Canadian market steady
Beef demand is typically light heading into Christmas, and that weighed on the cattle market.
The cash trade in Canada was too light to establish trends, but market-ready fed cattle in the United States sold at US$164 per hundredweight, down from $166-$168 the previous week.
Canfax said it believed the light trade in Canada was generally steady at prices that were about C$9 stronger than in mid-November.
The weaker loonie attracted U.S. packer interest, which paid a premium over Canadian packers.
This U.S. packer interest appears to be correlated to the decline in contracted and formula-based fed cattle procurement over the past three weeks.
The weekly cash-to-futures basis strengthened sharply to around -$4.25.
Weekly western Canadian fed slaughter to Dec. 6 fell five percent to 30,125 head.
Packers could gain market leverage soon. Beef buying is down, packers will likely slow slaughter and impose weight discounts.
American interest in Canadian cattle might fall off.
Cow prices strong
The last week in November and first week in December saw the largest cow slaughter of the year in Western Canada.
A good feeder cow market and strong North American packer demand has supported the non-fed complex.
Cow prices usually strengthen toward the end of the year, but this year’s market is impressive.
D1, D2 cows are trading just shy of highs set back in August. D1, D2 cows ranged $120-$138 to average $128.13, up $1.13 from the week before and D3 cows were $108-$121 to average $114.25, up $1.83.
On the rail, cows ranged $245-$250.
Bulls were steady at $140.30.
Cash market stands up
January Chicago feeder futures plunged $9.27 per cwt., partly on rising corn prices.
However, Canadian feeder cash prices held mostly steady.
Weakness was noted on forward delivery sales.
Stockers 500-700 pounds established new price highs while same weight heifers remain just shy of highs set in early October.
Buyers have been willing to pay a premium for pre-conditioned cattle, varying on location, cattle genetics and lot size.
Stocker calves that have been weaned for a month or more are holding a $5-$10 per cwt. premium over fresh weaned calves, based on sale ring and electronic sales.
At electronic auctions, 875-890 lb. steers from Alberta for February-March delivery were priced in the upper $220s per cwt.
It will be difficult to push cash bids much higher because the Chicago January feeder contract is at the lowest levels since September, but procurements for year-end tax reasons should keep a floor beneath calves and light stockers.
Record cow-calf profitability is encouraging producers to invest in the bred market.
Demand for dispersal herds and one-owner heifers has been especially strong.
Fewer bred heifers are entering feedlots this year than last year.
Western Canadian bred heifers averaged just shy of $3,000 per head, while bred cows were $2,000-$3,450.
It appears cows that are due to calve in early spring are in stronger demand than cows calving in late spring or early summer.
U.S. beef demand has not picked up post-Thanksgiving, which weighed down prices. There is strong competition from cheaper pork, and of course, it is turkey season.
The U.S Choice beef cutout on Dec. 11 was $247.79, plunging $6.63 from the previous week, and Select cutouts were $247.79, down $4.32.
American packers’ slaughter schedules over the holidays will likely be the lightest in years.
Canadian cutout values for the week ending Dec. 5 were not available.
Prairie cattle on feed
Market-ready supplies will be tight to start next year.
There were 861,518 head in Saskatchewan and Alberta feedlots Dec. 1, down seven percent from a year ago.
A smaller fall yearling run, a smaller calf crop and large feeder exports will likely keep on-feed and market ready supplies tight for most of next year.
November marketings were 116,170, which was up three percent from last year, but down 12 percent from the five year average.
Feedlots are placing more light cattle that will require more days on feed.
November placements were 218,689, down 15 percent from last year and 25 percent below the five-year average.
Heavier cattle placements fell more than lighter cattle.
Since Sept. 1, placements of calves lighter than 600 lb. are up almost 20 percent from a year ago, while placements of feeders heavier than 800 lb. are down almost 20 percent.
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.