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.
Feds continue rally
Western Canadian fed prices rallied for four consecutive weeks and as of last week were at the highest point since August. Fed steers rose by $1.89 per hundredweight to average $142.45, and fed heifers were up by 95 cents to average $141.21 per cwt.
In the second half of this year, fed prices have been trending in line with 2017. Last week, most of the dressed sales were reported at $240 per cwt. delivered. Cattle that were bought last week were being scheduled for the end of October and early November delivery.
Instead of taking a cash bid, some producers opted to price their cattle on the Canfax average for the week that they would be delivered.
Alberta fed cash to futures basis levels weakened, going from -64 cents per cwt. to -$2.04 per cwt., the weakest basis since late May. Volumes were light, but dressed sales in Ontario were reported from $232-$234 per cwt. delivered. One Ontario packer still remains offline, and there have been rumblings that this plant could be back and operating soon.
Western Canadian steer carcass weights increased two pounds to average 929 lb. Based on the five-year average, carcass weights traditionally don’t peak until late October. Despite steer weights above last year, grading continues to disappoint. This trend of lower quality grading is not only occurring in Canada but the United States as well.
For the week ending Oct. 5, Canadian Prime/AAA grading as a percentage of all A grades was 63.9 percent, compared to 68.9 percent last year.
Slaughter volumes continue to be impressive, and one can’t help but think there is light at the end of the tunnel because fed supplies should begin to gradually tighten. Western Canadian fed slaughter volumes for the third quarter of 2019 were the largest since 2005. With year over year increases in Canadian beef production, it is also impressive with how strong Canadian beef cut-out prices have been over the past 90 days, supported by domestic and international demand. The trend is your friend.
In the U.S., light trade in the north on dressed sales reported prices at US$172 per cwt., which was $2 per cwt. higher than the previous week. Total beef exports for the month of August were down 9.8 percent in volume and down 10.8 percent in value.
Non-fed prices trended steady last week on a seasonally moderate offering. Alberta D2 slaughter cows at auction have traded in a tight $85-$86 per cwt. range over the past four weeks, last week averaging $86 per cwt. D3 prices, which averaged $75.07 per cwt. last week, have been static.
Non-fed dressed cow bids were carried over from the previous week at $165-$170 per cwt. delivered. Butcher bull prices were reported mostly steady, averaging $103.94 per cwt.
Western Canadian non-fed slaughter volumes for the week ending Oct. 5 were down 12 percent from the previous week to 6,609 head, and year to date was four percent larger, totalling 309,438 head. Slaughter cow prices are anticipated generally steady, but price downside is anticipated as offerings seasonally build.
In U.S. beef trade, Choice was up US$3.57 per cwt. to average $215.63, and Select was down 55 cents to average $186.66 per cwt. The Choice/Select spread widened again to $29 per cwt. compared to $25 per cwt. the previous week and $10 at this time last year.
Canadian cut-out values for the week ending Oct. 4 saw AAA and AA up C$1.40 to average $277.08 and AA up $6.02 to average $253.94. The AAA/Choice spread continued to strengthen from -$9 per cwt. to -$6, while the AA/Select spread is now at +$5 per cwt. compared to -$4 per cwt. the previous week.
The Alberta feeder market gained momentum last week, and average prices rallied C$3-$5 per cwt. higher than the previous week. Light calves surged sharply higher last week with strong demand for backgrounders to use ample forage stocks.
Abundant feedstocks have also limited the movement of light-end steer and heifer calves in general, which were actively marketed last year.
Calves from 500-600 lb. saw prices firm over $2 per cwt. higher than the previous week. Larger steer calves over 600 lb. saw prices trending $1.50 per cwt. higher, while similar weight heifers rallied $3.50 per cwt. higher.
Active eastern buying interest was observed for all types of feeders again last week. Yearling supplies continue to tighten, and prices for large feeders over 900 lb. were generally $3-$4 per cwt. stronger. Total weekly sale volumes were 47 percent larger than the previous week at 42,732 head.
The USDA reports that Canadian feeder exports to the U.S. for the week ending Sept. 28 were 609 head, the smallest weekly volume of the year. Year to date feeder exports are six percent larger than last year at 165,833 head.
Auction volumes will continue to build seasonally larger through October but will remain manageable. Average 550 lb. steer calf prices last week were trading around $10 per cwt. lower than year ago, but the calf market moving ahead is poised to converge with 2018. Good demand is anticipated for feeders to place against the first quarter fed market.