This cattle market information is selected from the weekly report from Canfax, a division of the Canadian Cattle Association. More market information, analysis and statistics are available by becoming a Canfax subscriber by calling 403-275-5110 or at www.canfax.ca.
Many cattle contracts
Many feedlots say a large percentage of cattle for the first quarter year are contracted, and cash numbers will be light. Cash leverage has been limited and this trend might continue over the next two months.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
Over the next 30 to 90 days, the market will work through some of the highest breakevens seen all year. Based on Canfax data, feedlot breakevens are all higher than $240 per hundredweight and in some instances as high as $260. Fed prices have struggled lately, so cattle sold on the cash market are looking at losses of more than $300 per head.
Competition on the cash market has been disappointing in recent weeks and sale volumes were too light to establish a weighted average fed price last week. Dressed sales and bids were reported from $360-$365 per cwt. delivered, $3-$5 per cwt. lower than three weeks ago.
Cattle that traded were scheduled for mid-February to March delivery.
Western Canadian steer carcass weights for the week ending Dec. 23 averaged just shy of 1,000 pounds, a new record high.
With big cattle, more fat is produced. Yield grade 4 and 5 as a percent of all yield grades was 17.7 percent, much higher than normal. In 2023, yield grade 4 and 5 averaged 6.68 percent.
In Ontario, dressed sales were reported at $375 per cwt. delivered, steady with prices seen three weeks ago. Cattle were scheduled for the week of Jan.15 delivery.
The market is front-loaded with fed cattle, and bigger slaughter volumes in coming weeks and months will be needed to get through the numbers.
In the United States, dressed sales in Iowa and Nebraska ranged from US$274-$275 per cwt., $2-$5 per cwt. higher than the previous week. Live sales in the northern feeding states ranged from $173-$175 per cwt. steady to $3 per cwt. stronger.
With lower beef cut-out values and higher cattle prices, processing margins are squeezed. Two private industry sources forecast beef production in 2024 to be down from 3.8 to 4.5 percent compared to 2023. The USDA says it will be down 3.5 percent.
For the week ending Dec. 23, U.S. beef cow slaughter totalled slightly more than 68,000 head, three percent lower than last year. For the second half of December, this is the second largest cow slaughter volume in the past 10 years.
Ontario cows rise
Non-fed prices traded strong in Ontario last week. D2 cows averaged $123.34 per cwt, which was $5.53 per cwt. higher than the previous week. This is up 30 percent from the first week of January 2023 and up a significant 76 percent from the five-year average of $70.26 per cwt.
D3 cows averaged $104.09 per cwt., up $4.16 per cwt. from the previous week.
That is up 32 percent from last January and up 78 percent from the five-year average. Alberta rail cows traded at $250-$255 per cwt., down $5 per cwt. compared to the previous week.
Few at auction
Last week’s sales at Alberta auctions were insufficient to determine a trend or market sentiment.
In Ontario, 550 pound steers averaged $311.94 per cwt. but with limited trade activity.
For December, prices for mid-weight steers were 23.1 percent stronger than last year and 33.5 percent stronger than the five-year average. Similarly, 850 lb. steers averaged $289.70 per cwt., easing 4.2 percent compared to the week of Dec. 22. Compared to the second week of January 2023, they saw an increase of 17.4 percent.
Ontario auction volumes for the first week of January stand at 837 head, near the five-year average. Canadian feeder cattle export volumes year to date for the week ending Dec. 23 were down 11.3 percent compared to the previous year.
Over the next 60 days, the largest price increase is usually seen on lightweight stockers (500-700 lb.) The five-year and 10-year averages have stocker prices increasing two percent from January to February.
Cut-out softens
In U.S. beef trade, Choice cutouts took it on the chin last week, softening over five percent from the previous week to US$275.90 per cwt. Select cutouts were steady at $258.82. The five-year average suggests a small pop in cut-out values from the beginning to the end of January.
