed lower numbers this year”.

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In Central Alberta, larger frame lower flesh Charolais blended steers weighing 815 pounds were quoted at $197 while medium to larger frame fleshier mixed steers averaging 825 pounds were valued at $190. In Southern Alberta, larger frame medium flesh black heifers averaging just over 850 pounds were valued at $184.  Available yearling supplies were limited in the Eastern prairie regions which contributed to the firmer tone. Ontario buying interest was evident in Manitoba where red and white face steers weighing 840 pounds reportedly sold for $196.

Buyers report that there appears to be larger volumes of calves under 550 pounds this year.  The adverse weather has taken its toll. The market was hard to define with 600 to 800 pound feeders often trading at similar values. Steers had to be under 500 pounds to reach into the 220’s in many locations. In Central Alberta, mixed steers weighing 530 pounds were quoted at $212; however, in Manitoba, Charolais based steers averaging just over 550 pounds reached up to $223.   In Eastern Saskatchewan, Simmental based steers weighing 645 pounds were quoted at $211 and similar quality heifers weighing 630 pounds were valued at $184.

The February and April live cattle futures appear to be incorporating a risk premium due to the uncertainty in 2020 first quarter production. On the flip side, 2020 second quarter production looks to be extremely burdensome. Next spring, the fed cattle market will trade from one extreme to another and feedlots are adjusting their purchase prices accordingly.

– Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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The feeder market has recovered after a softer tone earlier in October. Favourable weather in southern Alberta over the past week caused Lethbridge-area feedlots to step forward more aggressively, especially in the lighter weight categories. Many auction barns held feature sales and larger supplies were met with moderate demand. Yearlings led the feeder complex higher and prices for 800-plus-lb. cattle were notably stronger in Manitoba and Saskatchewan. Transportation concerns have eased.

High volume of yearlings were offered this past week with ranchers finally moving cattle that would normally sell a month earlier. In central Alberta, larger-frame mixed steers with medium flesh levels weighing 925 lbs. were quoted at $188 while larger-frame lower-flesh mixed heifers averaging 925 lbs. were valued at $183. In central Manitoba, black medium- to larger-frame steers weighing 900 lbs. sold for $191 while Charolais-based heifers averaging 920 lbs. were valued at $180. Lethbridge-area feedlots were shopping outside the local area, which enhanced values across the Prairies.

Calves were generally stronger but health programs continue to dictate value. Unweaned, unvaccinated calves were discounted accordingly. Vaccinated unweaned tan steer calves weighing just over 500 lbs. reportedly sold for $230 in central Alberta; unvaccinated unweaned mixed steer calves weighing 515 lbs. were valued at $214 in Manitoba. Simmental blended vaccinated semi-weaned steers weighing 650 lbs. were valued at $218 in southern Alberta. Finishing feedlots placing calves in custom lots have been patient because of poor pen conditions.

Strength in the Canadian dollar has limited demand from south of the border. Weaker barley and feed wheat prices have also favoured feeding in Western Canada rather than shipping to the U.S.

Calendar year-to-date Canadian feeder cattle exports were 167,100 head for the week ending Oct. 5, up five per cent from last year. Western Canadian yearlings continue to trade near 52-week highs while U.S. feeder cattle are about $10 below year-ago levels.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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We’re in the last half of April and quality cattle will be hard to come by in 30 days; this time factor also contributed to the stronger market. Fed cattle exports and the Canadian slaughter are running sharply above year-ago levels; therefore, finishing operations are anxious to build up inventories prior to summer. Alberta orders stretched across the Prairies, setting the price structure. U.S. buyers were on the sidelines as the Midwest endured another major storm. U.S. auction market receipts continue to come in above year-ago levels but the market has easily absorbed these larger supplies.

In central Alberta, larger-frame tan mixed steers with medium flesh weighing 930 lbs. were quoted at $172; red mixed heifers averaging 875 lbs. were valued at $162. In southern Alberta, medium- to larger-frame Simmental-blended fleshier steers weighing 875 lbs. were quoted at $188 landed in the feedlot; Charolais mixed heifers with heavier flesh averaging 860 lbs. were valued at $165 in the same area. In central Saskatchewan, larger-frame Angus-blended steers weighing 830 lbs. were valued at $189.

