Canfax report – July 12, 2012

Feeder costs jump

Cattle feeders reported huge losses as grain prices rallied.

That encouraged fed cattle to be marketed before they were fully finished.

Steers averaged $109.32, up 96 cents, and heifers averaged $108.97, up 70 cents.

Alberta rail prices were $180-$183 for steers and $180-$182.25 for heifers. Interest from U.S. buyers was soft and few if any cash cattle were exported.

A considerable number of feedlots carried cattle over for the second week, causing inventories to build a little.

The Alberta fed cash-to-futures basis weakened slightly to -$11.64.

Weekly fed cattle exports to June 23 fell 11 percent to 5,260 head.

Weekly western Canadian fed slaughter to June 30 fell three percent to 35,880 head.

Market-ready volumes are expected to tighten in the next few weeks. Uncertain summer beef demand could curb packer interest despite manageable fed numbers.


Cow prices lower

Western Canadian weekly cow slaughter volumes were relatively consistent over the past eight weeks, ranging from 4,100 to 4,650 head.

Packer inventories have increased, making it hard for prices to rise.

Auction volume fell last week, but cow prices fell 25-75 cents per hundredweight. D1, D2 cows ranged $75-$86 to average $80.38 and D3 cows ranged $65-$78 to average $71.88.

Rail grade prices were $149-$154.

Butcher bulls were steady. Demand for high-yielding bulls remains strong.

Weekly exports to June 23 totalled 4,621, down 12 percent.

Select young cows and heiferettes are commanding a premium as buyers look to retain and expose females.


Few feeders available

The feeder market was lightly tested. Rising grain prices because of the U.S. drought will likely cap feeder prices.

As well, drying pastures in the United States are forcing feeders into feedlots, but Canfax thinks tight feeder supply in Canada will prevent sharp price declines.

The Canfax average steer price last week fell $2.28 per cwt. and heifers fell $1.15.

However, prices in Canada fell less than the futures market would indicate. The week’s 750 and 850 pound cash-to-futures basis closed at the strongest levels this year.

Sale volumes were too light to establish an accurate price trend for British Columbia, Saskatchewan and Manitoba. Some commercial auction facilities have closed for the summer while others are holding sales on a bi-weekly or monthly basis.

Alberta auction volume totalled 6,405, down 66 percent from the previous week.

Feeder exports to June 23 totalled 2,678, up 14 percent from the previous week.

Load lots are increasingly difficult to assemble with varying quality and light volumes in each weight class.

The convenience of buying uniform packages of feeders through electronic sales or private treaty should command a market premium.

Special anniversary and Stampede auction sales should boost volumes. Feeder prices are anticipated steady to lower.


Beef prices fall

Moving into the summer doldrums, U.S. cut-out values fell $2.50-$4.50 last week on light demand and moderate offering.

Extreme heat in the U.S. slowed demand for grilling cuts.

Canadian cut-out values for the week ending June 29 were steady to $2 lower. The AAA cutout rose to $197.95 per cwt., up from $197.61 the previous week.

AA cutouts fell to $191.55, down from $193.92.

Montreal wholesale for delivery this week was steady at $210-$212 per cwt.

Canadian steer carcass weights are record large for this time of year.

Steer carcasses were generally 40–50 lb. higher than 2011 through the first part of June.

Carcass weights tend to bottom in June, and if this hold true in 2012 the low could be 850 lb., almost 40 lb. higher than the five-year average.



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