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 price plunges

Prices for fed steers fell $5.23 per hundredweight last week to average $155.97, and fed heifer prices fell by $4.60 to average $155.06 per cwt.

Canfax says it is not uncommon to see the fed market on the defensive in May, which can be a very volatile month. In 2018, fed prices dropped by $17.50 per cwt. from the start of May to the end of May, and in 2017 prices fell by $21 per cwt.

Now that first-half highs have been established, the question is where fed prices will go from here. Over the past 10 years the average decline from the first half of the year highs to second half of the year lows stands at 17 percent. Using an historical decline, this would put fed prices on track to bottom in the $135 per cwt. area.

With the summer 2019 live cattle futures contracts rallying to the low $120 per cwt. range, producers did have the opportunity to contract some of their summer placed cattle at a positive margin. One may assume packers have more cattle contracted for the second half of 2019 compared to last year, and if this is true, it could pose additional price risk for the fed market heading into summer.

From first half highs to second half lows, it would not be out of the question to see a larger than 17 percent decline this year, with a chance of challenging the 2017 summer low of $131.63 per cwt.

Looking at the cash market, bids started out in the low to mid $260s per cwt. delivered on May 8. By May 9, sales were being reported at $258. One packer pulled bids, indicating it had bought enough cattle for the week, and one packer was buying cattle for the end of May delivery. Another was scheduling cattle for mid-June delivery.

In the United States last week, trade was scattered and packers were able to buy cattle cheaper as the week progressed. Most live sales in the south were reported from US$119-$120 per cwt., which was $3 lower than the previous week. Dressed sales in the north ranged from $190-$196 per cwt., which was $4-$8 lower than the previous week.

Non-fed boost

Prices for D2 cows rose by C$1.11 per cwt. last week to average $95.90, while slaughter bull prices also rose to average $108.44, an increase of 81 cents over the previous week.

Good demand boosted the prices, with D3 prices also rallying almost $5 per cwt. higher. Dressed cow bids strengthened around $3 per cwt. higher to $183-$188 delivered.

Western Canadian non-fed slaughter volumes for the week ending May 4 were down sharply by 17 percent from the previous week to 6,936 head. Year-to-date western non-fed slaughter was reported nine percent larger at 165,021 head.

With generally favourable calving conditions, fewer calving culls are anticipated this spring. Non-fed supplies are expected to moderate.

Feeders slip

Average feeder prices slipped $3.50 per cwt. lower last week as fund managers continued to liquidate oversold cattle futures. Light calves less than 500 pounds trended sharply lower on varied quality and lot size.

Middle weight feeders from 600-800 lb. continued to see good demand as grass cattle and bunk replacements in spite of the three-week cattle futures liquidation, and prices traded moderately $2-$6 per cwt. lower than the previous week.

Larger feeders heavier than 800 lb. traded fully steady to $2 per cwt. higher than the previous week, but the price tone appeared softer by the end of the week.

Auction volumes slid significantly lower than the previous week to 16,202 head. Alberta year-to-date auction volumes were fully steady with a year ago at 481,865 head.

From the April high, feeder cattle futures have plummeted about $20 per cwt. lower in Canadian dollars. Oversold cattle futures are expected to realign modestly higher this week, and feeder prices should see overall improved technical and fundamental support. Good demand should continue for feedlot bunk replacements, and moisture conditions have improved modestly for grass cattle.

Beef trade

U.S. cut-out values continued to trend lower last week. Choice and Select were down US$6 per cwt. and $8 per cwt., respectively, on light to moderate demand and moderate to heavy offerings. Choice averaged $222.47 and Select averaged $207.08.

Canadian cut-out values for the week ending May 3 traded steady on AAA to average C$297.97 and down $4 per cwt. on AA to average $282.69.

Higher prices were reported for grilling items such as AAA short loins, strip loins and boneless rib eyes but the increase was offset by lower prices on other products, resulting in the steady to lower overall cut-out value.

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