Klassen: Strong demand supports yearling market

Compared to last week, Western Canada yearling markets have traded between $2 and $3 either side of the same value. Heavier calves over 700 lbs. were priced $2-4 more on average. Calves under 700 lbs. were quite variable. There were a limited number of offers in the lighter weight categories and the market remains in price discovery mode. Larger chains of yearlings with quality genetics sold on the high side of the market. Small groups of less than 10 heads or mere handfuls were at the bottom of the scale. In some cases, traders were getting “just get it” commands, which made it difficult to get ownership. Feedlot operators are smelling the market and it’s ‘red hot’. Order buyers had a case of orders below current price levels, which limited any slippage. Needless to say, feedlot operators will have to reassess again next week. Quality cattle seemed to win over fresh grass cattle, but there was still a noticeable reduction. Feed grains are not cheap, and efficiency prioritizes fine, low-flesh grasses. Alberta feedlot operators were looking south of the border for indications of market behavior, but prices in the United States also rose by $3 to $5 on average. Freight discrepancies were observed between the major feeder regions of Alberta and Saskatchewan.

South of Edmonton, larger frame mixed steers with full health fresh off the grass weighing just over 1,000 pounds. were listed at $218; north of Saskatoon, medium to large mixed red steers on the grass weighing just over 1,010 pounds. sold for $215. In the Lethbridge area, Charolais steers weighing 935 pounds. were valued at $230 landed at the feedlot and heifers of similar quality and weight were listed at $213.

Wider-framed Simmental mix steers with full health records fresh off the grass weighing a touch over 815 pounds. were valued at $240 landed at the southern Alberta feedlot. Heifers of similar quality and weight averaging 800 lbs. were listed at $215 delivered to the same region. Southeast of Calgary, a larger group of white-faced red calves out of the grass averaging a shadow over 700 pounds. were valued at $242 landed at the feedlot and heifers of similar weight and quality were valued at $220 delivered.

The veal market was difficult to define. Given the limited number, even small quality groups did not generate significant interest. In central Alberta, a pair of black steers weighing 575 lbs. were listed at $262 and the black heifers weighed an average of 560 pounds. dropped the hammer to $232. The current feeder market has made cow-calf pairs look like a steal. Various quality pairs often trade between $2,000 and $2,500.

Feeder cattle futures have a finance charge of $4 between August and September. Waiting is not an option as these cattle will be more valuable over time. Looking further ahead, the May 2023 feeder contract is trading at a $10 premium to the September 2022 futures contract.

—Jerry Klassen is President and Founder of Resilient Capital, which specializes in commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via its website at ResilCapital.com.

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