Western Canadian feeder cattle prices were generally steady with week-ago levels but the market is poised for stronger prices in the fall period.
Thursday's U.S. Department of Agriculture report was negative for feedgrain prices as corn stocks will be sufficient to satisfy feeding requirements until the new crop. At the same time, U.S. farmers intend to increase corn acres this spring, causing a major fundamental shift in the feedgrain complex. Even if Canadian barley acres are down 10 per cent, does an eight million-tonne barley crop matter if the U.S. produces 350 million tonnes of corn? Even the most northern feedlot in Alberta will be encouraged to use U.S. corn next fall.
Western Canada's auction barns were busier last week due to favourable weather. In central Alberta, Charolais-cross steers with medium flesh weighing just over 600 pounds sold for $152 per hundredweight (cwt). Black Angus-cross steers weighing 750 lbs. traded for $132 landed in southern Alberta feedlot. A solid-weight group of exotic heifers weighing 750 lbs. were brought into the same feedlot at $114/cwt. Alberta packers were buying cattle at $114-$115/cwt last week, which also supported the feeder market.
Dressed prices in Nebraska reached up to historical highs touching $204/cwt, up $4 from last week. In Oklahoma, medium- to large-frame steers weighing 780 lbs. averaged $136/cwt. U.S. choice wholesale values were slightly softer for nearby delivery, but packers are anticipating stronger demand later in April.
I'm expecting a $2-$4/cwt jump in the feeder market over the next couple weeks. Lighter cattle under 600 lbs. could be up $3-$5/cwt. The barley market made a yearly high last week, trading at $291/cwt delivered into the Lethbridge area. The high cost of feedgrains will temper the upside for feeder cattle prices in the short term. However, corn and barley stocks are sufficient until new-crop, and with larger upcoming production overhanging the market, the feeder market will start to incorporate the change in the feeding margin structure for the final quarter of 2013.
-- 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 firstname.lastname@example.org%22">email@example.com for questions or comments.
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