Canfax report – August 6, 2020

Dressed trade steady

Last week was fairly uneventful in the fed cattle market. Most of the dressed trade was steady with the previous week at $225 per hundredweight delivered. There was thinly reported trade at higher prices up to $229 per cwt. delivered. Most cattle were being scheduled for pickup in one to two weeks, while some were scheduled for later in August.

The cash-to-futures basis strengthened marginally while the cash-to-cash basis weakened as the Alberta market lost its premium to Nebraska. Prices in both regions traded about even.

Slaughter rates continue to be strong with Canadian fed slaughter last week almost 3,000 head above the same week a year ago. Over the last four weeks Canadian fed slaughter has averaged more than 3,000 head higher than a year ago at 57,568. Last year weekly fed kills increased from July to average 57,323 last August. Higher slaughter rates and Saturday shifts will be needed to keep up and/or stay ahead of last year’s kill levels.

Despite backlogged numbers, feedlots are generally reporting they are in decent shape for currentness with no major pressure to move cattle.

The Ontario market also remained steady with the previous week and maintained a price premium to the west with fed prices trading from $240-$245 per cwt. with delivery one to two weeks out. Ontario continues to have some of the strongest fed prices in North America.

Although the fed market has stabilized, Alberta fed live prices remain more than $12 per cwt. below a year ago, and feedlot losses continue to grow because packing plants have the leverage. Upside potential for the fed market remains limited.

In the United States, the fed market saw some strength last week. Live trade in the south moved up to US$97 per cwt. In the north, dressed trade was mostly at $160 per cwt. and $100 per cwt. live.

Lower cow slaughter

Over the four weeks ending July 31, western Canadian cow slaughter has totalled 18,862 head, 21 percent lower than last year. For the month of July, it appeared to be the smallest cow slaughter since 2015. Year-to-date, western Canadian cow slaughter is down 24 percent compared to last year.

To make up for reduced non-fed beef production, imports have increased. New Zealand beef imports from January to May are up 11 percent compared to 2019. In some spots there was a bigger run of cows (300 to 500 head on offer) at commercial auction facilities, but for the most part volumes have been light.

Butcher cow prices traded steady to $2 per cwt. stronger. D2 cows averaged $88.17 per cwt. and D3s averaged $79.42. Butcher bull prices were steady, averaging $120.14.

Light calves pressured

After trading in a tight range from $225-$230 per cwt. for the past 11 weeks, Alberta 550-pound calf prices have come under pressure. Seasonally it is not uncommon to see calf prices decline during the summer, while feeder prices tend to pick up momentum.

Demand for grass cattle has been strong, and further strength was noted on the electronic sales with prices $5 per cwt. higher in spots, bringing prices very close to year-ago levels. Some yearlings in Western Canada that have traditionally been fed in Ontario are staying in Alberta or coming west into Alberta to be fed.

Last week on the cash market, Alberta steers and heifers weighing 800-900 lb. traded $2-$4 per cwt. higher. Prices are $3-$4 per cwt. shy of their highs set back in January.

In seven of the past 10 years, 850 lb. steer prices have established annual highs during the second half of the year. More upside is anticipated, and prices are expected to overtake the January price of $188.85 per cwt.

The forward delivery market was lightly tested last week for both yearlings and calves. British Columbia steers weighing 900-1,000 lb. for September delivery coming off grass traded $175-$187 per cwt. Last year 900 lb. and heavier B.C. steers for September averaged $179.47 per cwt.

The calf market was lightly tested in Manitoba, and forward calf prices are looking a few dollars higher compared to sales in May and June. For October delivery, five weight steer calves traded in the low $220s per cwt. and seven weight steers traded over $200 per cwt. Good interest was noted from Ontario feedlots.

Choice cut-out steadies

In U.S. beef trade, wholesale prices were mostly steady as the Choice cut-out found support at the US$200 per cwt. level. The Choice cutout has been trading in a tight range between $201 and $203 per cwt. for more than a week, and Select has been in the $188-$191.50 per cwt. range.

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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