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.

Summer rally holds

Alberta direct cattle sales last week saw prices firm $1.75-$2.50 per hundredweight higher than the previous week, and cash sale volumes were one of the largest seen in several years.

The unexpected early summer price rally continued for a second week, and feedlot managers aggressively sold large blocks of market ready cattle. Dressed prices were fully steady with the top end of sales seen two weeks ago. The majority of dressed trade was from $258-$260 per cwt. delivered.

Most of the cattle that traded last week were for July delivery. A few were traded for deferred August delivery and were priced $4-$6 below spot delivery.

Feedlots were selling fed cattle at nearly $200 per head losses about a month ago and are now seeing prices near break-even levels. Basis levels continue to be strong for this time of year and with the cash to futures basis of $16.81 per cwt., feedlots remain current.

Packing plants have geared up for larger cattle numbers, and the additional Saturday kills are also supporting the market. While the market tone is strong, further upside may be limited as larger cattle numbers and the summer lull in beef demand may restrict the fed market.

In the United States, only light trade was reported last week in Iowa and Nebraska, and dressed sales ranged from US$173-$175 per cwt., which was $2-$5 lower than the previous week.

Cows, bulls rise

In non-fed action, prices for D2 and slaughter bulls rose last week, with the cows averaging C$90.30 and the bulls $114.38.

However, non-fed volumes have started to moderate through commercial auction facilities. Western Canadian cow slaughter volumes for the holiday short week totalled 4,929 head, the second time since the end of April that cow slaughter volumes have been below year ago levels.

Trading $3.50 per cwt. higher, butcher bull prices established new annual highs last week while butcher cows traded 50 cents higher. In 12 out of the past 13 years, D2 cow prices have established second half highs in either July or August.

From a seasonal standpoint, there still is more upside price potential to the cow market. Over the past three years, second half highs have failed to overtake first half highs. There was a significant spring rally this year, and in coming weeks there is a chance D2 cow prices could challenge or possibly surpass May highs of $98.30 per cwt.

Good feedlot demand

Feeder prices traded mixed on lighter volumes and mixed quality last week. Heifers weighing more than 700 pounds were trading higher than year ago levels.

At this time of year, eastern Canadian buyers tend to show good interest on larger groups of dry lot feeders from Alberta and Saskatchewan. So far this summer, eastern buying interest has been rather quiet. Feeders coming out of background lots in Alberta and Saskatchewan are seeing good demand from western Canadian feedlots.

Moisture and pasture conditions are mixed across the Prairies. With yearling prices strengthening, some producers in the drier areas are doing weight sorts and have started to market the heavies among their grass yearlings.

On the other side of the coin, areas that have received timely rains and are looking at good grass conditions have been willing to price some of their yearlings as far out as October delivery.

Grass yearlings for October delivery are trading steady to a slight premium compared to August-September delivery.

For the month of June, feeder exports were 6,000 head larger than last year.

Feeders weighing more than 800 lb. are seeing prices trend right in line with the five-year average. Steers heavier than 900 lb. have set second half highs during the third quarter in seven out of the past 11 years. In six out of those seven years, highs were set in August.

Beef trade slack

In U.S. beef trade, cutouts saw a light to moderate demand on a generally moderate offering last week, and values trended barely steady to lower. The Choice cutout slid $1.85 per cwt. lower than the previous week to US$206.58, and Select was $1.69 per cwt. lower at $197.01.

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