October and November feeder cattle futures continue to trade near 52-week highs, which has kept the calf market well supported. Finishing feedlots were once again major buyers in the lighter weight categories. It appears that yearling numbers in the fall period will be lower than anticipated, and with April 2020 live cattle futures trading over $125, buyers have full confidence paying up for 500- to 600-lb. calves.

In central Saskatchewan, fresh mixed Angus steers weighing 525 lbs. were quoted at $244 while fall-born larger-frame mixed tan heifers weighing 560 lbs. were valued at $202. In southern Manitoba, Hereford steers weighing 700 lbs. traded for $205; black Angus-based heifers weighing just under 500 lbs. were quoted at a whopping $216.

— Jerry Klassen manages the Canadian office of Swiss-based grain trader GAP SA Grains and Produits Ltd. and is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339.

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Despite the strength in the fed cattle and healthy margin structure, Western Canadian feeder cattle prices were relatively unchanged from last week. Stronger buying interest was noted on shorter-keep cattle. Reports from the country stated a larger volume of high-quality backgrounded cattle are selling direct off-farm to finishing feedlots. This has tempered activity in the auction rings, where quality is unknown and flesh levels can be deceiving.

In southern Alberta, weight gain-controlled lower-flesh 850-lb. steers were actively moving from $163 to $165 off-farm; sales of larger-frame, medium- to lower-flesh steers were quoted from $160 to as high as $166 in central Alberta. Mixed heifers with lower flesh levels traded just above $150 in the same region.

Feedlot margins are quite healthy but there is concern for the summer time frame with the August live cattle futures trading at a $14 discount to the April contract. Long-time weaned calves were relatively unchanged in Alberta but in Saskatchewan and Manitoba, lighter-weight feeders were $2-$4 above week-ago levels. Mixed larger-frame tan steers from 600 to 625 lbs. were quoted from $200 to $204 in central Saskatchewan.

Feeder cattle exports to the U.S. have been quite dismal; nevertheless, the weaker Canadian dollar tends to influence eastern markets more than in Alberta. Pasture conditions will be optimal this spring and there appears to be rejuvenated interest from the mixed farmer/cattle producer. Feedlots also want some ownership of these lighter cattle even if they’re in a backgrounding lot for the next 150 days. Auction numbers in Saskatchewan and Manitoba have been disappointing so far this year, so there are ideas the 2016 calf crop may be smaller than earlier projections.

I still feel this feeder market has some breathing room to move higher. The beef complex from the wholesale trade to finishing feedlot has turned quite favourable in a short amount of time. We could see some sizeable week-over-week increases in the feeder market as finishing feedlots liquidate a large volume of fed cattle over the next month.

— 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.

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They’re not ignoring the possibility of trade disruptions in the U.S., said Ryder Lee, CEO of the Saskatchewan Cattlemen’s Association — “but neither are we lighting our hair on fire yet at each proposal you catch wind of.”

Lee expects to hear plenty of proposals between now and the Jan. 20 inauguration, and even through the next year. “And a lot of the things we’ll hear now are kind of spitballs. They’re waiting to see what sticks and what doesn’t.”

It’s certainly not the beef industry’s first rodeo. The sector has worked for years to reopen borders shut since the first case of BSE was found in an Alberta cow in 2003. And Canada only recently had mandatory country-of-origin labelling (COOL) struck down by the World Trade Organization.

“It’s a garden that needs tending all the time,” Lee said of trade issues such as COOL. But Canada has many staffers in Ottawa and D.C. who learned the ropes during BSE, he said.

Some newly elected officials and their staff also likely have some catching up to do, he acknowledged.

The SCA, however, sends money to the Canadian Cattlemen’s Association “to have those people on the ground, to have those relationships so that they’re not making it up as they go. They don’t have to. Cattle producers’ voices are heard there and understood.”

Those staffers are already talking to members of Congress and administration officials in D.C., Lee said, as well as people connected to Trump’s transition team.  In fact, firing up COOL again might already have proved to be “a bit of a lead balloon,” he said.

Lee’s basing that hope on a recent article from MeatingPlace.com, which reported Trump’s agricultural advisory committee has already talked the transition team out of reinstating COOL.

The push for COOL was coming from beef producers at a recent meeting organized by R-CALF, the South Dakota Stockgrowers’ Association and the Independent Beef Association of North Dakota, MeatingPlace reported.

