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.
Prices set new lows
Alberta direct cattle sales saw moderate volume trade last week, and average prices eased to new annual lows. A week-over-week market trend could not be established because of insufficient sale volumes the previous week.
Compared with the week ending Aug. 9, weighted average prices were down $4.73 and $4.16 per hundredweight for steers and heifers, respectively.
Last week’s average steer price dipped below the 2018 annual low of $142.04, which coincidentally occurred the same week last year and is at the lowest level since October 2017.
The cash to futures basis weakened but remains seasonally strong at +3.18 per cwt.
Total Canadian slaughter for the week ending Aug. 17 surged 11 percent larger to 66,093 head. Western Canadian fed cattle slaughter for the same week was also 11 percent larger than the previous week at 47,016 head and six percent larger year to date, totalling 1,281,728 head.
Western Canadian steer carcass weights were reported at eight pounds larger than the previous week at 913 lb. and were 19 lb. larger than a year ago. Canadian fed cattle-slaughter cow exports to the United States for the week ending Aug. 10 surged 40 percent larger to 6,802 head and year-to-date were 27 percent larger, totalling 283,201 head.
Volatility in the cattle and beef complexes is expected to continue this week as American packers struggle to maintain the weekly kill following the Tyson Kansas fire and ongoing global trade tension.
Packer margins are now lucrative, and all three Alberta packers have reportedly added Saturday shifts. Recent large harvests have enhanced market- ready demand, but interest is expected to soften after Labour Day so chain speed could slow.
Annual lows are historically likely to occur during September, and market-ready feedlot supplies are expected to trend less current.
In the U.S., Chinese retaliatory trade tariffs are to be increased by 10 percent effective Sept. 1 on U.S. beef, pork and some other products, so stocks and commodities were volatile last week. Live sales in the north were $2-$3 higher than the previous week at US$108-$109 per cwt.
Despite live cattle futures hovering near contract lows, western Canadian calf and feeder prices continue to impress.
U.S. calf prices are now trading at the lowest point since February 2017. Even with pressure on the U.S. market, Alberta calf prices have trended sideways over the past three weeks, averaging $213.75-$214.50 per cwt. Alberta calf prices are now trading at a $10 per cwt. premium against the U.S. market, which is the largest premium seen this year. On a cash-to-cash basis, Alberta feeder prices are also at a $10.50 per cwt. premium to the U.S. market.
Over the previous week, the forward delivery calf market was lightly tested. Alberta and Saskatchewan steer calves weighing 500 to 600 lb. for October delivery saw a weighted average price of $222.03 per cwt. based at 559 lb. Prices are in line with last year as 550 lb. steers in October 2018 averaged $220.50 per cwt.
It’s possible the market is pricing in a premium for October delivery calves compared to the spot market. Based on monthly prices, in 11 out of the past 19 years, 550 lb. calf prices have averaged higher in August compared to October.
Last week heifers heavier than 900 lb. traded $16.50 per cwt. lower than their steer counterparts, comparable to last year. Based on the three-year average, the 900+ lb. steer-heifer spread narrows from August to September.
Eastern Canadian buying interest on the Alberta-Saskatchewan yearling market has dried up, but demand remains strong on the forward calf market. Feed barley bids remain under pressure, and southern Alberta sales for August to December delivery are ranging from $220-$225 per tonne delivered.
Cow prices down
The Labour Day holiday is one of the strongest periods of demand for ground beef retail. After seven consecutive weeks of higher prices, butcher cow prices took a step backward last week, trading $1.50 per cwt. lower.
D2 cows in the West traded at $83-$98 per cwt. to average $90.50. D3 cows traded at $75-$85 per cwt. to average $80.30. Slaughter bulls averaged $107.88 per cwt.
Despite lower prices through the ring, dressed bids were steady to a couple dollars higher. Seasonally it might mean second-half highs have been reached for this year.
Increased cow volumes are just around the corner and retail demand traditionally softens from August to September, so that will likely keep the cow market in check.
The bright spot for the cow market is the strength of the Canadian 85 percent trim market because prices are higher than last year and the three-year average.
Though trim prices have held up well, it doesn’t necessarily mean packers will pass that value down the supply chain. Non-fed supplies will start to increase, but overall volumes will remain manageable.
D2 cow prices are expected to average $86-$90 per cwt. over the next month.
AAA trades higher
Cut-out values continued to strengthen in U.S. beef trade but at a much slower pace than the previous week. Choice and Select were up US$3.16 and $5.24 per cwt., respectively. Averages were $239.28 for Choice and $215.91 for Select.
A large part of procurements for Labour Day should be finished by now and buyers were more cautious after the previous week’s price rally.
Canadian cut-out values for the week ending Aug. 16 traded higher with AAA up $7.47 per cwt. and AA up $5.99.
Despite the increase, the AAA/Choice spread weakened sharply from -$11 per cwt. to -$24 per cwt. and AA/Select from -$8 per cwt. to -$20 per cwt. because of the stronger growth in the U.S.