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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 slaughter dips

Alberta direct cattle sales saw moderate volume trade last week with weighted average steer prices firming $1 per hundredweight higher. Light live trade was reported at $135.50-$136 per cwt. Early dressed bids in the low $220s per cwt. did not attract feedlot attention. Rail trade developed at $225 per cwt. delivered, fully steady with the previous week.

The Alberta cash-to-futures basis weakened to -3.90 per cwt. For the week ending Sept. 5, western Canadian fed slaughter dipped 10 percent lower than the previous week to 42,779 head. Year-to-date western fed slaughter is down three percent at 1,371,112 head. Canadian steer carcass weights were reported five pounds heavier than the previous week and one lb. lower than last year.

The U.S. Department of Agriculture reports that Canadian fed cattle/cow exports for the week ending Aug. 29 were slightly larger than the previous week and 19 percent lower than last year at 6,801 head.

Last week’s Ontario fed market lacked enthusiasm with early bids reported at $230-$240 per cwt. delivered. A handful of rail trade was reported from $231-$232 per cwt. delivered for early October and $240-$242 per cwt. delivered for next week’s lift.

Feedlot managers were not motivated sellers last week, and generally current market-ready inventories will provide some breathing room this week. The recovery from drought in Australia has tightened beef supplies, and a positive African swine fever case in Germany could be positive for North American beef and pork trade.

With summer holiday buying winding down, fed prices should seasonally be trending lower, but current lucrative packer margins and great beef features could encourage steady prices this week.

In the United States, moderate volume live trade was reported in the north and south last week with prices down US$1-$1.50 per cwt. from the previous week at $101-$102 per cwt. Dressed sales in the north were $2-$3 per cwt. lower than the previous week from $160-$161 per cwt. delivered.

U.S. steer carcass weights for the week ending Aug. 29 were six pounds heavier than the previous week at 916 lb. and significantly 32 lb. larger than year ago.

Drought conditions in some U.S. regions and the potential lack of winter grazing limited the stocker price upside last week and prices ranged from $3 per cwt. lower than the previous week in the south and $3 per cwt. stronger in the northern states.

Large feeders saw prices trend fully steady to $5 per cwt. higher last week on improved feeding margins despite ample offerings.

Few cows at auction

Western Canadian cow slaughter for the week ending Sept. 5 totalled 4,569 head, 24 percent lower than last year. This is the 24th consecutive week that cow slaughter volumes have been below year ago. The situation in Eastern Canada is a bit different, with cow slaughter totalling 2,181 head, which for the beginning of September is the largest slaughter since 2011.

In Western Canada, non-fed volumes through commercial auction facilities were very light with many auction marts reporting less than 100 head of non-fed cattle on offer last week. Despite the lighter volumes, D2 cow prices traded $2 per cwt. lower, to average $82.64, the lowest price since late May. D3s averaged $74.64.

Alberta cow prices have shifted back to a discount against the U.S. market. Butcher bulls continue to be the shining star of the western Canadian market, last week averaging $112.32 per cwt. They are the only class of slaughter cattle (fed and non-fed) trading higher than year ago.

Canadian cow carcass weights averaged 707 lb., which is 18 lb. smaller than last year. This is the smallest that carcass weights have been all year.

Calf interest solid

Most of the cattle on offer last week were yearlings coming off grass. Despite lower prices, heavier weight feeders continue to trade within a couple dollars of annual highs. Calf volumes remain light, but buying interest remains solid with prices above last year.

Ontario 550 lb. steer calves averaged in the low $220s per cwt. last week, the highest priced calves in Canada and North America. Eastern Canadian buyers have been quite active on the Alberta, Saskatchewan and Manitoba forward delivery calf market.

Last week, Alberta and Saskatchewan calves weighing 500-600 lb. for October/November traded for $205-$227 per cwt. with a weighted average price of $214.61 per cwt. based at 572 lb., fully steady with three weeks ago.

Forward delivery calf prices are right in line with the spot cash market as Alberta 500-600 lb. steers traded from $205-$226 per cwt., averaging $215.55 last week. Based on monthly prices, in 11 out of the past 20 years steer calf prices have declined from September to October with the average decline over those 11 years being 4.4 percent. That may not happen this year but it is important to bring attention to the market/price risk of the calf market. From today’s prices, and using the historical decline of 4.4 percent, that would put 550 lb. prices in the $205 per cwt. area for October.

A lot of the yearlings trading on the spot market and heavier weight calves trading for 30 to 60 day delivery have break-evens in the low to mid $150s per cwt. Using historical basis levels for April and May, some of these cattle are near break even.

Cutouts trend lower

In U.S. beef trade, cut-out values trended seasonally softer last week with all primals trending lower except for brisket. Softer demand pressured Choice and Select values downward by US$6.41 per cwt. for Choice (averaging $220.83) and by $5.18 per cwt. for Select (averaging $207.32.)

Cut-out values are expected to soften further as summer buying winds down and beef prices realign lower. Good kill margins and attractive beef features should keep product moving.

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