Trade actions such as COOL are always a risk, Lee said. “But the nice thing about that one is it’s fresh enough everybody knows what happened at the WTO, what our retaliation list is.”

Bilateral deals

It looks like “the sun is setting” on the Trans-Pacific Partnership (TPP), said Lee. A Canadian government official has said Canada has until February 2018 to make a final decision on walking away from the deal, the Toronto Star reports.

Trump, however, has promised to drop the multilateral deal between 12 Pacific Rim nations, effectively killing it.

Canada could follow New Zealand’s lead, passing TPP at home to send a signal that we’re not talking protectionism, Lee said.

“The jewel of TPP for us was catching up on access to Japan,” said Lee. Canada had started negotiating a bilateral agreement with Japan, and TPP’s demise could add “a little more fuel to it,” he added.

Ultimately, Lee would like to see better access to Japan’s high-value market for Canadian beef. “Australia has about an 11 per cent advantage into Japan for beef exports. That’s more than your profit a lot of the time.”

Mexico is also an important market for Canadian beef, and China has “exploded” for the industry as Canada has gotten better access, Lee said.

Beyond that, markets depend on cuts, what kind of value chains are set up, which processor is involved, and how they’ll be supplying that business throughout the year.

But while Canada’s beef industry supplies other markets, the U.S. remains an important trading partner.

“A lot of the time it’s our home market that’s most important,” Lee said. “And the U.S., we can service it fresh and on a truck. So those two are always the biggest ones.”

— Lisa Guenther is a field editor for Grainews and Country Guide based at Livelong, Sask. Follow her at @LtoG on Twitter.

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Alberta-based Western Feedlots said Wednesday it will shut feeding operations early in 2017, citing poor market conditions and unfavourable economic factors in the province.

“The market we’re in now can’t get much more depressed,” said Martin Zuidhof, chairman of Alberta Cattle Feeders’ Association, a rancher who also runs a feedlot.

The price of young cattle is likely to face pressure, and if it leads to fewer cattle raised in the province, could jeopardize profits in the packing industry, he said.

The price of slaughter-weight cattle has dropped 30 per cent from a year ago.

Alberta’s two biggest beef packers, Cargill and JBS USA, declined to comment.

Barley and wheat are fed to cattle to fatten them for slaughter, and Western’s closure may also weigh on prices of those grains if feeder cattle numbers dip, Zuidhof said.

Canada is the world’s sixth-largest beef exporter, and Alberta raises more cattle than any other province.

Canadian cattle prices are mostly affected by U.S. prices and the value of the Canadian dollar, although domestic conditions play a role, said livestock industry analyst Kevin Grier. Consumer meat prices are unlikely to be affected by one feedlot’s closure, he said.

“In principle, it’s going to depress the demand for feeder cattle,” he said. Western’s closure may result in ranchers selling more young cattle to U.S. feedlots, he said.

Despite Western’s plan to stop fattening cattle, Alberta is not likely to lose more feedlots, the province’s agriculture minister said. Agriculture Minister Oneil Carlier said he spoke with a feedlot industry group last week.

“No one indicated that to me,” Carlier said in an interview. “There is good news on the horizon and I’m hoping the decision taken by Western Feedlots was… not going to affect the rest of the industry.”

Carlier said his government, criticized by Western, has supported the cattle industry, including increasing a loan guarantee program for producers.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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Canada’s Agriculture Minister Lawrence MacAulay and Trade Minister Chrystia Freeland on Monday announced an agreement with Turkey on export certificates for Canadian breeding cattle effective “immediately.”

Turkey, the government said, offers “the potential of being a top export market for Canadian breeding cattle” and improved access “will position Canada as a long-term, reliable partner in meeting Turkey’s import requirements.”

Bilateral merchandise trade between Canada and Turkey was valued at $2.4 billion in 2015, including agrifood exports such as lentils, soybeans, durum wheat, non-durum wheat and chickpeas.

Overall, the Canadian government noted, Turkey’s agrifood imports have grown at a compound annual growth rate of 5.2 per cent between 2012 and 2015.

The Canadian Livestock Genetics Association and the Canadian Beef Breeds Council said in the government’s release Monday they’re “very pleased to have this new market opportunity for Canadian livestock exporters.” — AGCanada.com Network

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