Feedlot Margins Underwater Amid Weaker Beef Demand

Western Canadian feeder cattle markets traded steady to $10 lower on average compared to seven days earlier, as of August 29. The current value of deferred live cattle futures suggests that feedlot margins may remain in negative territory for a prolonged period. Stronger feed grain prices and potential barley market rally over the winter are also weighing on the feeder complex.

Ontario buying interest was more prominent last week, supporting the market in central Alberta. A group of 25 Charolais-based yearling steers sold for $437/cwt at the VJV sale in Ponoka, while a package of 189 red and black Angus heifers traded for $420/cwt.

A cattle producer from central Alberta sold 15 mixed steers off grass with processing records for an average price of $486/cwt. Dryland Cattle Trading Corp. reported 65 mixed steers sold for an average price of $515/cwt, while a mid-sized group of Charolais-cross weaned steers averaged $635/cwt.

Alberta packers were buying live cattle on a dressed basis in the range of $495-$502/cwt delivered, down $16-$23/cwt from the previous week. Using a 60 per cent grading, this equates to a live price of $297-$301/cwt. Breakeven fed cattle prices are hovering at $330/cwt.

Cattle producers are expanding the herd at the top of the market, while beef demand is expected to be lower in 2027. The industry was in the early stages of expansion according to Statistics Canada's cattle inventory report. The market will contend with larger feeder cattle supplies and lower beef demand, resulting in lower prices.