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 volume light

Sale volumes last week were too light to establish a weighted average fed steer and heifer price, but the market tone was steady to lower. Dressed bids and sales were reported from $233-$250 per hundredweight delivered.

On reported bids and sales, cash to futures basis levels ranged from +$1.25 to +$5.50 per cwt. compared to the five-year monthly average of +$1.13 per cwt.

In a lot of ways, sellers are facing some tough decisions. With cash to futures basis levels strengthening, and Alberta fed prices still stronger than the export basis of -$8 per cwt., it may be providing a signal to market cattle. On the other hand, losses on the fed cattle that are being sold are closing in on $200 per head.

Until now, fed cattle marketings have been timely, but because feeding margins have only become worse, marketing rates have slowed as producers fight the lower trending fed market and add weight to the cattle.

From their high in April, fed prices have dropped 12 percent. Over the past 20 years, there has only been three other times that the first half of year highs occurred during April. Looking at those years, the average decline from the April high to the second half low was 17 percent.

From an export perspective, Canadian pork is much more dependent on China than beef. If this issue regarding fraudulent export certificates is not resolved between Canada and China, more Canadian pork will end up on the domestic market.

Over the past three years, the average increase in western Canadian steer carcass weights from spring lows to fall highs stands at 107 pounds. Using an historical increase, this would put weight on track to peak at 946 lb. Producers have started to fight the market, which is a concern, but with more Holsteins entering the slaughter mix, weights are not expected to get much larger.

In the United States, dressed sales in the north ranged from US$178-$182 per cwt., steady to $2 higher than the previous week. Live sales in the southern U.S. ranged from $109-$110 per cwt. while sales in the north ranged from $111-$113.50 per cwt. Live sales were $1-$2 higher than the previous week.

Cows trade steady

Non-fed cattle prices traded steady to lower last week with D2 cows trending sideways, averaging C$84.13 per cwt., and D3s slipping $2.50 per cwt. lower, averaging $72.75. Dressed cow bids continued steady at around $160-$163 per cwt. delivered.

For the week ending June 28, Canadian D2 cows were trading at a $1.36 per cwt. premium to U.S. utility cows and last week were $1.26 per cwt. higher than Eastern Canada. Butcher bull prices softened $1.35 lower to average $107.45 per cwt.

Western Canadian non-fed slaughter volumes for the week ending June 29 were down four percent to 6,806 head, and year to date volumes were eight percent larger, totalling 220,390 head.

Summer grilling beef demand rallied during the warm weather July 1. Non-fed cow demand is expected to improve as packers top up stocks and non-fed prices on a moderate summer offering could tick higher.

Low auction volume

Auction volumes last week were the smallest seen so far this year and are expected to remain seasonally light through July. Pasture conditions have improved throughout Alberta, and light calf volumes dwindled at auction as fewer cow-calf pairs were marketed and split.

Feeder steers traded unevenly steady last week, while heifer prices were $3.78 per cwt. lower than the previous week. Improved grass demand firmed middle weight 600-700 lb. steer prices almost $2 per cwt. higher last week, and larger bunk replacement steers over 800 lb. trended steady to $3 per cwt. higher.

Lofty grain prices and tight silage stocks continue to encourage selective feedlot buying, and lower converting heifers over 800 lb. saw prices slip $5-$6 per cwt. lower than the previous week.

With the Canada Day holiday, auction volumes were, not surprisingly, 46 percent smaller than the previous week at a modest 4,570 head, and year to date auction volumes are down five percent at 591,198 head.

The U.S. Department of Agriculture reports that Canadian feeder exports to the U.S. for the week ending June 22 trended mostly steady with the previous week at 4,663 head. Year to date feeder exports were up five percent at 138,167 head.

Beef trade steady

In beef trade, U.S. cut-out values traded mostly steady last week to average US$219.25 for Choice and $195.36 for Select. Demand was light to moderate and offerings were moderate to heavy. It was a shortened week due to the U.S. holiday.

Canadian cut-out values for the week ending June 28 saw AAA and AA down $6 and $12 per cwt., respectively. The AAA/Choice spread weakened from -$10.37 per cwt. to -$12.36. The AA/Select spread weakened from +$3.68 to -$1.98 per cwt.

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