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.
Steers lowest since 2012
Alberta direct cattle sales saw very light trade last week, and the market tone was generally steady. Reported sales were dressed from $180-$195 per hundredweight delivered. Last week’s average live steer price, $112.27 per cwt., was almost $49 per cwt. lower than the same week last year and the lowest average weekly price since Nov. 26, 2012. Heifer trade was too limited to establish a weekly price trend.
Unprecedented harvest and fabrication reductions during the COVID-19 lockdown eliminated cash market competition again last week, and backlogged market-ready fed supplies continue to swell overwhelmingly larger.
A significant number of producers also have some form of fed cattle price insurance and are motivated to get cattle sold and delivered. Any inkling of seasonal market resolve to pressure cash prices higher has been eliminated.
No U.S. buying interest was reported in the local cash market last week, but modest volumes of contract and formula cattle were still heading south for slaughter.
Last week’s Alberta cash-to-cash basis was estimated at around a $21 per cwt. discount to Nebraska. The U.S. Department of Agriculture reported that Canadian fed cattle/cow exports to the U.S. for the week ending April 18 were 16 percent lower than the previous week at 8,430 head and year to date were four percent larger at 161,787 head.
Slaughter for this week will again be low. Year-to-date western Canadian fed slaughter for the week ending April 25 was three percent lower at 579,155.
Lacklustre buying interest is anticipated this week, and trade volumes will be thin. Resumption of the Cargill High River plant to a modified shift would get more cattle and beef going through the pipeline. Slaughter capacity will need to rebound significantly through May to even start working through some of the massive backlog of market-ready cattle.
Strong wholesale beef demand will eventually lead to increased slaughter, but COVID-19 has contra-seasonally shifted leverage away from the feeder. Increased slaughter will be needed sooner rather than later for fed prices to improve.
In the U.S. it was also another week of disappointing slaughter rates and cash cattle trade. Light trade early last week was mostly steady with the previous week in the US$95-$100 per cwt. range while dressed trade in the north was $4-$6 per cwt. lower, in the $148-$150 per cwt. range.
D2 cows lowest since 2010
Alberta D2 cow prices traded C$1 per cwt. higher last week, averaging $67.60 per cwt. For the end of April, it was the lowest price since 2010. D3s averaged $58.31. Volumes through commercial auction facilities have been light as lower prices keep cows at home.
Non-fed supplies are not getting backed up nearly to the degree fed cattle are. U.S. packers have shown good interest on the western Canadian non-fed market. Non-fed prices in Saskatchewan, Manitoba and Ontario have been trading at a premium to Alberta. This is occurring because those three provinces have a freight advantage to U.S. cow plants, and some smaller slaughter plants in eastern prairie provinces have started to slaughter more cows as well.
With limited cow slaughter volumes in Western Canada over the past couple of weeks, lean trim remains in tight supply. Canadian food service and retailers may have no other choice but to start importing more lean trim products from the U.S. and other overseas markets. Both major packers remain off the cow market.
Feeder demand is holding
Despite feedlot supplies backing up, demand for calves and feeders is holding together as prices were generally steady to stronger last week. With grass cattle not too far away from being turned out to pasture, grass operators have started to show interest in feeders weighing 800 to 850 pounds.
When comparing the price difference between calves and feeders, it is not surprising that interest is starting to shift toward heavier weight feeders. Last week Alberta 550 lb. steers averaged $221 per cwt. ($1,215 per head) compared to an 850 lb. steer at $161 per cwt. ($1,368 per head.) For an extra $153 per head, the grass buyers are getting an additional 300 lb. that they will be able to sell in the fall.
U.S. feedlots have a cost-of-gain advantage over western Canadian feedlots, which should continue to support U.S. buying interest. Since the beginning of April, weekly export data has shown a consistent flow of Canadian feeders to the U.S. of about 4,500 head per week.
Looking at a few sale results from North Dakota, it appears there is a better chance of seeing heifers exported versus steers. Last week 600-699 lb. heifers in North Dakota averaged US$132 per cwt. Using a 71 cent Canadian dollar, that puts 650 lb. heifers in the mid $180s per cwt. in Canadian dollars. Last week heifers of that weight in Alberta, Saskatchewan and Manitoba averaged from $168-$172 per cwt., so western Canadian prices were around $15 per cwt. discounts to the U.S. market.
Total Alberta-Saskatchewan auction volumes for April were 16 percent lower than last year and 11 percent lower than the five-year average. Facing negative margins, some background operations have decided to finish their cattle out while others are simply fighting the market and delaying sales.
Cutouts gain big
In U.S. beef trade, the coronavirus pandemic has propelled U.S. cut-out values to uncharted record highs. The significant reduction in meat supplies during indefinite plant closures and dramatically reduced harvests have propelled Choice and Select cut-out values higher. Choice averaged US$367.56 per cwt., up $83.27 and Select averaged $350.16 per cwt., up $77.27 per cwt. from the previous week.
Values are expected to lose momentum as slaughter rates improve.