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.

Fed market strengthens

Fed steer prices rose by 29 cents last week to average 163.52 per hundredweight. Fed heifer prices were not available.

Canfax reports that since the beginning of the year, western Canadian fed prices on average have been trading four percent higher than last year while Ontario prices have been two percent below. Strong prices and basis levels in Western Canada have encouraged producers to pull cattle ahead of schedule, but this is not necessarily the case in Eastern Canada.

Western Canadian steer carcass weights are 14 pounds below last year, on average. Ontario weights are four lb. larger. Buying interest in the cash market was moderate last week but was not a surprise given that packers have been pulling hard on February contract cattle. With the grid base price at a premium to the cash market, more grid cattle are being committed. As well, packers allocated more hours to D grade slaughter.

Sale volumes were light last week. Many producers indicated cattle need more days on feed before marketing. Packers lowered bids late last week, so there was no motivation to sell cattle.

Cash to futures basis levels weakened, going from +10.90 to +5.41 last week. For the month of January, Canadian fed cattle exports from Western Canada were down 23 percent compared to last year, and exports from Eastern Canada were down one percent.

In the United States, there was little fed trade last week. Live bids of US$126 were reported in the south while packers in the north were bidding $200 dressed. Bids were steady with the previous week.

Forward beef sales for 22-60 day delivery have been strong. Sales are in line with last year and larger than 2015 and 2016. Since the start of the year, 550 lb. stocker calves in the U.S. have increased four percent and are trading at the highest point since April 2016.

Few cull cows moving

D1 and D2 cows in Western Canada traded in the $80 to $95 range, averaging $87.08. D3 cows were going for $73 to $85, averaging $78.50. Rail grade cows brought $170 to $175 and slaughter bulls averaged $101.50.

The non-fed market was mostly flat last week but with a slightly firmer tone. D3 cows and bulls saw some week over week strength. The number of cull cows and bulls through auction continue to be limited. This may be partly related to weather but also to tight feed supplies because most culls were moved off the ranch.

Despite the limited run on cows, packers continued to have large cow slaughter levels. Two weeks ago, the western Canadian cow kill was 9,929 head, the largest of the year so far.

Packers continue to work through the supply of cows put on feed last year. Some feeders are holding cows waiting for a price improvement, but many will need to be marketed in February. Cull cow prices are about $6 per cwt. below a year ago, while 85 percent lean trim prices are above a year ago.

Feeder market rises

After a weaker feeder cattle market through most of January, the market saw higher prices last week. All classes of cattle saw strength with the biggest pop from lightweight calves that will be suitable for grass this summer. Heavier weight heifers also saw a jump in prices, but volumes were limited.

Interest out of Eastern Canada supported the price of heavy steers. Prices across the three prairie provinces continue to be quite even, and each province’s market is seeing good demand.

Auction volumes across Western Canada continue to be light and well below last year. Year to date Alberta auction volumes are only 73 percent of a year ago. The feeder basis has been weakening, and the most recent feeder export volume was around 3,600 head, the largest weekly export volume since April 2017. Seasonally, feeder export volumes tend to hit their highest level of the year in the spring.

Many key market factors have been changing over the last several weeks. The Canadian dollar has been weakening, the basis has been weakening, futures have been strong and the feed market has also been stronger. Demand for barley from export markets has eaten into domestic barley supplies, resulting in more corn coming into local rations. Overall, profitability in the feedlot sector has supported strong demand for feeders.

Beef trade

U.S. values on Choice and Select cutouts were down slightly from last week at US$208.53 for Choice and $203.79 for Select. Those compared to $206.60 and 204.54, respectively, the previous week.

Canfax said last week’s estimated U.S. cattle slaughter was down 3.3 percent, but beef demand could remain slow before buyers start procurement for the spring market.

Canadian cut-out values for the week ending Jan. 27 traded lower with AAA down C$5.21 per cwt., at $253.60, and AA down $1.91 to $249.92.

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