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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.

New fed lows

Fed prices established new annual lows last week. Averages for fed steers fell $3.49 per hundredweight to $147.39 and heifer prices dropped by $3.15 to average $147.43 per cwt. Over the past month, western Canadian fed prices have gone from the low $160s to the upper $140s per cwt.

On a cash-to-cash basis, Alberta fed prices were at an estimated $9 per cwt. discount against the Nebraska market. Ontario dressed sales were also at a premium to the Alberta market, ranging from $254-$257 per cwt., delivered.

Seasonally, it is not uncommon to see packers gain leverage over the cattle feeder. During the past two weeks, packers have clearly had the upper hand, reflected in weaker basis levels and softer prices. With fed cattle prices on the defensive, feeding margins have gotten worse. Based on the Canfax trends data, calves targeting the May/June fed market have break-evens on either side of $160 per cwt. Losses are now closing in on $175 per head.

Last week lift dates were reported all over the map as packers were buying cattle anywhere from three to six weeks out. Roughly one-third of the cattle that traded will not be lifted until the beginning of July. Packers remain comfortably bought out in front and longer than anticipated lift times have added additional pressure to market cattle.

For the week ending May 18, western Canadian steer carcass weights averaged 841 pounds, which is 16 lb. larger than last year and 12 lb. larger than the five-year average. Carcass weights should be nearing a bottom as weights historically find a low in late May or early June.

In the United States, dressed sales in the north ranged from US$183-$187 per cwt., steady to $1 lower than the previous week. Most of the live trade in Texas and Kansas was reported from $114-$115 per cwt., which was steady to $2 per cwt. lower. For the week ending May 11, beef cow slaughter volumes totaled 62,010 head, the fourth largest weekly slaughter this year.

Boost for butcher bulls

Slaughter cow prices trended modestly lower last week on generally ample offerings. D2 prices eased 75 cents lower than the previous week to average C$97 per cwt. D3 prices slipped over $2 per cwt. lower to average $84.50. Dressed cow bids were reported from $183-$188 per cwt. delivered.

Butcher bulls established a new annual high last week with prices firming almost $2.50 per cwt. higher to $108.50 per cwt.

Western Canadian non-fed slaughter volume for the week ending May 18 was down six percent to 6,663 head. Year-to-date western non-fed slaughter was eight percent larger totalling 178,741 head. Non-fed supplies should seasonally moderate in coming weeks but deteriorating moisture conditions could induce some early weaning and accelerate culling decisions.

Grilling season demand will intensify and non-fed prices should remain well supported.

Mixed beef trade

In beef trade, U.S. cut-out values traded mixed again last week with Choice realigning modestly higher, to US$220.79, and Select easing lower to average $206.53. Moderate boxed beef demand was reported on a moderate to heavy offering.

Canadian cut-out values for the week ending May 17 slid around C$3.25 per cwt. lower, with AAA averaging $298.16. However, AAA value was at a $1.45 per cwt. premium to U.S. choice and AA was trending at a $2.50 discount to Select.

Feeders stable

Feeder prices stabilized last week with good demand reported on a moderate offering. Calves less than 400 lb. saw seasonally light volume and a weekly market trend could not be established. Late spring grass demand has shifted from lighter 500-600 lb. calves to slightly larger feeders and prices slid over $4.50 per cwt. lower than the previous week.

Feeders from 600-800 lb. saw prices trend steady to $2 per cwt. higher on good grass and feedlot demand. Feeders over 900 lb. traded mixed last week with steer prices firming $2.54 per cwt. higher. Heifers slipped $2.66 per cwt. lower.

A significant volume of replacement quality heifers were on offer last week and dry conditions appear to have changed some breeding intentions. Auction volumes continued to seasonally tighten last week, down 17 percent at 12,392 head. Year-to-date auction volumes are three percent smaller at 509,170 head.

USDA reports feeder exports to the U.S. for the week ending May 11 were seasonally smaller than the previous week at 4,967 head and volumes are expected to continue tightening until the end of July. Year-to-date feeder exports total 111,157 head and are down six percent from year ago.

In the outlook, Canfax predicts auction volumes will continue to seasonally dwindle across Western Canada. Grass interest has shifted from light to larger calves. Good feedlot demand should continue for yearlings to place against the fourth quarter fed market. Low moisture is increasingly causing concern across the Prairies and the price upside for all types of cattle may be limited if growing conditions continue to deteriorate.

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