Klassen: Feeder market absorbs double-edged sword
By Jerry Klassen, GFM Network News
via Canadian Cattlemen - June 4, 2019
Compared to last week, western Canadian feeder cattle markets traded $3 to as much as $6 lower.
The feed grains market is writing the story for the feeder market. August feeder cattle futures lost $10 this past week and U.S. cash feeder prices were also down US$4-$6 compared to seven days earlier. Ideas are that six million to 10 million U.S. corn acres will not get planted this year. The corn market may experience a setback but the fundamentals suggest we could see US$6-per-bushel corn before this corn crop is harvested. Central Saskatchewan and central Alberta have received less than 40 per cent of normal precipitation. On Friday, if a feedlot needed 2,000 tonnes of barley, the offer was closer to $300 per tonne delivered Lethbridge, up $25 from last week.
Alberta packers were buying fed cattle at $245 on a dressed basis, down $8 from last week. Breakeven pen closeouts for May are around $160 live and this week’s price equates to $145; therefore, unhedged cattle are in red ink by nearly $200 per head and feedlots fear this will become worse before the environment improves.
In the Lethbridge area, Angus-based steers averaging 965 lbs. were quoted at $160. In central Alberta, the market held up; a small group of medium-frame mixed steers averaging 850 lbs. were valued at $188. In the same region, red mixed medium-flesh heifers weighing 840 lbs. were valued $170.
Calves were quite variable across the Prairies. The eastern Prairie regions were readily trading $3-$5 below prices in the major feeding regions of Alberta. In central Saskatchewan, tan mixed steers weighing 640 lbs. were quoted at $206; in central Alberta, red white-faced steers averaging 655 lbs. were reported at $215.
There is a fair amount of uncertainty moving forward and feedlot operators are taking a cautious approach...