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.
Stronger fed market
The majority of Alberta trade last week was reported dressed from $252-$252.50 per hundredweight delivered, steady to $2.50 per cwt. stronger than the previous week. Live steer prices were $1-$3.50 per cwt. higher than the previous week’s live steer average. Weighted average steer prices closed the week $1.31 per cwt. higher than the previous week but $13.19 per cwt. lower than the same week last year and $14.51 per cwt. lower than the weekly five-year average.
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Renewed buying interest was observed last week with both major packers competing for cash cattle. Kill schedules are generally one to three weeks out, and one plant will be adding a Saturday to this week’s kill.
Western Canadian fed slaughter for the week ending Jan. 16 was nine percent lower than the previous week at 38,518 head. For the same week, western Canadian steer carcass weights eased six pounds lighter than the previous week to 904 lb. but were 18 lb. larger than the same week last year.
Total 2020 year-to-date Canadian fed cattle-cow exports to the United States were two percent larger than 2019 at 491,738 head. For the week ending Jan. 9, Canadian fed cattle-cow exports rebounded following the holidays to 8,671 head but were 12 percent lower than the same week last year.
The Ontario cash market struggled again last week, but active trade did develop at $236 per cwt. delivered, fully steady with the previous week. Delivery dates for cattle traded was generally one to three weeks out.
Limited contract and formula cattle should support stronger cash prices this week. Carcass weights January through February typically trend steady to slightly larger, but increased feeding costs are encouraging timely fed cattle marketings.
Tighter packer inventories and modestly lighter carcasses moving forward should provide some cash market leverage. However, ample market-ready U.S. fed supplies through the first quarter of this year could pull live cattle futures lower.
In the U.S., light trade saw southern live sales mostly steady with the previous week from US$110-$111 per cwt. Limited northern live trade last week was reported steady with the previous week at $109 per cwt. Light dressed trade in the north saw prices steady with the previous week at $172-$173 per cwt. delivered.
U.S. steer carcass weights for the week ending Jan. 9 were three lb. heavier than the previous week at 923 lb. and 11 lb. heavier than year ago. Ample market ready offerings are anticipated, and prices could soften if supplies outpace chain speed.
Stockers and feeders traded mixed last week with a softer price tone reported for calves. With drought conditions extending into many feeding areas, feeder offerings are ample, and feedlot placements have been accelerated.
D2s hit new low
A steady to weaker price tone was noted on the cow market last week. Competition at commercial auction facilities was mixed with one major packer buying most of the cows on offer. Interest from feeder cow buyers was also supportive.
D2 cows averaged around $75 per cwt. For the first half of January, this is the lowest price since 2013. D3s averaged $63.50, and slaughter bulls averaged $99.69.
Western Canadian cow slaughter for the week ending Jan. 16 totalled 6,712 head, 16 percent lower than last year and 21 percent smaller than the five-year average. In general, non-fed supplies have been smaller than expected for January, but larger volumes are still in front because slaughter volumes have not peaked for the first quarter.
Given strong demand for bred stock over the past couple of months, there seems to be more optimism from the cow-calf segment compared to the past couple of years. Cows are being retained and kept in the herd, suggesting cow slaughter volumes could be below 2020 for the first quarter of this year.
Auction volumes up
Since the start of January, total auction volumes in British Columbia, Alberta, Saskatchewan and Manitoba are 67,000 head larger than last year. Cooler temperatures for the first half of January 2020 did keep auction volumes limited, in contrast to this year.
Alberta 550 lb. steers have traded mostly sideways since the start of the year, averaging from $218-$219 per cwt. In eight out of the past 10 years, first half highs have surpassed second half highs of the previous year. Over those eight years the average increased from second half of the year high to first half of the following year high stands at 13 percent.
Last year, 500 lb. steer calves established second half highs in July at $229 per cwt. Using an historical increase of 13 percent, this would put first half highs on track to hit $258 per cwt. This will likely not be achieved this year.
Alberta 550 lb. steer calf prices are expected to surpass the July highs of $229 per cwt., but prices might not go much higher than that.
Grass margins have fared much better than the backgrounding and feedlot segments over these past years, and this should support demand for light calves into spring. The first quarter is traditionally when the largest volumes of Canadian feeder cattle are exported to the U.S.
Last year, first quarter Canadian feeder cattle exports averaged 2,720 head on a weekly basis. Western Canadian calf and feeder prices are at a $12-$14 per cwt. premium to the U.S. Canadian feeder exports are expected to stay historically light.
Last week, the forward delivery market was lightly tested as Alberta heifers heavier than 1,000 lb. for fall delivery traded in the upper $160s per cwt. Compared to January 2020 sales for fall delivery, prices are down $7-$10 per cwt. from a year ago.
U.S. cutouts rally
In U.S. beef trade, cut-out values rallied sharply higher last week on good beef demand and features for middle meats. Choice and Select cutouts saw week over week gains of US$7.83 per cwt. (averaging $221.20 for Choice) and $9.21 per cwt. (averaging $210.28 for Select) respectively.
Total U.S. cattle slaughter is estimated two percent larger than a year ago at 657,000 head. Large harvests are anticipated with ample market-ready supplies available through the first quarter of 2021.
