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.
It’s a market situation where no one wins. Packing plants can’t process cattle, or are limited in how many they can process, therefore feedlots can’t get their fed cattle to market. Feedlots trying to market their upcoming fed supplies are looking at significantly lower prices, if they can even get a bid at all.
Meanwhile, beef production has been squeezed across North America, which is restricting supplies available to consumers. As a result, wholesale beef prices shot above old record highs this week, feedlots are seeing huge losses, and consumers will likely see higher beef prices. This situation will strain the entire supply chain.
Fed steer prices dropped by $11.80 per hundredweight last week to average $112.55, and heifers dropped by $13.61 to average $113.32 per cwt. The Cargill plant in High River had not slaughtered cattle for nearly two weeks as of April 24, while JBS in Brooks was slaughtering 1,500 to 2,000 per day — less than half its capacity. Many U.S. plants are also impacted by temporary closures and reduced slaughter rates.
As a result, cattle that were supposed to be slaughtered in Western Canada or exported to the United States for slaughter in April are being pushed back into May. Feedlot inventories were not in bad shape as of last week, but each day with idle plants and reduced capacity is a significant risk to the feedlot sector.
In Western Canada, cattle prices have dropped $36 per cwt. over the past three weeks, averaging just over $112 per cwt. last week. Prices are at the lowest point since October 2012. For the month of April, this is shaping up to be one of the largest per head losses in history.
Losses are steep but there was a large uptake on fed cattle price insurance for May and June. For many producers with insurance, they will likely be more concerned about getting a slaughter spot and less concerned about price. This will make it difficult for those without insurance to fight for higher prices.
With two major packers inactive on the cash market, buying interest was noted from two smaller Alberta packers last week. Dressed sales were reported from $190-$195 per cwt. delivered and buyers indicated cattle would be picked up in one to two weeks. Most cattle marketed are yearlings but a few calves were sold last week.
On a cash to cash basis, Alberta fed prices were trading at roughly $28 per cwt. discount against the Nebraska market. On a dressed basis, Alberta fed prices last week were at a $48 discount against the Ontario market.
In the U.S., trade was scattered last week. Dressed sales in the north ranged from US$148-$160 per cwt., which was $7-$8 per cwt. lower than the previous week. Wholesale beef prices are at the highest point ever seen while cattle prices are trading at annual lows.
No hooks for cows
Overall reduced slaughter and kill priority for fed cattle continued to pressure non-fed prices lower last week. D2s averaged C$66.57, and D3s averaged $58.70 per cwt. Slaughter cow prices at auction were $4-$5 per cwt. lower than the previous week. Butcher bull prices trended steady with the previous week, averaging $97.17 per cwt.
Western Canadian non-fed slaughter for the week ending April 18 was sharply $37 percent lower than the previous week at 3,259 head, and year to date totals were 11 percent lower at 132,615 head.
Weekly cow slaughter volumes are seasonally moderate, but additional dairy cow culls are currently in the mix. Strong trim and grind will continue supportive, but getting cows on the kill floor during the pandemic remains problematic. A significant number of cull cows are going to the U.S.
Alberta feeder prices were mixed last week with grass type calves seeing prices strengthen while large feeders over 800 pounds saw prices continue to seasonally soften. Light 400-500 lb. calf prices rallied $5 per cwt. higher than the previous week, and calves from 500-700 lb. saw prices trending steady to $3 per cwt. higher.
Grass interest was observed for feeder steers up to 800 lb. Steers from 800-900 lb. slipped $2.72 per cwt. lower than the previous week, and prices were the lowest since mid-October 2016. Large feeders over 900 lb. to place against a lacklustre third quarter fed market saw prices $4 per cwt. lower.
Total weekly sale volumes were down 11 percent from the previous week and were 16 percent lower than the same week last year. Year-to-date auction volumes have declined through April and are 19 percent lower than year ago at 354,756 head.
The U.S. Department of Agriculture reports that Canadian feeder exports for the week ending April 11 were steady with the previous week at 4,613 head. Year to date feeder exports are significantly 46 percent below year ago totalling 44,052 head.
Some background feeders have been fighting the market during the pandemic, and marketings have been deferred. Feeders over 800 lb. are expected to see increased price pressure, and some backgrounders are looking to finish their cattle rather than sell in the soft market.
Cutouts hitrecord high
In U.S. beef trade, cut-out values rallied record high last week with strong demand reported on the limited beef coming out of the pipeline. Choice averaged US$284.29 per cwt., and Select averaged $272.89. All primals traded higher with middles leading the way.
Despite a significant reduction in food service buying, retail demand is now outpacing supplies following significant reduction in North American slaughter. Added grilling demand should enhance price support, and cut-out values are expected to strengthen.