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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 prices drop

Alberta direct cattle sales saw active trade last week, but the weighted average price dropped by $5.09 per hundredweight for fed steers, to average $150.88, and dropped by $4.48 on heifers, to average $150.58.

Dressed prices were reported from $253-$255 per cwt. delivered, which was $8-$8.50 per cwt. lower than the previous week’s rail average. A handful of live trade was reported at $150-$150.50 per cwt., which was $3.50 per cwt. lower than the previous week.

Total reported weekly sale volumes of 23,299 head were the second largest since May 2012. Most market-ready cattle traded last week carried some level of price insurance.

Feedlot managers were able to aggressively market massive volumes of cash cattle last week for deferred second half of June delivery. Western Canadian fed slaughter for the week ending May 11 surged 13 percent larger than the previous week to 43,315 head because one major packer added a Saturday kill.

Year to date Western Canadian fed slaughter was eight percent larger, totalling 680,089 head. Canadian fed cattle/slaughter cow exports have been larger than a year ago every week so far this year and year to date volume is 35 percent larger at 173,827 head.

Typical large market-ready supplies are anticipated for July and August, and additional imported Holsteins have been added to the mix. Summer fed inventory will likely be pulled forward into June, while lighter cattle could be pushed out as far as November to dilute summer doldrum supplies. Large fed harvests are anticipated, and potential increased meat exports should be price supportive if Chinese trade tension can be defused.

In the United States, moderate trade was reported last week with live prices US$3-$5 per cwt. lower than the previous week from $114-$117 per cwt. in the south. Dressed sales in the north were generally $6-$8 per cwt. lower than last week’s rail average with trade from $184-$186 per cwt. delivered.

Total estimated federally inspected U.S. slaughter for the week ending May 18 eased modestly from 671,000 the previous week to an estimated 660,000 head.

Beef demand lags

In U.S. beef trade, grilling weather was lackluster and beef demand lagged while market-ready supplies and fed slaughter surged larger. U.S. cut-out values traded mixed. Choice dipped almost US$3 per cwt. lower, to average $219.56, and Select firmed modestly higher, to average $207.88. Boxed beef demand was light.

Improved seasonal demand is anticipated for beef, and cutouts have hit downside price resistance. Market-ready fed supplies will continue to trend larger, but increased Asian exports are anticipated. Japan has recently announced it will resume importing beef from cattle older than 30 months.

Cow price boost

For the first time in 73 weeks, cow prices were above year ago levels. Trading $1.50 per cwt. higher, butcher cows established new annual highs for 2019 and were just shy of taking out the 2018 highs of $98.30 per cwt. D2 cows averaged $97.71 per cwt. last week and D3s averaged $86.60.

Butcher bull prices have struggled relative to the cow market and are trading $5.75 lower than last year.

For the week ending May 11, western Canadian cow slaughter volumes totalled 6,650 head, the fourth time that cow slaughter volumes have been below last year. Two weeks ago, Alberta D2 cow prices were trading at a $12 per cwt. premium over the U.S. market, while last year Alberta prices were at a $22 per cwt. premium. Many cow-calf producers are getting ready to turn cattle out onto summer pasture, but dry conditions continue to be a major concern.

Feeder prices soft

From their highs in late April, 550-pound steer prices have dropped $9.50 per cwt. Despite softer prices, it cannot be ignored on a cash to cash basis that Alberta calf prices have gone from an $11 per cwt. discount against the U.S. market to a $2-$3 per cwt. discount.

Historically, calf prices don’t peak until late May or early June, but it is likely safe to assume that first half highs are in the books for this year. Over the past 12 years, only once have 550 lb. steer prices established first half highs during April, and that was in 2015. If moisture conditions don’t improve over the next couple of weeks, some cattle bought for grass could instead be sold on the cash market to help manage stocking rates.

It is not uncommon to see Ontario buying interest improve on heavyweight feeding heifers from Western Canada. Canadian feeder exports to the U.S. totalled 7,625 head, and peak export volumes for the first half of the year are likely past.

For the first half of May, combined Alberta, Saskatchewan and Manitoba auction volumes are down 33,800 head compared to last year. The U.S. Feeder index hit new lows last week and will keep a lid on the heavyweight feeder market in Western Canada.

Demand for cow-calf pairs has been lackluster. A lot of the pairs offered on the electronics were passed last week. Sales through commercial auction facilities ranged from $1,700-$2,800, averaging $2,100 per head. Cow-calf pair prices are trading $120 per head lower than last year. Bred cows averaged $1,525 per head last week, which was not much over slaughter prices.

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