Canfax report

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This cattle market information is selected from the weekly report from Canfax, a division of the Canadian Cattlemen’s Association. More market information, analysis and statistics are available by becoming a Canfax subscriber by calling 403-275-5110 or at www.canfax.ca.

Fed cattle lower

The fed steer weighted average was $159.97 per hundredweight last week while heifer trade was too light to establish an average.

The strongest Chicago live cattle prices since March and a weaker loonie supported prices, but the Canadian cash market drifted down 34 cents per cwt. on steers.

Recent improvement in the grid base price took some cattle off the cash market.

Both Alberta packers were active cash buyers. Producers negotiated lift dates, hoping to fatten cattle a few more days. Delivery would happen in one to three weeks.

There was a higher percentage of B4 or dark cutter cattle, up 78 percent this year.

Western Canadian prices are at a premium over eastern cattle, resulting in more eastern fed cattle going west to be slaughtered. This could explain the larger number of B4 cattle.

Many yearlings placed in late summer were bought with break-evens around $140, which means they are fetching good margins.

Cattle supplies are tight, and Alberta packers might try four-day work weeks. Last year there was only one week in the first quarter in which packers put in a full 40,000 head slaughter week.

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In the United States, dressed sales in the north were US$4-$5 higher than the previous week, while southern live cattle traded $3-$4 higher. Packers paid mostly $121-$123. It was the first time since early July that fed cattle prices averaged more than $120.

Cows weaken

D1, D2 cows ranged C$93-$104 to average $98.50, down 85 cents. D3 cows ranged $80-$95 to average $87.13. Rail grade cows ranged $184-$189.

Prices slipped late in the week as more cows showed up at auction, attracted by recent stronger prices and warmer weather.

Cow slaughter tends to peak in late January or early February before declining. Packers are current with their cow inventories.

Cows from the bovine tuberculosis depopulation appear to have mostly been processed.

Feeders mixed

The calf market was mostly steady, while feeders heavier than 700 pounds faced pressure.

Eastern Canadian buyers supported the market on the heavier steers.

Auction volumes increased as strong prices and the improved weather encouraged producers to market backgrounded calves.

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Auction volumes should seasonally increase into the spring. Feeder exports were small last fall, leading to expectations of more feeders going to market this spring.

Calf prices tend to rise into spring, while heavier feeders tend to be flat with a softer tone in March-April.

Chicago live cattle futures for fall 2017 are at a steep discount to nearby contracts. With more feeders expected to be marketed across North America, the upside on heavier feeders appears limited.

That said, profitable feedlots have been supporting the feeder market, and there will likely be continued volatility in the markets and in the Canadian dollar.

U.S. beef rises

The Choice cutout was up US$2.50 per cwt. at $191.60 and Select rose 94 cents at $187.49 Jan. 19.

Weekly Canadian cutouts to Jan. 14 were down C$4.98 on AAA at $247.37 and AA was down $1.64 at $245.66.

Consumer demand was typically sluggish because this time of the year is when the holiday bills arrive.

The AAA-Choice spread was -$4.76/cwt, narrowing from – $14.92 last week.

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