Fed prices soften
Western Canadian fed cattle prices continued to soften in the dog days of summer. This is not unusual. Between June and August, fed steer prices have softened in seven of the last 10 years and 13 of the last 20 years.
Steers eased $1.50 per hundredweight lower to $238.47 per cwt., and heifers were down $1 to $237 per cwt. last week.
Typically, western Canadian fed slaughter increases in summer compared to the first half of the year, pressuring prices. That has not happened this year, with weekly fed slaughter volumes trending steady to slightly lower than in spring. However, slaughter volumes have begun to pick up, and last week they were the third highest since mid-April.
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The Alberta-to-Nebraska cash-to-cash basis weakened considerably this week, to -$9.16 per cwt., and was the weakest since 2010. Dressed sales eased $1-$2 per cwt. lower, with steers at $399.77 per cwt. delivered and heifers at $400.47 per cwt. delivered.
The latest trends report shows significant per head profit on all classes of cattle marketed on the spot/cash market in July, assuming no risk management, encouraging marketings despite the recent drop in prices. Short-keep cattle in July are either side of $500 per head profit and yearling cattle are $465-$482 per head in the black. Ontario fed steers were fully steady with the previous week, though volumes were too slight to establish a price trend.
In the United States, prices at US$180 per cwt. in Texas and Kansas and $188 per cwt. in Nebraska on July 20 resulted in light trade. Friday morning saw those bids renewed. A total of 9,000 head traded in Nebraska. National boner cows were $3.50 per cwt. stronger, at $212.28 per cwt.
Robust cow slaughter
Year-to-date Canadian cow slaughter is more than 263,000 head, five percent larger than last year. Over the past 10 years, this stands as the third largest cow slaughter volume. Only 2018 and 2019 were larger.
With strong non-fed prices in Canada, fewer cows are being exported into the U.S. From January to May, Canadian cow exports to the U.S. were down 26 percent compared to last year.
Despite larger non-fed beef production in 2023, Canadian beef imports from Australia, Uruguay and Brazil have been running above last year as well. This shows how strong demand has been for lean manufactured beef.
July traditionally has the tightest non-fed volumes of the year, but that has not been the case this year. With dry conditions across part of the Prairies, non-fed volumes continue to be much larger than normal. Butcher cow prices traded $1 per cwt. lower through commercial auction facilities and dressed sales were also lower as well. D2s averaged $153.86 and D3s averaged $138.92 per cwt. Over the past month, Alberta cow prices have been trading at a $13-$15 per cwt. premium against the U.S. utility cow market.
Feeder market rebounds
After a slight price pull-back in June, the calf market rebounded to record high levels. The feeder market has also picked up momentum over the past month with the steer/heifer spread also narrower.
Feeders heavier than 800 pounds set new annual highs. Over the past 25 years, heavier weight feeder prices have never set annual highs in July, suggesting there is more upside to the market. Based on the five- and 10-year indices, it is more common to see highs occur in late September/early October.
U.S. and Ontario corn prices continue to drift lower, whereas western Canadian barley prices have seen a modest uptick in the past few weeks. Ontario and U.S. corn prices are trading at the lowest point since late 2021. From a cost of gain perspective, both Eastern Canada and the U.S. continue to have a sizable advantage over Western Canada.
Given cheaper feedgrain prices south of the border, western Canadian feedlots are actively booking corn, which could put a lid on barley prices in the near term.
Cutouts retreat
In U.S. beef trade, cutouts spent another week in retreat. Choice cutouts eased 1.4 percent lower to average US$302.56 and Select cutouts softened two percent, to average $274.71. The Choice/Select price spread has begun to narrow, aligning with last year for the first time since the start of June, but is still $11per cwt. wider than the five-year average.
