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.

Feeder prices remained steady this week, but offerings were low because many regular auction sales were cancelled because of cold weather. Alberta auction volumes were more than 40 percent lower than the same time last year, selling 15,934 head. Year-to-date sales volumes are down more than 20 percent from a year ago.

Various quality calves weighing less than 500 pounds saw prices ease $2.50-$3 per hundredweight lower than last week.

Saskatchewan and Manitoba calves in the 500-600 lb. weight range traded at a $3.32 premium per cwt. to Alberta. Saskatchewan calves fetched an average $$226 per cwt., while Alberta averaged $223 per cwt.

Middleweight calves from 500-700 lb saw selective buyer interest with prices ranging from $1.67 per cwt. lower to $3.33 per cwt. higher. There was good demand for feeders weighing more than 900 lb. partly because of May price insurance in the low $160s per cwt.

Cattle-on-feed up

The Jan. 1 cattle-on-feed report from Canfax showed feed inventories are above last year for the third consecutive month. This is the third largest inventory since 2002. Cattle-on-feed inventories were 1,116,471 head, 11 percent larger than last year and 20 percent more than the five year average.

Fewer feeders are being exported to the United States, and record volumes of American calves pushed up fourth quarter placement numbers.

From October to December, feedlots placed 877,256 head, the third largest fourth quarter placement volume since reporting began. This large number could test western Canadian packing capacity in the summer months when these cattle are marketed.

Fed cattle

Aggressive fed cattle marketings over the past few months have finally come home to roost as feedlot inventories are becoming more current and leverage is favouring the cattle feeder. Over the past three weeks, fed prices have averaged in the low $160s per cwt.

Producers have been encouraged to market cattle because fed prices are at their highest point since March 2018, basis levels are strong and profits in the cattle being sold are small. Active trade was reported this week. One packer was buying cattle for one to two week delivery while the other packer was booking cattle for three to four week delivery. Cattle sold for immediate delivery were priced at $275 per cwt., while cattle for February delivery saw prices range from $272-$274 per cwt. delivered.

On a cash-to-cash basis, western Canadian fed prices have been at a premium to the U.S. for the past five weeks. This week, Alberta fed cash to futures basis averaged -76 cents per cwt., which is right in line with the five year historical monthly average. This week, Ontario dressed sales ranged from $250-$255 per cwt., steady to $5 per cwt. higher than the previous week. Prices were higher for February delivery compared to immediate delivery.

Cow numbers limited

Alberta slaughter cow prices are continuing to improve with D2 slaughter cows trending fully steady and D3 cows about $1.50 per cwt. higher this week. There has been good demand for a smaller offering.

Strong interest for fat cows has been reported over the past couple of weeks, and feeder cow prices surged over $7 per cwt. higher this week. Butcher bull prices trended barely steady, averaging $101.79 per cwt.

Cut-out values rally

U.S. cut-out values rallied higher this past week. The Choice-Select spread narrowed to $1.43 per cwt., the lowest since last February.

The Choice cutout was $2.94 per cwt. higher than last week, and Select improved by $4.79 per cwt.

Canada is falling behind on the grading side. Requirements for AAA and Prime are the same as USDA Choice.

Marbling requirements for U.S. Choice and Prime are the same as the Canadian requirements for AAA and Prime, but the percentage of carcasses hitting the top two grades is considerably higher in the U.S. than Canada. Last year in the U.S., almost 80 percent of the carcasses graded Choice or Prime.

Last week about 56,700 head were killed in federal plants. About 29,400 made AAA while only about 2,000 graded Prime.

Canada is failing to gain added value with this performance. Using the five year average for the AAA/AA spread in Canada of approximately $12 per cwt. and last year’s average carcass weights, it works out to almost $42 million if Canada could match U.S. quality grading levels.

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