Feds losing money
The August Chicago live contract hit a five year low of US$108.90 per hundredweight July 12 before recovering a little.
It is hard to understand the futures market’s pessimism when cash prices are at an historically large premium against the nearby Chicago contract. U.S. steer carcasses are down seven pounds from last year at this time. Canfax said most of the bad news has likely been priced into the market.
U.S. feedlots are becoming more current in their marketing. On the beef side, smaller imports and increased exports should support cattle prices.
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Canfax said the weighted average fed steer price last week was C$147.81, down $1.08, and heifers were $146.24, up 56 cents. Such prices are well short of break-even levels.
Fall-placed calves have break-evens in the mid to upper $170s, while short-keep feeders placed early in the New Year have break-evens in the low to mid $160s.
Negotiated sale volumes were light to moderate with both Alberta packers active on the cash market.
Packers have extended their inventory, and lift times are shifting into the first half of August.
Canadian fed cattle prices should be supported by increased slaughter rates and larger export volumes.
Weekly exports to July 2 were 5,730 head, the largest since the middle of May.
In the United States, cash cattle bids in the southern Plains were US$116-$117 per cwt. against $120-$122 asking prices. Light trade in Iowa and Nebraska saw dressed sales at $186-$188, which were $2-$4 lower than the previous week.
Cows rise
Auction mart trade was mostly in cows with D1, D2 ranging C$87-$101 to average $94.60 per cwt., up $1. D3 cows ranged $79-$93 to average $85.40. Bulls averaged $119.75, up almost $2. Non-fed animal volume was ample, and competition has been limited.Marketings of cows and bulls exceed year ago levels.
The weekly cow kill to July 2 was 5,341 head, up 20 percent over last year. Weekly exports to July 2 were about 6,000 head, up 53 percent over last year and the most since early February.
Feeder market slow
The feeder market was quiet because grass conditions are mostly good and weak prices do not motivate selling.
Heavier feeders were a little stronger than light cattle. Yearlings set to come off grass in September traded on par with current cash prices.
A set of 600 pound steers for October delivery sold for $188 per cwt, or about nine percent below current prices. It is not uncommon to see calf prices drop 10 percent from this time to October.
Feeder marketings are expected to remain limited for another month.
Yearling prices often rise as the summer progresses, but struggling cattle futures are offering little upside hope this year.
Alberta calf and feeder prices have traded at a premium to the U.S., but that will be hard to maintain, even though barley prices have fallen. U.S. feedlot economic conditions will likely improve this fall, strengthening their buying power.
Beef down
U.S. boxed beef prices fell with Choice at US$205, down $5.05, and Select at 193.06, down $3.92.
Canadian cutout values were mixed for the week ending July 1 with AAA at C$280.24, down $1.49, and AA at $258.94, up $3.21.
Canadian cutouts were at a premium over the U.S. with the AAA-Choice spread at +$9.21 and AA-Select spread at +$5.03.
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.
