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.

New highs for fed cattle

New second-half highs were established during the week of Dec. 21 for weighted average steer prices. Those prices were up by $2.65 per hundredweight before Christmas to average $157.19. Fed heifer prices also rose by $2.17 per cwt. to average $156.27.

Fed prices have now established second-half highs in December in six of the last seven years. Cattle that were bought the week of Dec. 21 were being scheduled for delivery the week of Jan. 7. Packers were buying for a full slaughter week, but competition on the cash market was moderate with two out of the three packers actively buying cattle.

Dressed sales in Western Canada were at a $13-$16 per cwt. premium over the eastern Canadian market. Eastern packers were comfortably bought out in front because they were buying cattle for the weeks of Jan. 14 and Jan. 21 before Christmas.

The concern in Eastern Canada is that carcass weights have not moderated, averaging 973 pounds in mid-December, 24 lb. larger than the previous year. With some cattle not scheduled to be picked up for a month in Eastern Canada, carcass weights could continue to grow.

Producers in Ontario could be looking at shipping cattle into Alberta just to get a slaughter spot and keep weights under control. Over the last few weeks of December, Alberta cash to futures basis levels were right in line with the five-year average.

In the outlook, with U.S. packers actively booking basis contracts, more Canadian fed cattle are expected to be exported south in 2019 versus 2018. Last year, prices in Western Canada peaked in early January.

Considering that yearlings came off grass earlier than normal, 2019 could be more of a seasonal year with prices rallying from winter to early spring.

In the United States, dressed sales at the end of December ranged from $187-$190 per cwt., which was steady to $2 higher than mid-month. Slaughter volume for the beginning of December was the largest weekly fed slaughter volume since early December 2002.

Non-fed prices firm

Non-fed cattle prices firmed higher in the week ending Dec. 21 on good demand despite ample supplies.

D2 slaughter cows through auction surged more than $3 per cwt. higher than the previous week to average $77.70. D3 prices trended fully steady, averaging $65.43 per cwt.

Dressed cow bids strengthened around $4 per cwt. higher, ranging from $152-$158 delivered. Butcher bull prices firmed $1.75 higher, averaging $86.86.

Western Canadian non-fed slaughter for the week ending Dec. 15 was 13 percent lower than the previous week at 8,981 head. Year to date, western Canadian non-fed slaughter was 12 percent larger at 390,403 head.

Slaughter cow prices typically bottom in late November or early December and rebound as supplies tighten toward year end. Cow prices this year have been following the seasonal trend, but average D2 prices the week of Dec. 21 were $20 per cwt. lower than the five-year average. Ample supplies are expected to be on offer in the new year, and the typical January price rally may be limited despite good trim demand.

Year-end demand

For the week ending Dec. 21, Alberta feeders saw good year-end demand, and prices trended mostly steady to higher. Average steer prices firmed almost $2 per cwt. higher than the previous week while heifers traded generally steady.

Light calves less than 400 lb. saw prices ease $2.50-$4 per cwt. lower, and 400-500 lb calves trended mostly steady.

Mid-weight 500-700 lb. steer calves surged $3-$6 higher with strong support for preconditioned calves for deferred January delivery. Similar weight heifers traded fully steady to $1.25 per cwt. higher.

Eastern buying interest was observed on feeders heavier than 700 lb. and was price supportive. Larger feeders heavier than 800 lb. saw a premium to spot for January delivery.

Auction volumes dwindled seasonally 32 percent lower than the previous week to 25,657 head. Year to date auction volumes were one percent lower than year ago and were expected to close the year generally steady with 2017.

The U.S. Department of Agriculture reports that Canadian feeder exports to the U.S. for the week ending Dec. 8 eased to 2,606 head and year to date are 66 percent larger, totalling 191,863 head.

Choice/Select spread narrows

In beef trade, the U.S. Choice cutout trended sideways the week of Dec. 21, while Select firmed US$4.25 higher. Choice averaged $212.47 and Select averaged $205.26. Demand was light to moderate on a generally light offering. The Choice/Select spread continued to narrow to $7.21 per cwt.

The Canadian AAA cut-out value for the week ending Dec. 7 continued to strengthen to $1.30 per cwt. higher than the previous week. AA rallied $4.26 higher.

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