Canfax report – August 1, 2019

Fed prices steady

Alberta direct cattle sales saw active trade for the week ending July 26, and average prices trended steady with last week for fed animals. Most trade was on a dressed basis from $245-$248 per hundredweight delivered. The cash to futures basis weakened to 3.60 this week and should seasonally continue to soften.

Over the next couple of weeks, packers will have August forward contracts to draw on, but feedlots have managed market-ready supplies and generally remain current with demands.

Feedgrains remain pricey. Lethbridge barley ranged from $240-$275 per tonne, and corn averaged $$286.67 per tonne. Lethbridge wheat was $258-275 per tonne. Ontario corn was $249.19.

Slaughter supplies up

Western Canadian fed cattle slaughter for this week was 16 percent larger than last week at 48,625 head. This was the largest weekly slaughter volume since July 2010. Western Canadian steer carcass weights trended significantly larger, up 16 pounds from the previous week, and were almost 20 lb. more than a year ago.

Fed cattle and slaughter cow exports to the United States have been growing steadily. So far, 258,780 fed steers, heifers and cows have been exported, an increase of 32 percent over last year. Feeder shipments are up nine percent at 148,615 head.

Bids in the southern states were at US$112 per cwt., and dressed bids in the north were steady with last week at $183 per cwt. delivered.

Feeder trade light

Feeder markets were light across the West, and about 25 percent were electronic sales.

The yearling market was favourable this past week. Ontario buyers have been quite active in the western Canadian yearling market. If eastern demand stays strong, more Alberta and Saskatchewan grass yearlings could end up being finished in the east.

Trading via electronic or in-house video sale, steers weighing more than 1,000 lb. in Alberta for mid-August delivery saw a weighted average price of $182.88 per cwt. based at 1,042 lb. However, considering basis, grain prices and finishing costs, these steers are projected to lose $140-$170 per head.

Alberta steers in the 700-800 lb. range averaged $190.38 per cwt., while Saskatchewan and Ontario averaged slightly higher than$183 per cwt. British Columbia was $3 below Saskatchewan for the same weight category.

Exports to the U.S. remain strong, but between January and May more than 72,000 head of live cattle have been imported from the U.S. This is up 75 percent over 2018.

Cows improving

The cow market for D2s reached the highest point since early June trading at $86 per cwt. D3 cows averaged slightly more than $73 per cwt.

Western Canadian cow slaughter for the week ending July 20 totalled 6,919 head, the largest slaughter volume since 2008 for the third week of July.

Improved moisture conditions across much of the Prairies have improved demand for cow-calf pairs, but no prices are available. Few if any cow-calf pairs are being split at commercial auction facilities, which keeps them out of the slaughter mix. Numbers are not huge, but cows that were bought in the spring targeting the August market will likely stay on feed or pasture longer.

No Canadian cut-out values were available, but prices are likely to remain flat until the Labour Day weekend. In the U.S., trade has been light and values fell slightly. The Choice cutout fell 77 cents per cwt., while Select went up by 57 cents. Choice ribs and loins were also weaker, while Select improved slightly. Fifty percent trim has weakened from $95 per cwt. to $80 per cwt.

The U.S. Department of Agriculture’s cattle inventory numbers were released July 18 and indicate that the rapid expansion is slowing after five years of steady growth. Cow numbers totalled 41.7 million, just a slight drop from 41.8 million, and heifer retention is also in line with last year’s statistics. Cattle on feed are around 13.6 million, up two percent from last July.

 

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