Western Canadian feeder cattle prices were steady to as much as $4 per hundredweight (cwt) lower by the end of the week as the U.S. market came under severe pressure. Stronger corn values, and the announced closing of the Cargill beef slaughter plant at Plainview, Texas set a negative tone across North American feeder cattle markets.
Alberta packers were buying fed cattle in the range of $113-$115/cwt, down $2 from seven days earlier, which also set feeding margins back in red ink quite significantly. The overall environment stemmed New Year buying enthusiasm, with adverse winter conditions also contributing to lower feeder values.
Charolais-cross steers weighing just under 600 pounds sold for $146/cwt in east-central Alberta; red Angus-cross steers weighing 650 lbs. sold for $143/cwt at the same sale. In southern Alberta, exotic steers weighing 800 lbs. were quoted at $135/cwt landed in the feedlot. The market appeared to be firmer moving east in Manitoba with 550-lb. mixed steers averaging $152/cwt as U.S. buyers supported the market.
Wholesale beef values were slightly softer this week, resulting in the lower fed market. Carcass weights are sharply above year-ago levels and first-quarter beef production will be higher than earlier anticipated. Retail beef prices remain firm but grocers are having a hard time selling stocks at historical high prices. Consumer spending has eased in the post-holiday season and restaurant traffic has also slowed.
I don't think this feeder market will fall apart but the nearby economics have definitely tempered the earlier momentum. Look for the market to stabilize over the next couple of weeks and the fed market needs to rebound so feedlots have more incentive increase buying interest. In the short term, the fed market feels sluggish.
-- 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 email@example.com for questions or comments.