Canfax report

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 price rises steadily

Last week was the ninth consecutive week in Western Canada of higher fed cattle prices. Packers were looking for available cash cattle and also to contract cattle. It was roughly an even split between spring-placed cattle and grass yearlings.

With higher feed grain prices, most of the cattle placed against the first quarter market have breakevens around $160 per hundredweight. Cattle being marketed are losing around $150 per head. Last week, dressed sales were reported from $248-$252 per cwt. delivered. Most if not all the cattle that traded last week were being scheduled for one to two week delivery.

A few Saskatchewan-fed cattle traded at $250 per cwt. last week, and with Alberta trading at a premium to the eastern Canadian market, these cattle will be coming west for slaughter.

Alberta fed prices have been trading at a premium to the U.S. market for the past six weeks. Last week it was estimated Alberta fed prices were at an $11 per cwt. premium to the U.S. for early January. This was the second strongest basis in history; 2018 was the only stronger year.

Western Canadian steer carcass weights have dropped 28 pounds since the middle of December, and from their high in November, weights have declined 61 lb. They averaged 910 lb. last week, the smallest steer carcass weight since late August.

In Eastern Canada, dressed sales were reported at $236 per cwt. delivered, steady with the previous week. Cattle were being scheduled for one to two week delivery. Backlogged fed supplies are getting cleaned up, and packing plants are back running at capacity.

It’s possible that first quarter lows are over. Last year, they occurred at $141 per cwt. in March, but lows have been seen in January twice in the past decade: in 2011 and 2014. In both those years, fed prices rallied 11 to 19 percent from January to the end of March.

In the United States, dressed sales in the north ranged from US$172-$174 per cwt., which was $3 per cwt. lower than the previous week. Live sales in Nebraska and Colorado were at mostly $109 per cwt., while sales in Texas and Kansas ranged from $110-$111, $1-$2 per cwt. lower. Deferred live cattle futures continue to set new highs on almost a daily basis.

Total U.S. beef exports for November were up 13 percent compared to last year. Beef exports to China were very strong for November.

Light non-fed offering

Non-fed prices were unevenly steady last week on a generally light offering. D2 prices averaged fully steady with the previous week, averaging $75.83 per cwt., while D3 prices slipped $1.27 per cwt. lower to average $63.43.

Dressed cow trade was lightly tested at $150-$155 per cwt. delivered. Butcher bull prices traded sideways with a weekly average of $99.23 per cwt.

A flush of slaughter cows is expected to hit the markets over the next two weeks. New year demand for grind will be limited by COVID eat-in dining restrictions, but increased retail sales should pick up some of the slack. Non-fed prices are anticipated steady to modestly higher.

High feed costs

New year trade volumes rebounded larger last week, and Alberta feeder prices traded fully steady to stronger. Light calves less than 400 lb. to place against the fourth quarter fed market saw good demand, and prices firmed $2.82 and $5.65 per cwt. higher than two weeks ago for steers and heifers, respectively.

Good demand was also observed for 500-700 lb. calves, and prices were generally steady. Skyrocketing feed costs are encouraging buyers to buy weight as opposed to long feeding calves. Large feeders heavier than 900 lb. saw prices rally $2 per cwt. higher than the previous week.

Alberta feeders traded at a premium to Ontario last week. Ontario auction offerings were limited and of varied quality. Eastern buyer interest continued last week for large Alberta calves. Last week’s auction offering was 73 percent larger than a year ago, and year to date was 141 percent larger at 39,257 head.

High feeding costs will limit price potential for feeder cattle. Seasonality is expected to kick in for the remainder of the first quarter, and prices are expected to soften for feeders destined for a terminal ration. A flush of calves that have been carried over into the new year is anticipated at auction this week, but prices should continue steady to stronger.

Cut-out price rebounds

In U.S. meat trade, cut-out values rebounded higher last week with Choice and Select surging US$7.56 per cwt. and $4.48 per cwt. higher than the previous week, respectively. Choice averaged $213.37 and Select averaged $201.07. Good beef prices at retail have kept product moving through the pipeline, and all primals strengthened last week.

Total U.S. cattle slaughter was estimated to be steady with the previous week at 651,000 head and 18,000 head larger than a year ago.

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