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 rebounds
Following four weeks of lower prices, the fed market rebounded last week. Weighted average steer prices strengthened 82 cents per hundredweight to close at $143.58 per cwt.
Fed prices are now sitting $1.20 per cwt. above their June lows. Seasonally this should not come as a big surprise, but market leverage continues to favour the packer segment because fed cattle supplies remain ample.
Even with a large price and basis shift over the past month, prices remain a couple dollars higher than last year. However, cash to cash and cash to futures basis levels remain weaker than last year.
Sales volumes were light last week with all three western Canadian packers buying cattle. Dressed sales ranged from $237-$242 per cwt delivered, and cattle that were bought last week were being scheduled for the week of Sept. 3 and Sept. 10 delivery.
Given longer than anticipated lift dates and slower marketing rates over the previous weeks, many were willing to sell into last week’s price rally to clean up cash cattle that were being carried over. Most of the sales last week were reported with no weight breaks, but there were a few sales with discounts for more than 1,050 pounds. Western Canadian steer carcass weights increased eight lb. to average 880, which is two lb. larger than last year.
Some producers have indicated packers are behind schedule and lifting cash cattle that were sold a few weeks ago. There have been rumblings that a few Saturday shifts could be added near term. Even though feeding margins remain negative, timely marketings will be critical over the next couple of months.
In the United States, live sales in Nebraska ranged from US$109-$110 per cwt., while most of the dressed sales were reported from $173-$174. Live sales were $1 per cwt. lower than the previous week, and dressed sales were steady to $5 weaker.
By Aug. 17, significant trade had yet to develop in the southern feeding states, and bids of $110 per cwt. were being passed in Kansas. Heavier feeder prices in the U.S. continue to trade at near annual highs.
Last week’s U.S. feeder index closed at S$149.59 per cwt. based at 800 lb. Using a 76 cent Canadian dollar to convert the U.S. feeder to Canadian dollars works back to $195.47.
This week’s western Canadian feeder index closed at C$204.75 at 801 lb., indicating Canadian feeder prices are still at a premium to the U.S.
Week cow slaughter
The non-fed market was under pressure again last week. Although volumes through auction marts have been manageable, demand has softened. Western Canadian cow slaughter was under 5,000 for only the second time this year and was the smallest weekly cow slaughter of the year.
In addition, packers continue to subsidize the kill with cows coming out of feedlots. Prices dropped about $6 per cwt. over the previous two weeks. Cow prices are about $10 per cwt. below a year ago and $20 below the five-year average.
D2 cows traded last week in a range of $82-$95 per cwt. to average $88.13. Slaughter bull prices were down $2.08 to average $109.82.
Cow prices could continue to seasonally soften into the fall, and producers concerned about further cull cow price weakness may start to pull cow marketings forward, which would add to overall cow volumes.
Feeder strength returns
The calf and feeder market continued to have a strong tone last week, and prices were well above a year ago. Yearling steers had a steady to stronger tone, while heifers saw some week over week strength gaining back some of what they lost the previous week.
Some exposed heifers are being marketed that are generally moving into feedlots. Dry conditions continue to lead to the early marketing of pairs, which are being split.
Although numbers are light, freshly weaned calves are seeing strong demand. Many yearlings are also being sold ahead of schedule as producers try to manage diminishing grass conditions and take advantage of the strong market prices.
Producers are also forward selling yearlings into September and October with prices generally steady with the current cash market. The feeder market is strong across Western Canada because Manitoba prices are only slightly below Alberta, U.S. demand supports the market and some calves and feeders are being procured to move south. Some Ontario buyers are also on the western Canadian market.
Although the basis weakened slightly from two weeks ago, it remains historically strong at close to $5 per cwt. compared to the historical August basis of -$9.75.
Market demand is expected to remain strong because yearling supplies are relatively tight, and calf supplies are not expected to pick up for a few weeks. High feed costs and the lack of feedlot profitability could limit the upside to the feeder market.
Beef for Labour Day
Beef cut-out values had a strong week as food service and retailers covered their needs for the upcoming Labour Day holiday, the final big grilling holiday of the summer. Choice cut-out values were up $3.04 per cwt. at $209.10, and Select was up $3.37 to $201.46 per cwt.