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.
Americans are buying
Stagnant Canadian fed markets got a boost last week as American buyers procured cash cattle in Alberta and Ontario. Ample out-front local packer inventories are limiting market upside, and steady western Canadian bids of $302 per hundredweight delivered received a mixed reception.
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U.S. bids of US$233-234 per cwt. delivered work out to a $5-$6 per cwt. premium to local, but the right kind of cattle were needed to avoid grade and weight discounts.
Western Canadian fed slaughter for the week ending Oct. 22 was one percent larger than the previous week at 42,620 head. Year to date, western fed slaughter was fully steady at 1,823,980 head. Western Canadian steer carcass weights eased two pounds lower than the previous week to 977 lb. but remain 23 lb. heavier than the same week last year.
Fed cattle/cow exports to the United States for the week ending Oct. 15 were almost three percent larger than the previous week at 9,306 head and four percent larger than the same week last year. Year to date, fed cattle/cow exports were up 12 percent to 379,433 head.
Light Ontario trade was reported steady with the previous week at $303 per cwt. delivered, and a U.S. bid of US$235 per cwt. delivered procured a few cattle. Weight discounts were reported on cattle heading south.
Significant volumes of contract cattle have been booked for November, and packers will maintain leverage to limit cash market upside. U.S. buyers are expected to maintain interest in Canadian fed cattle as U.S. supplies tighten.
In the U.S., moderate trade developed during the second half of last week with live prices US$2 per cwt. higher than the previous week at $150 per cwt. in the south. Most northern trade was reported around $153 per cwt. Northern dressed sales were reported $5 per cwt. higher than the previous week with the bulk at $240 delivered.
As market-ready supplies tighten, fed prices have rallied almost $8 per cwt. higher over the past seven weeks and additional market strength is anticipated. In anticipation of tightening supplies, the U.S. Department of Agriculture reported that total beef in cold storage at the end of September was almost 19 percent higher than a year ago and more than 10 percent higher than the five-year average.
Cow price lower
Non-fed volumes through auctions have increased over the past two weeks, and prices have turned lower. Trading $6 per cwt. lower this week, this is the first time since early April that D2 cow prices have been below $100 per cwt., to average $97.79. D3s averaged $86.57 per cwt.
Alberta cow prices are trading at roughly a $5 per cwt. discount against the U.S. utility cow market. Despite larger non-fed volumes, western Canadian packers have been slow to reallocate additional hours to the D grade slaughter. Western Canadian cow slaughter for the week ending Oct. 22 totalled slightly more than 6,000 head, the smallest weekly slaughter over the past four weeks.
For the first half of the year, eastern Canadian cow slaughter was up 15 percent compared to last year. Ontario cow prices have declined for four straight weeks and are down $17 per cwt.
Truck shortage concerns
The calf run is in full gear as the market works through peak numbers. Logistics continue to be an issue because trucks are hard to come by. There are larger than normal discounts on calves and feeders in the northern regions compared to the south.
With truck power being stretched, Ontario buyers have not been as active on the western Canadian market. For October, the steer/heifer calf (550 lb.) price spread averaged slightly more than $40 per cwt.
Heifer calves continue to be discounted compared to steers. On an annual basis, the steer/heifer calf price spread has increased each year over the past 12 years. There is usually a strong correlation between fed cattle and feeder basis levels, but this has not been the case recently.
The fed cash-to-futures basis has weakened dramatically, while the feeder cash-to-futures basis is nearly the strongest it’s been all year.
U.S. cutouts rise
In U.S. beef trade, cutouts ended the week with Choice up 3.5 percent from the previous week to US$262.49 per cwt. Select cutouts were up 4.4 percent to $231.91.
