Wholesale beef prices have been trading near historical highs, which has supported fed and feeder cattle markets. Beef demand during the summer months has been slightly higher than anticipated, causing the combined weekly slaughter pace in Canada and the U.S. to exceed expectations. Favourable weather across the Midwest and Eastern Seaboard has encouraged barbecues and restaurant patio traffic.
Alberta packers were buying fed cattle in the range of $119 to $120, similar to week-ago levels, but with many packers short bought, the industry is expecting stronger cash trade over the next couple of weeks. Back-to-school usually results in a slowdown in beef consumption, but it looks like the weekly slaughter will maintain current levels into the fall. The market is expecting a sharper year-over-year decline in fourth-quarter beef production, so the supply situation favours a stronger fed market longer-term.
Most pen closeouts are above break-even, and with barley continuing to slide lower, break-even costs should slowly move lower through September. Yearlings are starting to trickle into the auction market across Western Canada and were $3-$6 per hundredweight (cwt) higher on average. In east-central Alberta, a mixed group of steers weighing 700 to 750 pounds averaged $160/cwt; higher-quality Charolais-cross steers weighing just over 850 lbs. were quoted at $155/cwt in the Lethbridge area. Calf values were not well established with the lower volumes, but the industry is expecting cattle under 500 lbs. to trade at the $170-$185/cwt level when early calves come on the market.
Feedlot inventories are at seasonal lows and there appears to be renewed optimism in the feedlot sector with lower barley prices. The corn harvest is just around the corner and larger volumes of U.S. corn will be imported into Western Canada later in October and November, keeping a lid on the feedgrain complex.
-- 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 for questions or comments.