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 up slightly
Alberta direct cattle sales were seasonally light last week, and average prices firmed $1 per hundredweight higher than the previous week. A handful of live trade was reported at $3 per cwt. higher than last week, and dressed sales of $276 delivered were fully steady.
The cold and shifting weather moderated feeding performance, and market-ready supplies tightened. Some of last week’s fed offering was carried over, and soft cattle could easily remain on feed three to four more weeks.
However, reduced chain speed has given packers some breathing room. Eastern Canadian steer carcass weights for the week ending Feb. 10 were 13 pounds heavier than the previous week, averaging 976 lb. In contrast, western Canadian steer carcass weights trended sideways and are 100 lb. lighter than the east, averaging 877 lb.
Western Canadian fed slaughter for the week ending Feb. 10 eased six percent lower than the previous week to 29,000 head. Year to date western fed slaughter is nine percent larger, totalling 173,667 head. Canadian fed cattle exports to the United States for the week ending Feb. 3 totalled 4,373 and year to date is seven percent smaller at 22,154 head.
In its outlook, Canfax said a positive cash-to-cash basis over the past few weeks has discouraged U.S. buying interest in local Canadian cattle, but fed supplies are manageable on both sides of the border.
The Alberta cash-to-cash basis has steadily weakened from +14 at the start of January to now close to par.
Historically, beef demand strengthens from February to March and is price supportive. Leverage has shifted to favour the cattle feeder, and prices are expected to strengthen.
In the U.S., live prices in the south rallied US$3 -$4 higher than the previous week to $129-130. Dressed sales in the north were reported around $5 higher than the previous week at $205 delivered. Calf prices trended steady to higher last week, and feeders traded mostly steady.
Cows on the rise
Prices for D1 and D2 cows were up an average of $1.31 last week to average $88.39. Slaughter bulls were lower by $1.61 to average $99.89.
Butcher cow prices traded higher through commercial auction facilities, and rail bids appeared to be a couple dollars stronger as well.
Non-fed slaughter volumes have likely peaked for the first half of the year. With volumes seasonally tightening, butcher cow prices may have reached bottom and should trend higher into the spring. The Canadian-U.S. cow price spread has narrowed from the start of the year, going from a $22 premium to more recently an $11 premium.
Canadian trim prices are trading two percent higher than last year.
Feeders rally
From lows in late January, 550 pound steer calves have rallied 5.5 percent and are trading at the highest point since November. In seven out of the past nine years, first quarter highs have surpassed the previous year’s fourth quarter high. The price of 550 lb. steers is only $3 shy of overtaking the 2017 fourth quarter high of $233.22 posted in October.
Fourth quarter highs are expected to be overtaken in the next couple of weeks because demand for grass should remain strong. Last week the soft spot on the market seemed to be heavyweight heifers. On average, for the first two weeks of February, 900 lb. and heavier heifers traded slightly more than $14 less than steers, right in line with the three-year average for the month of February.
It is not uncommon to see the steer-heifer price spread narrow from February to March. The price spread from February to March narrows by more than $2 per cwt. from 2015-17.
On Feb. 15, the U.S. feeder index closed at $147.70 based at 793 lb. Using an 80-cent Canadian dollar, this would equate to C$184.62.
Western Canadian feeder prices are sitting at roughly a $3 premium to the U.S. market because the western Canadian feeder index was reported at $187.70 at 789 lb.
Barley prices show no sign of weakening, thanks to a colder than normal winter, more cattle on feed compared to last year and export demand for barley from Saudi Arabia and Kazakhstan. Some feedlots say they are having a tough time sourcing enough barley and are feeding more corn and wheat.
For spring delivery, feed barley prices are being reported as high as $5 per bushel delivered into southern Alberta. Feeder prices are expected to be steady to lower while calves and lightweight stockers are expected to be steady to higher.
Beef trade
Choice and Select cut-out values in the U.S. trended higher with Choice at $209.04, up from $208.53 the previous week, and Select at $205.14, up from $203.79. Moving into the second half of February, cutouts typically strengthen. Last year, the monthly increase from February to March was 13 percent for Choice and 11 percent for Select.
Canadian cut-out values for the week ending Feb.3 traded higher with AAA up $3.29 per cwt. to $256.89 and AA up $1 per cwt. to $250.92. The Canadian cutouts were close to par with the U.S.
