Struggling Canadian cut-out values and a stronger Canadian dollar pressured cash prices lower, but Chicago futures rose as funds invested in commodities.
The Canfax weighted average steer price for the week ending Aug. 6 was $87.58 per hundredweight, down $1.32, and the heifer price was $87.41, down $1.15. Sales volumes were down.
The cash to futures basis weakened slightly to -$6.95 from -$6.30 the previous week. It is stronger than the 2006-09 average in August of -$11.12.
USDA export volumes of Canadian fed cattle are unavailable.
Feedlots are current and may have good leverage, as packer inventories are relatively tight.
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COWS STRONGER
D1, D2 cows rose $1.33 to $60.88 per cwt., a new high for the year.
D3 cows rose $1.83 to $55.33. Butcher bulls were steady at $73.08.
Rail grade cows were $117-$119.
With these high cow prices, some pairs are being split and cows sold.
FEEDERS MIXED
Feeder auction volumes were steady with the previous week, but were down more than 10,000 head from a year ago.
Volume is down this summer after a strong spring.
The Canfax average steer price was up 25 cents per cwt. and heifers were down 47 cents.
Steer and heifer calves under 600 pounds were down $1-$2, and 700 lb. and heavier were mainly flat to $2 higher.
Grass cattle marketing is picking up in direct trade and on electronic markets. Given grass conditions, delivery dates vary widely, from immediate through to October.
Grass cattle have seen good demand and are selling in the top half of the auction market range.
The cash to futures feeder basis has tightened to -$12.78 from -$15.57.
This is similar to the 2006–2009 average August feeder cash to futures basis of $14.70.
The U.S. Department of Agriculture’s Canadian feeder cattle export numbers are unavailable.
Demand is strong for yearlings, with limited trade yet to develop on calves.
The wheat rally has driven up feed prices, but if the large U.S. corn crop is harvested without problems, feed prices will likely come down.
CANADIAN BEEF STRUGGLES
Choice cutouts in the U.S. in July averaged $156.50 US per cwt., up $16.50 over 2009.
U.S. beef demand has been supported by larger beef exports, up 27 percent from last year, and higher wholesale pork values, up 36 percent.
Domestic beef demand in Canada picked up last year, but is now showing up in the U.S., supporting beef prices there.
Canadian cut-out values have struggled in 2010, with production up six percent year to date.
Large feedlot placements from January to April should keep fed supplies large through this month and keep pressure on cutouts.
However, significantly smaller placements in May and June will tighten supplies this fall.
The Montreal wholesale market for delivery this week was steady at $179-$181.
U.S. Choice cut-out values fell $2.70 to $150.69 last week and Select fell $1.76 to $143.98.
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.
