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 market takes a hit

Weighted average steer prices closed $5.75 per hundredweight lower to average $141.54 per cwt. last week. Heifer prices averaged $140.24 per cwt. Fed cattle prices are at the lowest point since early October. For the second week of March they were the lowest fed cattle prices since 2014.

With fed prices continuing to drop, feedlot margins have gone from bad to worse. A few cash cattle have been pulled off the list and are instead being reallocated to meet April contract obligations. Some cattle have been carried over for the past few weeks and there was pressure to sell.

On March 11, dressed sales were reported from $240-$243 per cwt. delivered. By March 12 and 13, packers were buying cattle at $235-$240 per cwt. delivered. Lift times varied from packing plant to packing plant. One packer was buying for the week of March 30 delivery while the other was indicating cattle would not be picked up until the second half of April. Some producers were willing to take less money for a quicker slaughter date.

On a cash-to-cash basis, Alberta fed prices have been trading at a discount to the United States for the past seven weeks. Last week, Alberta fed prices were at an estimated $10.50 per cwt. discount against the U.S. market, the weakest basis level seen this year. Even though Alberta fed prices were trading at an export basis to the U.S., the U.S. buying interest was non-existent last week.

Western Canadian fed slaughter for the week ending March 7 totalled just over 39,000 head. The start of March was the largest weekly slaughter since 2006. Large slaughter volumes would suggest packer margins are profitable. The Canadian dollar, trading at the lowest point since January 2016, should support the beef export business.

In the U.S., trade last week was scattered. Dressed sales in the north ranged from US$170-$176 per cwt., which was $6-$10 lower than the previous week. The U.S. feeder index set new annual lows, closing at $127.91 per cwt. based at 797 pounds. U.S. beef exports for January were 4.1 percent larger than last year and beef imports were down 2.9 percent.

Bulls trade steady

Slaughter cow prices at auction eased modestly lower last week on a moderate offering. D2 cows averaged $85.79 per cwt. and D3s averaged $75.17. Butcher bulls trended fully steady with the previous week, averaging $104.35 per cwt.

Western Canadian non-fed slaughter for the week ending March 7 was one percent larger than the previous week at 9,419 head and year to date totals are nine percent lower at 90,848 head.

Weekly cow slaughter volumes should begin to tighten and grilling demand should seasonally strengthen. Reduced non-fed slaughter is anticipated and should free up some hooks for the fed market.

Feeders under pressure

Feeder cattle futures trended limit down last week in three out of five trading sessions and Alberta feeder prices were pressured lower. Good demand continues for grass types but steer calf prices did ease modestly lower. Similar weight heifer calves saw prices slide sharply $5- $7 per cwt. lower than the previous week.

Feeder steers over 700 lb. to place against the third quarter fed market saw prices generally $2-$4 per cwt. lower than the previous week. It should be noted that Western Cattle Price Insurance Program (WCPIP) fed insurance on March 12 was offered at $122 and $124 per cwt. plus premium for end of August and September respectively. The Canfax March trends report is projecting fed steer break-evens for August at around $151 per cwt.

A significant volume of feeders was passed through auctions last week and some producers opted to defer marketing for a later date. Total weekly sale volumes were 22 percent smaller than the previous week at 25,705 head and were 25 percent lower than the same week last year. Year-to-date auction volumes are four percent lower than year ago at 247,465 head.

USDA reports Canadian feeder exports for the week ending Feb. 29 were the largest so far this year, up 11 percent from the previous week to 4,222 head. Compared with the same week last year, feeder exports were reported 48 percent lower. Year to date export volumes were down 47 percent, totalling 17,713 head.

Extreme volatility over the COVID-19 pandemic has limited market upside. Calf prices should seasonally be gaining momentum but in the current emotional climate, prices are anticipated to go lower. Larger feeders are also expected to see sharp price declines as feeding margins deteriorate and risk increases in the fed market.

U.S. beef trade

In U.S. beef trade, cut-out values eased lower last week on generally light to moderate demand and offerings. Choice averaged US$206.01 per cwt. and Select averaged $197.88. Boxed beef load counts were five percent larger last week and increased retail buying on coronavirus pressure was reported.

Spring beef demand would seasonally be gaining momentum, along with fed price momentum but that could deteriorate if virus fears persist.

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