FED CATTLE EDGE HIGHER
The Canfax fed steer weighed average was $134.58 per hundredweight, up 70 cents. There was no heifer average.
Packers did not chase cattle, and so feedlots, which are generally current, opted to carry over a large portion of the cash show list.
Delivery times were two weeks out.
Canadian fed steer carcass weights for the week ending Sept. 16 fell five pounds to 913 lb., while U.S. steer carcasses to Sept. 9 were six lb. heavier.
The weekly western Canadian slaughter to Sept. 16 fell one percent to 40,031 head.
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Slaughter for the year is up seven percent.
Weekly exports to Sept. 9 surged to 7,686 head, up 23 percent from the holiday shortened week.
Exports for the year are up eight percent.
Alberta prices are near the seasonal bottom, but more downside is still possible through to mid-October.
Feedlots have technically and fundamentally gained leverage over the past two weeks, but the strong fed basis continues to encourage trade and to pull fed cattle forward.
The Alberta-to-Nebraska basis narrowed but remained seasonally strong at plus eight cents
Market-ready supplies will begin to tighten, and fourth quarter fed prices should be well supported.
U.S. trade saw live prices US$2 higher than the previous week in the south with most trade at $108 per cwt.
Light dressed trade in the north was $3-$5 higher at $170-$172 delivered.
However, the U.S. monthly cattle-on-feed report showed more placements than expected, which weighed down deferred cattle futures months.
COWS DOWN
D1, D2 cow prices hit new annual lows, ranging $80-$92 to average $85.71 per cwt., down $2. D3 cows ranged $70-$83 to average $77.
Cow prices tend not to set annual lows in September, so there is still more downside price risk this fall.
Even with market pressure, Alberta prices have been at a $10 premium to the U.S. utility market.
Over the past 10 years, excluding 2014, the average decline from spring highs to fall lows is 26 percent.
If realized, this would put prices on track to bottom at $82. However, we could see a larger than average decline this year with possible lows in the high $70s.
A large percentage of Canadian bulls are being exported to the U.S. for slaughter, so the stronger loonie is weighing on prices. Slaughter bull prices were about $100 per cwt., down $4.86.
Bulls are trading $15 lower than last year, while cows are $4-$5 lower.
FEEDER MARKET STRONG
Alberta demand for yearlings continues strong, and it appears yearlings from Saskatchewan and Manitoba are moving to Alberta to be finished.
Prices for steers and heifers 900 lb. and heavier are now only $4-$5 shy of their highs set in early June.
The cash-to-futures basis for 850 lb. steers for the first three weeks of September have averaged +$5.66, possibly signalling the strongest September basis levels in 30 years.
September is traditionally the strongest basis month of the year, and it is not uncommon to see levels weaken into October.
With cash barley prices 18 percent higher than last year, the steer-heifer price spread has widened.
On average, steers weighing more than 700 lb. are trading $19.75 higher than last year, while same weight heifers are $14.68 higher.
In nine of the past 12 years, 650 lb. steer prices have dropped from October to November, falling on average 2.8 percent.
In electronic trade, steer calves in Alberta and Saskatchewan weighing 600-699 lb. for October delivery saw a weighted average price of $217.13 based at 633 lb., while same weight steer calves for November delivery average $211.02 based at 641 lb., so the seasonal price decline might be already happening.
Alberta calf prices are trading at a $3 premium to the U.S. market, and feeders are $13 per cwt. higher. That is discouraging exports.
BEEF HIGHER
U.S. Choice was up 51 cents per cwt. at US$191.51, and Select was up $1.69 at $188.41.
Cut-out values are two to five percent above year-ago levels.
Weekly Canadian boxed beef prices to Sept. 16 traded mixed with AAA up $3.70 at C$246.43 per cwt., and AA down $3.77 at $233.08.
Historically, 50 percent trim values tend to decline in the fall, but prices have been relatively steady this year.
Lighter carcass weights might have reduced the supply of 50 percent trim and supported prices.
The Consumer Price Index report shows beef in August was down 0.6 percent from July but up one percent from a year ago.
