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 steers drop

Weighted average steer prices dropped 75 cents last week, and new annual lows were established. Fed prices are trading 11 percent below last year, whereas AAA and AA cut-out values are six to eight percent lower than last year, suggesting that packer margins are healthy.

Western Canadian fed slaughter totalled slightly more than 40,500 head, the third largest weekly slaughter volume seen this year. Sale volumes were moderate with all three western Canadian packers buying cattle last week.

Dressed sales were reported from $238-$242 delivered. Most of the cattle that traded last week were being scheduled for the week of June 25-July 2 delivery.

On a cash to cash basis, this was only the second time since early December that Alberta fed prices have been at a discount against the Nebraska market. Last week’s Alberta/Nebraska cash to cash basis is estimated to be -6.19.

This is also the first time this year that Ontario fed prices have been at a premium to the Alberta market. Weekly fed cattle exports totalled 4,899 head, the fifth consecutive week in which exports have been below last year.

Increasing fed supplies will be noted moving into summer, and lows are still ahead. There have been only three times over the past 25 years in which first half highs occurred during January. In those years, second half lows occurred in August-early September.

From first half high to second half low, the five-year average (excluding 2014) decline stands at 19 percent, and the 10-year average stands at 18 percent.

Using the historical decline, this would put fed prices on track to bottom in the mid-$130s. Given that fed prices have already dropped 14 percent from January highs, it would not be out of the question to see a larger than average decline this year with possible lows in the upper $120s.

In the United States, trade was delayed until the later stages of the week. Dressed sales in the north ranged from US$182-$184, which was $4-$6 higher than the previous week. Live trade in the south was reported at $115, which was $5 stronger. Most of the cattle being marketed had breakevens of slightly less than $120.

Plenty of cows

Moisture concerns and increased calf mortality during this spring’s challenging calving season have flushed a few more dry cows and pairs to market in the past few weeks. Slaughter cow prices eased modestly lower with D1,2 cow prices $1 lower than last week, averaging C$93.25, and D3s almost $2.50 lower at $81.50.

Dressed cow bids were pressured down to the low $180s last week. Butcher bulls saw continued good demand and prices firmed $1.36 to an average of $113.55.

Western Canadian non-fed slaughter for the week ending June 2 realigned slightly larger than the previous week to 6,194 head. Year to date western non-fed slaughter was 12 percent larger, totalling 178,836 head.

Canadian non-fed exports to the U.S. for the week ending May 26 totalled 2,269 head, and year to date were 31 percent lower at 53,973 head.

Non-fed prices will have limited upside moving forward and prices are expected to seasonally trend generally steady this week. Supplies should remain manageable, but poor pasture conditions could flush a few more cows to market and pressure prices lower.

Feeder prices rally

Feeder prices realigned $2.50 higher last week with good interest observed for grass types.

Steer calves from 400-600 pounds saw prices rebound $6-$7 higher than the previous week, and similar weight heifers trended $3.50-$6.50 higher.

With the exception of 700-800 lb. steers, all feeders weighing more than 700 lb. saw prices firm higher. Large feeders weighing more than 900 lb. saw good demand, and prices rallied $3-$5 higher.

Last week’s Alberta feeder index firmed almost $4 higher to $188.50, and the calf index surged more than $6.50 higher to $218.78.

Auction volumes have trended steady or higher than year ago levels for eight straight weeks, but last week’s offering was seasonally lower. Total auction volumes of 18,527 head were 11 percent smaller than the previous week, and year to date volumes were nine percent lower at 566,847.

Feeder exports to the U.S. for the four-day week ending May 26 were not surprisingly smaller than the previous week, totalling 3,456 head. Year to date feeder export volumes were 62 percent larger at 115,739 head.

A significant offering of cows has enhanced auction volumes over the past couple of weeks, and recent scattered moisture should slow non-fed marketings.

Feedlot inventories are running at respectable capacities, and feeder demand could soften until significant volumes of fed cattle are marketed. Auction volumes will continue to seasonally tighten, and calf prices are anticipated generally steady. Yearling prices should continue to firm until summer grass cattle come off pasture.

Beef trade lower

In beef trade, U.S. Choice dropped slightly to US$226.41 compared to $228.30 the previous week. Select was also down slightly to $203.41 compared to $204.47 the previous week.

The values were seasonally lower with light to moderate boxed beef demand on a light to moderate offering.

Canadian cut-out values for the week ending May 25 firmed modestly with AAA up almost C$2 to $283.90 and AA up $1 to $265.71.

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Copyright © 2016. All market data is provided by Barchart Market Data Solutions. Futures: at least 10 minute delayed except as noted. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.
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