For the week ending May 2, western Canadian feeder cattle markets were relatively unchanged compared to seven days earlier.
The heifer discount to steers continues to narrow.
Steady buying interest from Ontario set the price structure in the eastern Prairie regions, while cattle west of Yorkton, Sask., flowed to major lots in Alberta.
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Stocker operators shopping for grassers are having a hard time securing ownership due to the intense competition. Comments from the trade suggest that backgrounding lots that are usually empty over the summer are now running at 50 to 60 per cent capacity.
Compared to past years, it appears that finishing lots are placing larger volumes of lightweight calves in custom lots to secure yearling supplies in the fall.
At the St Rose Auction in Manitoba, a small package of Charolais cross steers weighing 948 pounds traded for $388.
At the Ponoka, Alta., sale, a smaller package of Charolais steers weighing 890 lb. dropped the gavel at $405. At the same sale, black mixed steers averaging 850 lb. on silage and limited rolled barley ration with full health records sold for $414.
In Lloydminster, larger frame Simmental heifers carrying lighter butter evaluated at 850 lb. were last bid at $389.
The Dawson Creek market report had smaller packages of mixed steers averaging 740 pounds trading for $454.
At the Killarney, Man., sale, medium to larger frame red steers with a mean weight of 700 lb. reportedly notched the board at $451. At the same sale, larger, wide-frame, black heifers evaluated at 708 lb. silenced that crowd at $437.
In southern Alberta, Charolais cross, weaned, preconditioned steers weighing slightly more than 600 lb. were valued at $550. The Lloydminster market report had Charolais heifers averaging 600 lb. trading for $505.
East of Calgary, black Limousin based steers weighing slightly more than 500 pounds reportedly sold for $580. North of Calgary, a smaller package of mixed heifers scaled at 540 lb. reportedly traded for $525.
Alberta packers were buying fed cattle in the range of $487-$$490 per hundredweight, up $4-$7per cwt. from the previous week. Using a 60 per cent grading, this equates to a live price of $292-$294 per cwt.
Break-even pen closeouts are in the range of $260-$265. Profitable feeding margins continue to enhance demand for replacements.
Wholesale choice beef was trading at US$345 per cwt. on April 30. This was up US$11 per cwt. from seven days earlier and a fresh historical high.
The wholesale beef market has incorporated a risk premium due to the uncertainty in domestic beef production and uncertainty over beef imports.
Stronger wholesale values result in higher fed cattle prices.
Feedlot operators often use the current price of fed cattle to determine their allowable purchase price on replacements. However, when using the live cattle futures as the price discovery, feeder cattle values have been bid up, so feeding margins are in negative territory in the deferred positions.
Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. He can be reached at 204-504-8339 or via his website at resilcapital.com.
