Canfax report – Jan. 16 – 2020

Direct fed cattle sales were active for the start of the new year.

Feedlots aggressively pulled market-ready steer supplies forward, but around half of this week’s trade were heifers. Many were expecting better prices, and the outlook suggests good domestic fed interest. There is a strong fed basis so American interest was cool.

Prices were fully steady, averaging $162.25-$164.25 per hundredweight, but the majority of cash sales were dressed at $275 per cwt. delivered.

Most cattle marketed this week were scheduled for immediate to two-week delivery.

Moderate dressed trade was reported in Ontario this week with prices continuing steady and most trading at $248-$250 per cwt. delivered. Eastern cattle marketed this week are scheduled for one to three week delivery.

The formula grid base is expected to strengthen moving forward as packers push to secure more inventory. Cash prices next week are anticipated fully steady to higher.

Western Canadian fed slaughter last week was one percent larger than the previous week at 27,636 head and eight percent smaller than a year ago.

Total western fed slaughter for 2019 ended the year six percent higher at 2.065 million head.

Feeder trade

For the week ending Jan. 10 steers traded 50 cents to $2 per cwt higher compared to the end of December.

Ontario buying interest is traditionally strong on heavier steers, but this has not been the case this year.

Alberta steers weighing more than 900 lb. for February delivery saw prices reported in the upper $180s per cwt. Heifers in the same weight range traded at $169.58 per cwt. Prices are comparable with the spot market.

Over the past five years 900 lb. steers established first quarter highs in January.

Given the seasonality of the feeder market and how strong prices and basis levels are relative to last year, forward pricing heavier feeders for February delivery is not a bad selling option.

Slaughter cows

Western Canadian D2 cow prices are trading at their highest point since early September. At many auction facilities, non-fed volumes were moderate to larger to start the year.

Butcher cow prices were steady to $2 per cwt. stronger than the last half of December.

Western D2 cows averaged $88 per cwt. while Ontario averaged $59.84. D3 cows averaged $75.50 in the West, but Ontario sank to an average of $49.52. Average dressed rates were $171-176 per cwt.

Beef trade

The AAA cut-out value in Canada as of Dec. 20 was $282.97 per cwt., down slightly from the previous week. The AAA-AA spread was $17.02. Last year the spread was only $5.92.

U.S. cut-out values gained momentum this week with moderate to good demand observed on a generally heavy offering. The Choice-Select price spread continued to narrow to $3.28 this week with Choice firming modestly $1.71 per cwt. higher, while Select surged $4.05 per cwt. higher. Post-holiday ribs were the only primal to lose ground this week with Choice and Select slipping $5.09 and $4.32 per cwt. lower, respectively. Select loin and brisket added significantly to cut-out values this week, surging $12.73 and $11.75 per cwt., respectively, while Choice saw modest gains of $2.50 and $4.59 per cwt. Chuck and round firmed modestly higher this week, and short plate and flank saw respectable post-holiday gains.

Exports

Canada remains a net exporter of live cattle. As of Dec. 28 more than 724,700 head were exported. This number covers feeders as well as slaughter steers, heifers, cows and bulls. Fed cattle and slaughter cow exports for 2019 were 26 percent larger than 2018, totalling 481,037 head.

As the herd size remains stagnant, more U.S. feeders have arrived in Canada for finishing.

Calf and feeder imports in November totalled slightly more than 40,000 head. October and November of last year ranked as the first and second largest monthly import volumes on record.

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.

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