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 prices continue slide

Alberta direct cattle sales saw moderate volume trade last week and average prices continued to soften to new annual lows. Fed prices have steadily declined over the past five weeks.

Average steer prices last week eased $1.60 per hundredweight lower to $140.07 and were almost $2.50 per cwt. lower than the same week last year. Average steer prices last week were the lowest since October 2017. Heifer prices have softened over the past seven weeks, and average prices dipped $1.68 per cwt. lower to $139.31.

Competition was lacking last week on seasonally lacklustre post-Labour Day beef demand, and front-end packer inventory is building.

The cash-to-futures basis strengthened significantly to +9.32 per cwt. Western Canadian fed cattle slaughter for the week ending Aug. 31 was 10 percent lower than the previous week at 45,619 head and year to date was six percent larger, totalling 1,377,996 head.

Western Canadian steer carcass weights eased nine pounds smaller than the previous week to 906 lb. and were eight lb. larger than a year ago. Canadian fed cattle/slaughter cow exports to the United States for the week ending Aug. 24 were nine percent larger than the previous week at 6,900 head. Year to date exports were 25 percent larger, totalling 296,803 head.

Ample market-ready supplies are anticipated through September, and additional price downside is anticipated. Seasonally softer boxed beef values could encourage reduced fed kills, and feedlots are expected to trend less current. Packer inventories continue to build, and cash market competition will be limited.

In the U.S., fed prices trended lower last week. Lower U.S. cash prices and concerns about maintaining fed slaughter following the Tyson Kansas plant fire contributed to eroding cattle futures.

Live trade in the south was generally US$3 per cwt. lower than the previous week at $100 per cwt. Live trade in the north was reported from $101-$103 per cwt, which was $3-$5 lower than the previous week.

Cows a bright spot

Butcher cow prices continue to be the bright spot for the non-fed market and are holding up much better than the fed cattle market. Alberta D2 cow prices have been hovering on either side of C$90 per cwt. for the past three weeks and are trading within $2.50 per cwt. of their second half highs. Last week they traded at $83-$97 per cwt. to average $89.42. D3 cows traded from $75-$85 to average $80.

On a dressed basis, rail cow prices are only $60 per cwt. back of the fed cattle prices. Western Canadian cow slaughter for the week ending Aug. 31 totalled 6,199 head, six percent lower than last year. In five out of the past six weeks western Canadian cow slaughter has been below year-ago levels. On a cash to cash basis, D2 cows are trading at a $4.50 per cwt. premium against the U.S. utility cow market compared to $12.25 per cwt. last year.

Over the past four weeks butcher bull prices have dropped $7.25 per cwt. Last week they averaged $104.64 per cwt. Bull prices are $8 per cwt. lower than last year, while cow prices are $1-$2 higher year over year. Cow-calf pairs that were purchased this spring and put on feed over the summer have started to hit the market.

Stronger basisfor feeders

Western Canadian calf and feeder prices are starting to show some signs of weakness. That said, prices continue to hold up well, which is reflected in stronger basis levels. Last week the Alberta 850 lb. steer cash to futures basis was reported at +15.73 per cwt. This is the strongest weekly basis over the past 20 years.

On a cash to cash basis, Alberta calf and feeder prices are trading at a sizable premium to the U.S. Last week steer calves weighing 600-699 lb. in British Columbia, Alberta, and Saskatchewan for fall delivery traded from $199-$217 per cwt. Week over week prices are steady to $7 per cwt. lower. Given weakness on the forward delivery market, more calves were passed. Prices for fall delivery are comparable to the spot cash market as Alberta steers weighing 600-699 lb. last week traded from $192-$216 per cwt.

The weekly volumes have been light, but there have been a few backgrounded or drylot feeders on offer. Last week, heifers backgrounded in a feedlot weighing 700-900 lb. traded roughly $10 per cwt. back compared to grass yearlings.

Alberta auction and electronic volumes totalled slightly more than 31,000 head. This is only the second time since July that auction volumes have been higher than last year. Canadian feeder cattle exports to the U.S. for the week ending Aug. 24 totalled 2,827 head, 47 percent larger than last year and 19 percent larger than the five-year average.

Barley prices continue to be under pressure and are now trading at the lowest point all year. Western Canadian barley prices are eight percent lower than last year while Ontario corn prices are 15 percent higher than a year ago.

It was another tough week on the futures market as live cattle futures hit new contract lows. The futures market has priced in a lot of negative news over the past month, but it cannot be ignored that there is still some positive news out there.

Beef trade

In beef trade, U.S. cutout values last week were down US$2.77 per cwt. on Choice, which averaged $229.42, and down $8.31 per cwt. on Select to average $204.47. A weaker tone has developed as demand typically slows moving into September, and beef production appeared to hold steady in the past few weeks after the Tyson plant fire.

Canadian cut-out values for the week ending Aug. 30 traded fully steady on AAA to average C$289.27 and were down 90 cents per cwt. on AA to average $262.83. The AAA/Choice and AA/Select spread was at -$22 per cwt. and -$19 per cwt., respectively, which is much wider than last year’s -$6 to -$8 per cwt.

Markets at a glance

Copyright © 2019. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

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