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.
Packers do well
For the past 15 weeks fed prices have been stuck in a tight trading range with prices averaging $133-$137 per hundredweight. Seasonally, leverage continues to favour the packing segment, which has been reflected in weaker basis levels.
Record large carcass weights (956 pounds) in Western Canada are also giving the packing segment a market advantage. With big cattle coming down the line, feedlots’ resolve is limited because cattle generally have to be marketed to avoid discounts on heavyweight cattle.
Last week saw light trade with most of the dressed sales reported at $228 per cwt. delivered. Cattle that traded last week would be picked up anywhere from three to six weeks, depending on who bought them. Most if not all cattle that traded last week would be delivered in November, and basis levels against the December LC were -$9 per cwt.
However, going against October LC, basis levels were at -$6.59 per cwt. Based on the latest Canfax Trends report, steer and heifer calves (500-600 lb.) that were placed early this year are losing $250-$300 per head, while 800-900 lb. feeders that were placed during the spring are being sold $40-$140 per head off side.
Since the beginning of October, Alberta fed prices have been averaging close to a $7.50 per cwt. discount against the U.S. market. Last year, Alberta prices were at a $3.17 discount for the first half of the month.
In Ontario, dressed sales were reported at mostly $232 per cwt. delivered, steady to a couple dollars higher than the previous week. For the week ending Oct. 10, fed slaughter in Eastern Canada totalled 10,834 head. It was the fourth week in a row that fed slaughter has been higher than last year.
In the United States, trade was scattered last week. Dressed sales in the north were reported from US$167-$170 per cwt., steady to $1 per cwt. lower than the previous week. Live sales ranged from $107-$108 per cwt., $1 per cwt. softer.
For the week ending Oct. 3, beef cow slaughter totalled 68,963 head. For the beginning of October this is the largest beef cow slaughter since 2011. Over the past month, U.S. cow prices have dropped around $5 per cwt. on a live basis.
Cow prices lower
Non-fed prices trended seasonally lower last week on a moderate offering. Alberta slaughter cows at auction slipped $2 per cwt. lower than the previous week but continued to see a significant premium to Ontario.
D2 cows averaged $80.67 per cwt., and D3s averaged $71.33. Dressed cow prices softened with bids reported from $155-$160 per cwt. delivered. Butcher bulls averaged more than $2 per cwt. lower than last week in a $95-$123 per cwt. range.
Western Canadian non-fed slaughter for the week ending Oct. 10 was up two percent from the previous week totalling 5,698 head, and year to date was down 24 percent at 241,434 head.
Slaughter cow offerings at auction are expected to surge, but interest in feeder cows as opposed to buying feeders is building.
Feeder margins in the red
Alberta feeding margins continue to trend deep in the red, and feeder prices last week were pressured lower. The Alberta calf run is in full swing, and market volumes are expected to peak over the next two weeks.
Steer calves from 500-700 lb. saw prices ease $2-$3 per cwt. lower than the previous week and similar weight heifer prices dipped $3-$4 per cwt. lower. Calf prices in British Columbia, Saskatchewan, Manitoba and Ontario were generally $1-$3 per cwt. higher than Alberta. The strongest calf prices were once again in Manitoba, where buying interest from Ontario and the U.S. is price supportive.
Feeders heavier than 700 lb. were generally $3-$5 per cwt. lower than the previous week. Total weekly auction volumes were 15 percent larger than the previous week but were 10 percent lower than the same week last year. Year to date, auction volumes were eight percent lower than a year ago at 913,226 head.
The U.S. Department of Agriculture reports that Canadian feeder exports for the week ending Oct. 3 totalled 1,488 head, 17 percent larger than the same week last year.
In the outlook, escalating feedgrain prices limited price momentum during the first two weeks of October. Calf prices last week traded around $7.50 per cwt. lower than the same week last year, while feed barley for December delivery is trading $45 per tonne higher than year ago.
Fourth quarter calf prices typically trend lower through October and November and price upside is limited.
Cutouts continue lower
In U.S. beef trade, cut-out values continued to seasonally soften, with Choice trading US$5.52 per cwt. lower than the previous week, averaging $210.48, and Select sliding $6.60 per cwt. lower to average $196.50.
With strong global pork demand and skyrocketing pork cut-out values, beef is well positioned at retail and should continue to be well featured. Last week’s U.S. cattle slaughter was estimated to be three percent larger than the previous week at 654,000 head.