Canfax report

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.

The Canfax weighted average live fed steer price was $158.32 per hundredweight, down $1.65, while heifers were $157.36. Most trade was reported Jan. 27 at $267 per cwt. delivered.

Cattle were being scheduled for slaughter in the second week of February. Deferred delivery for late February was also offered.

The cash-to-futures fed basis rebounded modestly to +$3.

Weekly western Canadian fed slaughter to Jan. 21 eased three percent to 26,762 head as packers devoted more space to non-fed cattle.

Weekly exports to Jan. 14 totalled 5,349 head, down six percent from the same week last year.

Market-ready supplies should increase, and additional non-fed slaughter will add to the February kill.

The fed basis in Western Canada is strong enough to draw more eastern fed cattle to Alberta plants.

Market supplies may now be outpacing demand.

In the United States, live trade in the south was reported from US$122-$124, but most were at $122, down $1 from the previous week. Northern trade was $1-$2 lower at $120-122 live and $193-$194 dressed.

Reuters reported that processors are mindful of large operating losses and may curb slaughter, leading to lower cash bids.

Market participants will closely monitor beef cut-out values that could rise as packers trim slaughter and grocers feature product for early February.

D1, D2 cows ranged C$88-$102 to average $95.25, down $3.25. D3 cows ranged $75-$92 to average $85.10.

Western cow slaughter totalled 8,700 head, which represented 24 percent of the total weekly slaughter compared to 22 percent in the same week last year.

The average price increase from January to February stands at eight percent over the past 20 years. This seems very aggressive this year. A more likely increase would be one to two percent.

First half lows are often set in January, although 850 pound steers posted highs early in the month last year. They have fallen $3.50 per cwt. since the first week this month.

The market tone could be lower into early spring because deferred delivery is at a discount compared to current cash prices.

Some 850-900 lb. feeders might yet be priced against the Chicago June live contract, which was at US$106.97. However, the marketing window is narrowing.

More 800 lb. feeders will be priced in coming weeks against the August contract, which was at $102.55.

Also note that monthly fed cattle basis levels are usually weaker in July and August than in June.

Grass buying interest is improving, which is helping to support calves and lightweight stock prices. Steers 550 lb. traded at the highest levels since late July.

Bred cows ranged C$1,275-$2,050 per head. Bred heifers ranged $1,250-$2,200.

U.S boxed beef prices to Jan. 26 rose with Choice up US$1.40 at $193 per cwt. Select climbed $2.25 to $189.74.

Weekly Canadian cut-out values to Jan. 21 were mixed with AAA up C$2.09 at $249.46 and AA down $2.59 at $243.07.

Feedlots increased placements 18 percent to 1.795 million in December, which was much more than the expected 8.4 percent increase.

These cattle will reach market weight in June and could depress prices then.

The Jan. 1 on-feed number was 10.605 million head, equal to the previous year. Analysts, on average, had forecast a one percent decline.

Marketings in December were up seven percent to 1.787 million head. Analysts had projected a 6.7 percent rise.

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