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 prices fall
The Canadian and American cash and futures cattle markets diverged sharply last week as Canadian prices plunged on weak local demand.
Only one of the two major Alberta packers was buying.
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The Canfax weighted average steer price was $154.14 per hundedweight, down $11.39.
Heifer trade was light with prices comparable with steers but volumes were too slight to establish a market trend.
It was the third largest weekly steer price decline in the past 25 years, of which the first two were the result of BSE.
The Canadian cash market might have been playing catch up with the American market that fell sharply two weeks ago.
But the Chicago futures market rallied all last week on ideas that market-ready cattle supplies are tightening, carcass weighs are falling and that beef demand would pick up for the Memorial Day holiday, perhaps cutting into the ample U.S. beef supply.
In Canada, a variety of cattle were on offer from calves to mixed clean-up loads of yearlings.
Some of the cattle did not sell and were carried over into this week.
The weekly cash-to-futures basis weakened to +34 cents per cwt. A weakening basis is rare for this time of year, happening only one other time, in 2010, in the past 10 years.
Western Canadian fed slaughter for the week ending April 30 surged 11 percent to 32,962 head. For the year, slaughter is down seven percent.
Weekly fed cattle exports to April 23 fell 12 percent to 8,660 head. Exports for the year are up 33 percent.
Cattle feeders are suffering huge losses and won’t want to sell at these low prices.
Overall market-ready supplies in Canada should increase modestly, but packer-owned inventories are expected to tighten, perhaps giving feedlots some market leverage.
If the Chicago cattle futures and the exchange rate co-operate, Canadian fed prices could stabilize and perhaps see a modest rebound over the next few weeks.
Cows steady
D1, D2 cows ranged $93-$108 to average $101.08 per cwt., down 17 cents.
D3 cows ranged $84-$98 to average $90.50. Railgrade cows ranged $192-$197.
Cow slaughter volumes totaled 6,129 head, down five percent compared to the previous week but 64 percent larger than the same time last year.
The non-fed market often closes in on annual highs at this time of year, but that has not been the case this year.
Producers are wondering if there will there be a spring rally. For the time being it is doubtful that January highs will be revisited.
More fed cattle are in the Canadian pipeline and the sharp drop in fed prices does not bode well for the non-fed market.
The best strategy in this market is to keep inventories current.
Feeders down
Feeder prices fell with calves and light stockers seeing the largest declines.
Feedlots have historically large feeding losses.
Many grass operators expect to run fewer animals this year, perhaps 25 to 50 percent down, due to the moisture concerns and narrow margins.
There has been a big increase in light cattle placements in Alberta-Saskatchewan feedlots.
For the first quarter of 2016, placements of calves and stockers lighter than 700 pounds are up 28 percent compared to last year.
Volumes at auction have been light.
A few groups of heifers intended for breeding have been sold on the feeder cattle market.
Demand is generally limited as many producers have finalized their breeding inventory and don’t want to get overstocked.
The market might stabilize this week thanks to stronger Chicago cattle futures and a weaker Canadian dollar.
Bred cows ranged $1,250 to $2,200 and cow-calf pairs ranged $1,800-$3,000.
Beef falls
U.S. boxed beef prices closed at new lows for the year.
Choice cutout fell to US$204.42, down $8.08 per cwt. and Select was $195.50, down $7.59.
Since mid-April, the cutout has dropped more than $20 per cwt. and is now $50-$53 below year-ago levels.
U.S. carcass weights are coming down with the average last week at 820 lb., down five lb. from the week before and down 13 lb. from last month.
This should help to improve prices in coming weeks.
In Canada, for the week ending April 30, AAA was C$270.50 per cwt., down about $11 on the week and AA cutouts were $260.15, down $13.08.
The AAA-Choice spread improved to +6 cents per cwt. from -$1.38 due to the sharp decline in the Choice cutout and the stronger Canadian dollar at the end of April.
