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 edge higher

The fed steer weighted average was $144.17 per hundredweight, up 92 cents. There was no average for heifers during a quiet week.

The U.S. fed cash and futures market traded higher, leading Canadian producers to expect higher prices. However, the impact was muted here.

A large part of the show list was carried over.

U.S. bids for Canadian cattle worked back close to local prices.

There were reports of prairie cattle going to Guelph, Ont., for slaughter.

The Canadian dollar rose as the Bank of Canada raised interest rates.

The Alberta cash-to-futures basis weakened about $1 per cwt. and is now slightly weaker than the five-year July average.

Alberta packers aggressively processed cattle. The July holiday-week slaughter was more than 40,000 head.

Last year, the holiday-shortened week was about 7,000 less.

Packers are expected to schedule Saturday kills through the summer.

Exports ran below a year ago through most of the first half of the year, but they have now caught up and are slightly higher than last year.

The stronger loonie and ample fed supplies will restrict upside price potential.

Some price stability may be warranted after the major price decline from the spring highs, but downside risk still remains.

Cows steady

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D1, D2 cows ranged $100-$116 to average $107, down only 33 cents.

D3 cows ranged $90-$102 to average $95.88. Rail grade cows ranged $200-$206.

Fed cattle prices have recently moved below year-ago levels, while cow prices are sitting $10-$12 higher than last year.

D1, D2 cows are trading within $5 of the highs set in early June.

Alberta D1, D2 cash cows have been trading at a $15-$16 premium over the U.S. utility cow market.

Non-fed production should be nearing a seasonal low. This should lend support to the 85 percent trim market.

It is common to see trim values rally into the summer.

Feeders lower

The feeder market was lightly tested and prices were lower on smaller lot sizes and varying quality.

With a lot of light calves placed on feed January to May, yearling supplies should be snug into August and September.

Depending on when grass cattle were bought, there has been opportunity to forward contract grass yearlings at a reasonable profit.

More yearlings have likely been forward contracted this year than last year.

Many producers retained ownership of their grass yearlings last year and put them on feed in smaller custom lots or backgrounding lots to have them finished.

The yearlings that were sold in the first quarter of 2017 saw historically large profit margins.

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Because this strategy worked last year, some might want to gamble again on retaining ownership this year.

Assuming more yearlings are contracted and producers again try retained ownership, competition could be stout on what is expected to be an historically tight yearling supply. Cow-calf pairs traded $1,800 to $3,050.

Barley price rises

As feed barley prices rise sharply, Western Canada might lose its feed cost advantage over the United States. There are reports that barley for quick delivery are just shy of $4.50 per bushel delivered into southern Alberta.

New crop barley bids are $4.50 to $4.70 for fall delivery in southern Alberta.

Cattle on feed

Feedlot supply in Alberta and Saskatchewan as of July 1 rose five percent from last year to 789,835 head. That was four percent above the five-year average.

Placements in June were 64,534, up five percent from last year. It was the fifth consecutive month of placements above year ago levels.

More of the placements were light cattle under 700 pounds. That category was more than double last year, while those heavier than 700 lb. were down two percent.

The number of heifers going into feedlots was 26,481, down from 39,584 last year, while steers rose to 38,053, up from 22,003.

However, that does not suggest herd rebuilding. For the year, heifer placements are up 10 percent over last year and up 12 percent from the five year average.

Marketings in June were 140,520, up nine percent from last year and the largest in five years.

U.S. beef falls

Beef prices fell further as the dog days of summer set in.

Choice fell more than $10 to US$209.85 per cwt. Select was down about $6.50 to $197.26.

In four weeks Choice has fallen $40, but it is still $5 above last year at this time. The Choice Select spread has narrowed about $17 to $12.50.

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Canadian data was not available.