Get ready for a wild ride as we dive into the world of cattle markets and uncover some intriguing insights! The cash feeder market has taken an unexpected turn, breaking away from its usual dance with the feeder cattle futures. But here's where it gets controversial... while the futures market soared, the cash market told a different story, leaving many scratching their heads.
Let's start with the basics. Yearling markets in western Canada experienced a mixed bag of price movements, with some trading higher and others lower. Calf prices took a dip, with an average decline of $3-$8 per cwt. However, feather-light calves, those weighing less than 450 pounds, held their ground, with prices steady to $10 higher on average.
Now, here's the part most people miss. The Canadian cash feeder market seemed to go its own way, ignoring the $20 per cwt. jump in feeder cattle futures. Why? Well, it's all about supply and demand. With limited supplies of yearlings off grass, feedlots were willing to pay premiums to secure their herds.
Take a look at the numbers. At the Lloydminster sale, Charolais yearling steers averaging 940 lb. fetched a price of $490 per cwt. Similarly, in Manitoba, mixed yearling steers weighing 901 lb. traded for $504 per cwt. These prices showcase the demand for quality cattle, even with the futures market pointing in a different direction.
But why the disconnect? It's a complex web of factors. Feedlots, for instance, often base their purchase decisions on the current fed cattle price rather than future projections. And with a weaker fed market last week, feeder cattle prices softened.
Here's another twist. Despite the rally in the futures market, packers weren't buying many cattle. Why? Well, they have their strategies too. With lower fed cattle supplies expected over the winter, packers are using contracted cattle and adjusting slaughter pace to manage the situation. It's a delicate balance.
Now, let's talk about consumer spending and its impact on beef demand. It's a simple equation: a one per cent increase in consumer spending equals a one per cent increase in beef demand. And with U.S. GDP reaching 3.8 per cent in the second quarter of 2025, the cattle producer's prospects look brighter.
But here's the catch. Canada is facing limited economic growth, and the fed cattle market isn't expected to reach new highs when demand is at seasonal lows. Feedlot operators know this, and they're not falling for the stronger feeder cattle futures. They understand the probability of a cash fed market rally in the first quarter of 2026 is slim.
So, what's the takeaway? Cow-calf producers are advised to sell their feeder cattle now rather than holding them over the winter. And for backgrounding operators planning to sell yearlings next spring, it's crucial to keep an eye on finishing feedlot margins. When they turn negative, bids for replacements may drop.
This article has explored the complex dynamics of the cattle market, highlighting the importance of understanding market trends and making informed decisions. Now, it's your turn. Do you agree with the insights shared? Share your thoughts in the comments below and let's spark a discussion!
