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 steady
Alberta direct cattle sales saw moderate volume trade last week, and prices trended either side of steady. Average steer prices rebounded $1 per hundredweight higher than the previous week to average $137.40 per cwt., while a light volume of heifers saw prices soften around $1 per cwt. lower to average $134.91.
Improved competition was observed last week with both major packers procuring cash inventory. A handful of live steers traded mostly steady with last week, and dressed sales were reported fully steady to $5 per cwt. higher with most trade from $230-$233 per cwt. delivered.
Average prices last week were $9 and $10.50 per cwt. lower than year ago on steers and heifers, respectively. Alberta fed steers have traded at a premium to Nebraska for the past four weeks, and last week’s cash to cash fed basis was estimated around +$2 per cwt.
Western Canadian fed cattle slaughter for the week ending Sept. 14 was 13 percent larger than the previous week at 46,512 head and year to date was six percent larger, totalling 1,465,703 head. Canadian steer carcass weights continued to trend seasonally larger last week, up three pounds from the previous week and five lb. heavier than a year ago.
Canadian fed cattle/slaughter cow exports to the United States for the short four-day week ending Sept. 7 was down 13 percent to 7,333 head. Year to date exports were 24 percent larger, totalling 312,606 head.
Alberta fed steer prices may have bottomed out last week at a $136.41 average, and the timing correlates with the five-year average. The Sept. 1 Alberta-Saskatchewan cattle on feed report was also bullish because monthly marketings were once again fully steady and have been fully steady to significantly larger than year ago in eight out of nine months so far this year.
However, the Sept. 1 on-feed inventory was the largest since 2007. This suggests market-ready supplies are not expected to tighten dramatically.
In the U.S., light trade continued to trickle in over the course of last week with live sales US$2 per cwt. higher than the previous week in the south at $101 per cwt. In the north, live trade was reported $1-$3 per cwt. higher than the previous week at $102-$103 per cwt., and dressed trade developed from $160-$162 per cwt., which was $2-$5 higher than the previous week’s Nebraska rail average.
Non-fed hits new low
Over the past five weeks western Canadian cow slaughter has averaged almost 1,000 head per week below last year. Lower non-fed production has been supportive to the 85 percent trim market because prices are 15 percent higher than last year and 12 percent higher than the three-year average.
D2 cows traded from $80-$93 per cwt. to average $86, while D3s sold for $70-$82 to average $75.14.
Slaughter bulls averaged $101.83, the lowest level since March. Cow prices are the lowest since July.
Looking at the cow market, over the past 10 years, excluding 2014, the average decline from second half highs to second half lows stands at 21 percent. Using an historical decline of 21 percent, this would put D2 cows on track to bottom in the $72 per cwt. area. However, the market may not get that low. Many producers have indicated more feed and forage were put up this year than last year, so there may be less culling pressure. As well, North American trim prices continue to impress, supported by strong international demand.
More than 50,000 head of calves traded last week via video and electronic auction, offered for October and November delivery. Based on the numerous sales, British Columbia, Alberta and Saskatchewan steers weighing 500-600 lb. for October delivery saw a weighted average price of $217.86 per cwt. based at 540 lb., while heifers for October delivery averaged $190.06 per cwt. based at 538 lb.
It appears forward delivery sales for October are at a slight premium compared to the spot market. The premium being bid into the market for October delivery is somewhat surprising. Over the past 19 years, 500-600 lb. steer calf prices strengthened from September to October less than 50 percent of the time.
Eastern Canadian buyers continue to be a strong force behind the calf market. Last week Saskatchewan and Manitoba 500-600 lb. steers traded at a $2 per cwt. premium over the Alberta market. On the flip side, Alberta feeders over 800 lb. were trading at a premium to the Saskatchewan and Manitoba market. Alberta bids appear to be more competitive than the U.S. as yearlings from Manitoba come west to be finished.
Based on the latest Alberta and Saskatchewan cattle on feed report, August placements were down 26 percent compared to last year, the fourth consecutive month that placements have been below last year. Third quarter placements are shaping up to be historically low, which should continue to support the yearling market.
Last week Alberta steers weighing 760-875 lb. for January delivery traded at $186.25-$191.25 per cwt. Using an eight cent slide, 850 lb. cash to futures basis levels ranged from +6.70 to +10.90 per cwt.
Cut-out values fall
In U.S. beef trade, cut-out values continued to fall last week with Choice down US$1.80 per cwt. to average $218.17 and Select down $6.44 per cwt. to average $192.16. Seasonal demand in the fall is expected to support prices of roast items, while lower prices in the last few weeks could encourage some buyers to step back into the market.
Canadian cut-out values for the week ending Sept. 13 traded lower with AAA down C$6.08 per cwt. to average $285.82 and AA down $8.34 per cwt. to average $252.19. The AAA/AA spread widened to $34 per cwt. compared to $31 per cwt. the previous week and $10 per cwt. last year.
The AAA/Choice spread narrowed from -$12 per cwt. to -$8 per cwt., and the AA/Select spread narrowed from -$13 per cwt. to -$12. The AAA/Choice and AA/Select spreads are now comparable with year-ago levels after being significantly weaker in the previous three weeks.