Feeder market returns to historical high levels
For the week ending April 17, western Canadian feeder cattle markets traded steady to as much as $10 higher compared to seven days earlier.
The market has fully recovered from U.S. tariff uncertainty. Strength in the fed cattle market and healthy feeding margins continue to drive replacement prices upward.
Alberta packers were buying fed cattle in the range of $470-$475 per hundredweight. Using a 60 per cent grading, this equates to a live price of $282-$282 per cwt.
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In Ontario, processors were showing bids from $480 to $485 per cwt.
Break-even pen closeouts in Alberta are in the range of $255-$265 per cwt. f.o.b. feedlot, while profitability starts in Ontario at $253 per cwt.
North of Saskatoon, backgrounded Angus cross steers on light barley, pellet and silage ration with full processing data scaled at 1,000 pounds were valued at $365 per cwt. f.o.b. feedlot.
At the Ponoka, Alta., sale, a larger group of mixed steers weighing 900 pounds dropped the gavel at $383.
In central Alberta, a smaller package of medium to larger frame, red mixed steers averaging slightly more than 800 lb. reportedly traded for $415.
South of Calgary, a larger package of Angus cross, medium to lower flesh heifers with a mean weight of 810 lb. were valued at $385 f.o.b. farm. It appears that feedlots were more aggressive for heifers lighter than 825 lb.
In the Calgary region, medium to larger frame black steers carrying lighter butter weighing slightly more than 700 lb. sold for $465. In the same region, tan heifers with medium to lower flesh on the card at 715 lb. were valued at $420.
The Dawson Creek Auction report had a small package of black steer calves weighing 668 lb. notching the board at $463, and a handful of black heifer calves with a mean weight of 688 lb. selling for $392.
Calves weighing less than 625 lb. were quite variable across the Prairies with singles and groups of less than five head trading at a discount to average values.
In central Alberta, a smaller group of Angus cross heifers weighing 642 lb. were quoted at $440, and Simmental based steers with a mean weight of 635 lb. were valued at $505.
The St Rose Auction Market report had Charolais heifers weighing slightly more than 600 lb. ringing the bell at $498. At the same sale, Charolais steers scaled at 591 lb. traded for $529.
In central Alberta, Charolais steers averaging 500 lb. were last bid at $580, and in central Saskatchewan, British-based steers on the card at 502 lb. were quoted at $558. The Westlock market report had a pair of black steers weighing 356 lb. moving through the ring at $610.
In Alberta and Saskatchewan, cattle on feed 150 days or longer as of April 1 were 265,693 head, down 19.4 per cent, or 63,935 head, from April 1, 2024.
Market-ready fed cattle supplies are down from last year but will increase over the next two months. Larger available fed cattle supplies will result in lower fed cattle prices during June and July.
Feeding margins are going to move into negative territory on both sides of the border during June and July. This will weigh on the feeder cattle market, but we’re not expecting the market to fall apart.
During the summer and fall, the first major round of heifer retention is expected in both Canada and the United States. This will lower the supply of feeder cattle, which will limit the downside in the feeder market.
Usually, the finishing feedlot operator needs to experience one full round of negative margins before there is a significant downward shift in the price structure.
Jerry Klassen is the president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. He can be reached at 204-504-8339 or via his website at resilcapital.com.
Source: producer.com