Klassen: Feeder market may have overextended to the upside

For the week ending July 4, there have been no feeder cattle gross sales in Western Canada as a consequence of holidays on July 1 and July 4. Main public sale markets within the U.S. have been additionally closed or had restricted numbers on provide. Costs quoted from south of the border have been regular to $4 increased on common however the market was laborious to outline.

From a seasonal perspective, the feeder market trades sideways by July earlier than marginally growing in August. The market tends to stagnate throughout September after which grinds decrease in October. Costs for calves are likely to make seasonal lows throughout October or early November. Cattle feeders predict the identical kind of worth behaviour in the summertime of 2025. I at all times advise cow-calf producers to keep away from promoting calves in October as a result of that is normally the bottom worth within the fall.

For the week ending July 4, Alberta packers have been shopping for fed cattle within the vary of $293-$295/cwt fob feedlot within the Lethbridge space. Values are regular to $2/cwt decrease than seven days earlier. In Alberta and Saskatchewan, cattle on feed 150 days or extra as of June 1 have been 359,177 head, up 2.9 per cent or 9,957 head or from the June 1, 2024, variety of 349,220.

Within the U.S., cattle on feed 150 days or extra as of June 1 have been 3.013 million head, up 253,000 head from 12 months earlier. The fed cattle market is predicted to grind decrease over the subsequent month which can weigh feeder cattle costs.

Over the past week of June, 1050-pound steers in central Saskatchewan have been valued $390/cwt in central Saskatchewan for early September supply. For August and September supply, 1,000 pound steers have been buying and selling within the vary of $395-$400/cwt in central Alberta.

The break-even fed cattle worth for these steers in January 2026 is $330/cwt. This contains all prices equivalent to feed, yardage, processing and so forth. The break-even for feed and curiosity prices solely is within the vary of $317-$320/cwt. It’s essential to notice that the February 2026 dwell cattle futures are reflecting an Alberta fed cattle worth of $286/cwt. These cattle are severely below water.

The margin construction doesn’t look a lot totally different for calves. In central and southern Alberta, increased high quality calves weighing 550 kilos have been buying and selling round $585 for October and November supply. The break-even on these calves when completed for August and September 2026 is round $315/cwt. The August 2026 dwell cattle futures are reflecting an Alberta fed cattle worth of solely $270/cwt. Curiosity prices have added one other layer of prices.

Previous historical past tells us that feedlot operators have to endure one full spherical of feeding with detrimental margins earlier than there’s a severe downward adjustment on the feeder market. Due to this fact, it’s essential that cattle producers to promote calves and yearlings earlier, somewhat than later.

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