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.
August doldrums
August is not traditionally known as a strong month for the fed cattle market because prices and basis levels historically weaken from July to August. In recent weeks, fed prices have moved from the mid-$150s to the mid-$140s per hundredweight.
Buying interest has been noted from only two out of the three western Canadian packers. Sale volumes were light last week with dressed sales ranging from $244-$248 per cwt. delivered. Cattle bought last week were being scheduled for the week of Aug. 20-27 delivery.
Cash to futures basis levels weakened, going from +$8 per cwt. to +$5.19 last week.
For the week ending July 28, western Canadian fed slaughter volumes totalled 44,381 head, seven percent lower than last year. It was the second consecutive week that slaughter volumes were lower than last year.
Even though packer margins remain positive, there is a chance we could see fewer Saturday shifts in August this year than last year.
Carcass weights continue to seasonally increase. Western Canadian and eastern Canadian steer carcass weights are five pounds and six lb. larger, respectively, compared to the same week last year. There is a strong correlation between carcass weights and grading. As carcass weights increase, grading tends to improve as well.
Canadian Prime and AAA grading as a percent of all A grades was reported at 55.09 percent below last year and the five-year average.
In the outlook, fed cattle supplies are expected to remain ample over the next two months, suggesting there is still further price risk to the fed market.
In the United States last week, very light trade was reported with live sales from US$110-$110.25 per cwt. and dressed sales from $174-$175.50. Live sales were $1-$2 per cwt. lower than the previous week, and dressed sales were steady to $4 lower.
Cull cows steady
The cull cow market was generally steady last week. D2 animals traded at C$88-$103 to average $94.43 per cwt. D3 animals traded at $77-$93 to average $84.58.
Cow volumes continued to be supported by dry conditions in parts of Western Canada. These cows are met with good demand from the three local packers, and some cows continue to be put on feed.
Western Canadian cow slaughter jumped back over 6,000 head two weeks ago to 6,562. Weekly slaughter has been under 6,000 head only five times out of 30 weeks this year, whereas last year it was under 6,000 for 12 of the first 30 weeks.
Cow carcass weights were 18 lb. below a year ago with a lot of weeks since June having weights 20 lb. or more below a year ago. That offsets some of the increased cow slaughter. Cow prices should remain seasonally well supported in the near term.
Feeders solid
Last week was another solid one for the calf and feeder market. After calf and feeder prices jumped in the previous two weeks, prices mostly consolidated last week.
Yearling prices were near annual highs. Although auction volumes were higher and are more than double the same week a year ago, more than half of the volume was electronic sales.
Some producers are taking advantage of these stronger prices to market cattle for deferred delivery, but the strong prices combined with producers facing dry conditions and limited feed has also resulted in more cattle being marketed for immediate delivery.
Prices for yearlings appear to be relatively flat between immediate delivery and deferred delivery into the fall. Demand for these western Canadian feeders has been mostly from local feedlots.
Calf prices have been flat this year. Since the end of April, 550 lb. steer prices have traded between $220-$228 per cwt. Over this time period, calf prices have moved from being below year ago to now being more than $10 per cwt. above year ago prices.
Dry conditions have also brought some pairs off grass in areas with the calves being split. Light four-weight steers were seeing prices reach into the high $240s per cwt.
Despite an uptick in the dollar and feed costs last week, and a softer fed market, feeder and calf prices held together. That said, cattle feeders continue to gamble on buying these feeders. Given current projections off the futures, these cattle are offside $150-$200 per head.
Beef trade weakens
In beef trade, boxed beef prices had a slightly weaker tone last week with both Choice and Select moving just over $1 per cwt. lower. Choice traded at US$203.80 and Select at $197.10.
There was positive news with the comprehensive cut-out value as it increased $1 per cwt. over the previous week. This was the first week over week increase for the comprehensive cutout since May.
