Feeder market experiences volatility at historical highs
For the week ending May 30, western Canadian feeder cattle markets traded steady to as much as $10 lower on average.
Drier grass conditions in certain regions of Manitoba and central and northern Saskatchewan may have contributed to the softer tone at certain locations.
Many feedlot operators continue to sit on their hands for the time being.
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Alberta packers were buying fed cattle on a dressed basis at $502 per hundredweight, up $2 per cwt. from the previous week.
Using a 60 per cent grading, live prices would equate to $301 per cwt. Current break-even pen closeouts are around $265 per cwt. Margins are healthy on cattle in the feedlot, but incoming replacements are sharply under water, given the value of the October and December live cattle futures.
In central Alberta, Simmental-based steers weighing 900 pounds on barley and silage diet with full processing data were valued at $405 per cwt. f.o.b. farm. In east-central Alberta, black wide-frame Limousin-based steers averaging 825 lb. reportedly sold for $460 per cwt.
The Killarney, Man., market report had red heifers weighing slightly less than 900 lb. selling for $391 per cwt. At the St Rose sale, a smaller package of red heifers with a mean weight of 795 lb. were marked at $425 per cwt.
The Ponoka market report in Alberta had a handful of red mixed steers evaluated at 709 lb. on hay and silage diet with full preconditioning data moving through the ring at $500 per cwt. At the same sale, tan heifers scaled at 700 lb. on a diet of silage and pellets with full processing data dropped the gavel at $486 per cwt.
At the Westlock, Alta., sale, a smaller package of Angus Simmental cross 650 lb. heifers on hay and barley diet with full processing records sold for $467 per cwt.
At the St Rose sale, the market report had black heifers averaging 616 lb. trading for $512 per cwt. In the Calgary region, a smaller package of Charolais weaned steers weighing slightly more than 600 lb. were quoted at $573 per cwt.
The St Rose Auction market report had Charolais steers averaging 555 lb. moving through the ring at $610 per cwt.
A buyer in central Alberta reported that Angus cross weaned heifers on the card at 560 lb. sold for $530.
The Saskatoon auction market report had good quality cow-calf pairs trading in the range of $6,500 to as high as $7,000. This is a fresh record.
The U.S. border closed to Mexican feeder cattle on May 11 for a second time due to expanding cases of new world screwworm. This hasn’t significantly influenced the feeder market in Canada or the United States so far.
Alberta prices for feeders in the range of 500-700 lb. are a $10-$15 per cwt. premium to major markets in the U.S. such as Oklahoma City.
The U.S. Department of Agriculture estimated U.S. fourth quarter beef production at 6.65 billion lb., down from the 2024 final quarter output of 6.882 billion lb.
If the U.S. border stays closed to Mexican feeders for a longer period of time, U.S. fourth quarter beef production forecasts would likely drop to 6.400 billion lb., and this would be extremely bullish for American and Canadian feeder cattle.
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