Canfax report – March 30, 2017

FED MARKETS RISES

It was another great week for cash cattle with the Canfax weighted average for steers rising $3.14 to $170.66 per hundredweight and heifers up $3.42 at $169.48.

There was strong demand and tight supply.

Dressed trade was $3-$6 per cwt. higher than the previous week with sales ranging $285-$288 delivered.

U.S. buyers were in the market, but few if any local cash cattle traded south because they did not meet American slaughter specifications.

The Alberta cash-to-futures basis weakened a bit but was seasonally strong at +$7.79.

Weekly western Canadian fed slaughter to March 18 rose three percent to 30,711 head.

Weekly exports to March 11 fell one percent to 7,142 head. Exports are down eight percent for the year at 56,687 head.

Marketings during the week had clean-up loads of various types of cattle, implying feedlot supplies are very current.

A few fed calves were marketed but could have easily remained on feed another month.

In the United States, live sales in the south were up US$2, and in the north prices rose $3-$5. Rail grade prices in the north were up $6-$7.

COWS SET HIGHS

D1, D2 cows ranged C$95-$111 to average $103.63, up $2.72

D3 cows ranged $80-$99 to average $90.56.

It was the first time since September 2015 that D1, D2 prices were above year ago levels.

Rail grade cows ranged $195-$200.

Bulls averaged $122.38 per cwt., up 17 cents. Bull prices have rallied 20 percent from January lows. Higher yielding bulls are now trading in the low to mid $140s.

There are reports that purebred bull prices have increased slightly since the beginning of the year.

Most of the cows bought on speculation and put on feed early in the new year have been marketed. Alberta cash cow prices are now at a slight discount to the U.S. utility market.

FEEDERS RISE

There was a big run of feeder cattle at auction facilities.

The feeder steer average rose $3.07 per cwt., while heifers were up $3.05.

The most noticeable price strength was on 650-725 pound feeders because demand for grass cattle remains firm.

Steers 550 lb. traded at the highest level since late June 2016.

From their January lows, 550 lb. steer prices have rallied eight percent, the smallest first quarter rally in the past decade.

From the lows posted four weeks ago, 850 lb. steers have rallied $8.50, but Alberta fed steer are now at a premium to 850 lb. feeders.

The five-year average for 800-900 lb. steers as a percent of fed steer prices stands at 117 percent for March.

Based on that average, steers should be closer to $200, compared to the current price of about $169.

Deferred live cattle futures are at a significant discount to current cash prices.

There is little price slide between weight classes. Some feeders weighing more than 1,000 lb. are fetching the same price as 900 lb. cattle.

Over the past three weeks, feeder exports have ranged from 3,400-4,700 head, which is down from last year when exports ranged 5,000-7,300 head.

U.S. BEEF RISES

U.S. boxed beef prices to March 23 rose with Choice up US$1.14 at $222.28 and Select up 84 cents at $215.77.

With the strong rally in the last few weeks, the cutout is now only one percent below last year.

U.S. cattle slaughter surged four percent to 613,000 head. That was 14 percent larger than the same week last year.

Weekly Canadian boxed beef prices to March 11 rose 44 cents to C$274.76 per cwt. on AAA and $5.03 to $271.72 on AA.

Canadian prices were still four to six percent below last year.

 

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