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 steers steady

Average fed steer prices last week were mostly steady with the previous week, averaging $145.10 per hundredweight. Fed heifer prices eased more than $1 per cwt. lower to average $143.35.

Most reported sales were dressed from $240-$246 per cwt. delivered. A few live sales were reported at prices steady to slightly lower than rail trade. Market- ready supplies were generally current last week, and feedlot managers were not motivated sellers.

The cash-to-futures basis softened to -0.41 per cwt. last week, slightly weaker than the five-year average.

Western Canadian fed cattle slaughter for the week ending June 8 surged 12 percent larger to 46,431 head, the largest weekly fed slaughter so far this year. Western Canadian fed cattle slaughter was up seven percent rear to date, totalling 843,225 head.

Western Canadian steer carcass weights were six pounds heavier, averaging 870 lb., and were 38 lb. larger than the same week last year. Canadian fed cattle/slaughter cow exports to the United States for the four-day week ending June 1 was modestly lower than the previous week at 7,878 head. Fed cattle/slaughter cow exports were reported 33 percent larger rear to date, totalling 205,183 head.

Packers are expected to add shifts through the second half of June, and continued large harvests are anticipated. Fed carcass weights have likely bottomed and are expected to seasonally increase but should remain manageable.

Fed prices have declined steadily over the past seven weeks and are down 11 percent from spring highs seen during the last week of April. Active buying competition is anticipated this week.

In the U.S., light to moderate trade developed late last week. Southern live trade prices ranged from US $110-$113 per cwt. with most sales reported $1 per cwt. lower than the previous week at $112. Northern live sales were reported at $114 per cwt., steady with the previous week. Dressed sales were steady to $1 per cwt. higher than the previous week at $184-$185 per cwt. delivered.

Lots of cows

In the slaughter cow market, supply is outpacing demand as non-fed volumes through commercial auction facilities continue to be larger for this time of year. Packers have cut back hours on the D grade slaughter.

In the previous two weeks, cow prices have dropped $9-$10 per cwt. Last week, D2s averaged $86.50 and D3s averaged $75.08 per cwt. Slaughter bull prices dropped by $4.75 to average $105.79 per cwt.

Over the span of five weeks, D2 cow prices have moved from their highs in the upper $90s per cwt. to trading within $4.50 per cwt. of their annual low. Dressed bids were reported in the mid $160s per cwt. last week and there have been rumblings that some cows would not be picked up for three weeks.

On a cash to cash basis, D2 prices two weeks ago were at a $9 per cwt. premium to the U.S. Given the sharp pull-back last week, prices could be around par with the U.S. market.

Lots of heifers

Heifer volumes have been big and continue to make up a larger percentage of the feeder volume. We are starting to see a few yearlings that have been on grass for around 30 days being gathered up and sold on the cash market. Most of the cattle coming off grass are going into feedlots, but a few grass buyers have been picking away and putting them back on pasture.

The largest price decline week over week was on 900 lb. steers and heifers with prices down $3-$4 per cwt., and new annual lows were established.

Over the past 10 years, there have been two years that 900 lb. and heavier steers have established first half lows in June, those being 2011 and 2016. In 2011, prices went from their June lows of $103 per cwt. to $118 per cwt. in the span of six weeks, and in 2016 prices went from their June lows of $153 per cwt. to $166 per cwt. in a six-week span.

With the cost of gains increasing, feedlots could be looking at buying the weight rather than feeding it on. Further downside risk to the heavyweight feeder market remains limited. In Alberta, Ontario buying interest was noted on the heavyweight steer market last week.

On a cash to cash basis, Alberta 550 lb. steers have moved to a $4.50 per cwt. premium to the U.S. market, and Alberta 750 lb. steers have moved to an $11.50 per cwt. premium. This is the largest premium Alberta calves and feeder prices have been to the U.S. this year.

Cutouts stable to lower

In beef trade, U.S. cut-out values were stable to lower last week with Choice down 15 cents to average US$222.10 and Select down $2.45 to average $204.71. Grilling demand typically weakens moving into the summer months, which could keep downward pressure on middle meat prices.

Canadian cut-out values for the week ending May 31 saw AAA up $2.90 to average $290.05 per cwt. and AA up $4.66 per cwt. to average $276.95. The AAA/Choice spread was at -$11.56 per cwt. and the AA/Select spread was at -$5.55 per cwt., steady with the previous week. Seasonally, the AAA/Choice spread typically strengthens in June and July.

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