November 10, 2011
Canadian feeder cattle prices stronger
Western Canadian feeder cattle prices were steady and rose by CAD2 (US$2) on average last week while Alberta fed cattle prices reached CAD110 (US$108) per hundredweight, up CAD3 (US$3) from a week ago, according to Winnepeg-based commodity analyst, Jerry Klassen.
Alberta fed cattle prices reached CAD110 (US$108) per hundredweight, up CAD3 (US$3) from a week ago, and this strength spilled over into the feeder complex.
A group of 100 Charolais-cross steers averaging 875 pounds, looking green and a bit fleshy, sold for CAD139 (US$136) per cwt in southern Alberta. Calves were also stronger with a nice pen of red Limo-cross steers averaging 570 pounds selling for CAD153 (US$150) per cwt in central Alberta.
Fed cattle futures surged higher on tight market-ready supplies. Despite packing margins dropping deeper in red ink, cash prices jumped to CAD124 (US$122) per cwt on a live basis in Nebraska; a few loads of high-quality dressed cattle traded at CAD200 (US$196) per cwt. Buying enthusiasm surged for all weight classes of feeder cattle with the US market showing steady gains of CAD3 (US$3) to CAD5 (US$5) per cwt. In Kansas, a fresh group of steers weighing 431 pounds sold for CAD199 (US$195) per cwt.
The feeder market is functioning to encourage expansion in Canada and the US. However, the industry continues to experience herd liquidation in the US southern Plains as winter wheat conditions remain poor. This environment has created an abnormally high price structure further enhanced by record fed cattle prices.
Looking forward into next fall, western Canadian feeder cattle prices could be CAD10 (US$10) to CAD15 (US$15) per cwt above current levels. August 2012 feeder cattle futures touched record highs of CAD150 (US$147) per cwt as the market is anticipating lower available supplies. December 2012 live cattle futures also reached all-time highs over CAD130 (US$127) cwt; the market is factoring in a risk premium due to the uncertainty in beef production in the fourth quarter of 2012.