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.

Steers up

The Canfax weighted average steer price last week was $160.43 per hundredweight, up $2.09. Heifer trade was too light to establish an average.

Both major Alberta packers procured cattle, and most trade was dressed at $272 per cwt. delivered.

A few cattle did not sell and were carried over, but market-ready supply should remain manageable.

The cash market was supported by much stronger U.S. cash prices and a futures rally. The U.S. monthly U.S. beef in cold storage report came in smaller than expected.

The Canadian fed cash-to-futures basis weakened almost $6 and is now at parity.

Weekly western Canadian fed slaughter to Feb. 18 rose 11 percent to 31,585 head.

Western Canadian carcass weights fell nine to 10 pounds last week. Steer carcasses are 36 lb. lighter than last year.

In the United States, the rally was sparked by trade at the Fed Cattle Exchange, where prices surged US$4-$6 higher than the previous week to $124-$125.

Dressed sales in the north were $195-$196, up $5-$6.

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U.S. market-ready supplies are a lot tighter than they were at this time last year, and carcasses weights are also lighter. Steers are down 12 lb. from last year.

Cows steady

D1, D2 cows ranged C$88-$103 to average $96.40, up just three cents. D3 cows ranged $78-$94 to average $85.

Rail grade cows ranged $181-$186.

Prices have not rallied from January to February, but they are up from November 2016 lows. Cattle that were bought then and put on feed will likely fetch a profit if sold today.

Cattle are being sold with fewer days on feed this year, leading to lighter carcass weights and fewer D4 grade cows, down 38 percent from last year.

Light feeders steady

Firm demand for grass cattle continued to support stocker weight cattle, while steady to lower prices were noted on heavier feeders.

Steers 850 lb. traded $1 lower and were at the lowest level since the end of October. They have fallen eight percent from January highs.

How much more down side is there to the heavier feeder market?

Looking at similar years (2006, 2012, 2013 and 2016), the average decline from January highs to first half lows stands at 15 percent.

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Assuming a 15 percent decline, that would put 850 lb. steer prices around $148.

However, a couple of things should keep the decline at less than 15 percent.

  • Feedlots have been profitable on this present turn of cattle.
  • Eastern competition on heavier feeders is supportive.

Weekly feeder exports were 1,213 head, down 62 percent from same week last year.

With fewer exports in the fourth quarter of 2016 and a slow start to 2017, there could be more fed cattle around in the second half of the year. Bred cows ranged $1,500 to $2,600 per head.

Beef rises

Choice was US$196.19 per cwt., up $6.97, and Select was $192.83, up $4.64. The Choice-Select spread widened to $3.36 from $1.03 the previous week.

Canadian prices were not available.

Cattle on feed

There were 10.709 million cattle on feed in U.S. feedlots on Feb. 1, which is up one percent, is a three-year high and in line with what the trade expected.

Placements in January were 1.981 million, up 11 percent.

Marketings in January were 1.751 million, up 10 percent.

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Both increases were in line with expectations and confirm predictions of weaker prices this summer when cattle will be at market weight.