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 lower

After trading in the low $160s per hundredweight for the past five weeks, fed prices took a step backward, closing $5-$6 per cwt. lower. Fed steers averaged $158.78 and fed heifers averaged $156.27.

There are price similarities between this year and last. In 2019, prices were flat for the first few weeks in January followed by a price pull-back in late January.

Strong prices over the past month have put feedlot inventories in good shape, and selling pressure was limited last week and sale volumes were light. A softer price tone was noted as the week progressed. On Jan. 28 sales started out at $270 per cwt. delivered, but by Jan. 29 prices were reported at $265 per cwt. delivered.

Two of the three western Canadian packers bought cattle last week but overall competition on the cash market was limited. Cattle that were bought are scheduled for the second half of February delivery. A basis shift was observed as Alberta fed prices went from a premium to the U.S market to a discount last week.

In Ontario, dressed sales were reported at $255 per cwt. delivered, fully steady with the previous week. Cattle were being scheduled for next week delivery. Year to date, the 2020 eastern Canadian steer slaughter is down five percent compared to last year and heifer slaughter is down four percent.

Based on the latest Canadian cut-out prices, the AAA/Choice spread is -$4.60 per cwt. and the AA/Select spread is -$11.06 per cwt. Processing margins have narrowed for western Canadian packers, and there has been talk of reduced hours.

Packers will be able to pull on February contract cattle this week while grid cattle volumes also sound ample.

In the U.S. fed cattle trade, dressed sales in the north ranged from US$194-$196 per cwt., which is $3-$4 per cwt. lower than the previous week. Live sales in the southern U.S. were marketed at $122 per cwt., which is $2 per cwt. softer. Weekly U.S. beef production was up seven percent compared to last year. Total U.S. beef cow inventory on Jan. 1 was down by 374,000 head compared to last year, and total dairy cow numbers were down 19,000 head.

Cows ample at auction

An ample offering of slaughter cows was marketed last week, and prices at auction eased modestly by $1-$1.50 per cwt. D2 cows averaged $86.81 and D3s averaged $77.56. Dressed cow bids slipped $5 per cwt. lower than the previous week with reports from $169-$174 per cwt. delivered.

Butcher bull prices firmed modestly higher last week to average $102.50 per cwt. Western Canadian non-fed slaughter for the week ending Jan. 25 was down 11 percent from the previous week to 8,207 head and year-to-date was 12 percent lower.

D2 cow prices typically ramp up through the first quarter and peak in April. In the past 30 years, monthly average D2 prices increased 12 percent from January to April.

Feeders pressured lower

Alberta auction volumes continued to build last week, and average prices were pressured modestly lower. Steer calves lighter than 600 pounds saw prices fully steady to higher with good seasonal demand as grass types and to place against the fourth quarter fed market.

Last week, 500-600 lb. steer calves traded at the highest level since the first week of May 2019. Feeder steers heavier than 600 lb. to place against the lacklustre third quarter summer market saw prices slip $3.50-$6 per cwt. lower than the previous week.

Eastern buying interest for larger calves improved last week, and Alberta markets saw a slight price premium over Saskatchewan and Manitoba. Weekly auction volumes surged 105 percent larger than the previous week to 38,753 head. Year-to-date auction volumes are nine percent smaller at 89,919 head. It should be noted that last week a significant volume of slaughter cows were included in the mix. The U.S. Department of Agriculture reports that Canadian feeder exports for the week ending Jan. 18 totalled 1,205 head, 62 percent lower than the same week last year. Year-to-date feeder exports were down 58 percent at 2,296 head.

Large feeders heavier than 800 lb. have traded seasonally strong through January, but prices broke lower last week and are expected to trend still lower. Calf prices should seasonally gain momentum through the first quarter of 2020 as grass interest improves.

Meat trade

In U.S. meat trade, Choice cut-out values slipped almost US$2 per cwt. lower last week to average $213.35, and Select traded fully steady at $211.48. Light to moderate demand was reported on a generally moderate offering.

The AAA cut-out value as of Jan. 17 was $272.70, and AA averaged $263.50 per cwt.

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