November 8, 2011

Canada's Alberta feed market heads firm into winter

In October, feed grain prices in the key southern cattle feeding region of Alberta have risen, but have now stabilised and appear rather stable heading into the winter months, according to a Lethbridge feed merchant.

Feed barley prices at Lethbridge have rallied over the past month from around US$190 per tonne up to US$215, said Jim Beusekom of Market Place Commodities.

The barley market has leveled off in the US$210-$215 area, with bids and offers both described as steady, he said.

"It doesn't feel like the market will go down, and on the other hand it doesn't feel like there is much reason for it to go higher right now," said Beusekom.

Feed wheat prices have also climbed from about US$190 at the end of September to current levels near US$220 in Lethbridge, he said. However, moving north into central Alberta, on-farm feed wheat prices were under pressure from an abundance of supplies.

Declining pool return outlooks (PROs) from the Canadian Wheat Board were causing farmers in the region to look at dumping their lower-quality wheat supplies into the feed market, he added. "There simply aren't enough buyers to take away the supply."

Small amounts of dried distillers grains with solubles (DDGS) were also finding their way into Alberta feedlots, but Beusekom said volumes were low as barley remains more attractively priced.

A seasonal pattern would see feed barley and wheat prices hold at current levels through January, and then start declining in February and March, he said.

Through the winter, feedlots will be buying on a week-to-week basis, which will limit the potential for large price swings one way or the other, he added.