Fed cattle steady
Fed cattle prices have been steady over the last two weeks after reaching an all-time high in early June. Last week, Alberta fed steers and heifers averaged $256.79 and $257.42 per hundredweight, respectively. Dressed sales have remained steady at $428 per cwt. delivered for the last four weeks.
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While buying interest was noted from all three western Canadian packers, only two bought cattle last week.
The Alberta cash-to-futures basis, which had been positive for the last three weeks, was at -$1.44 per cwt., weakening $8.24 per cwt. from the previous week. Seasonally, expect the basis to trend weaker into November.
For the week ending July 13, Canadian fed cattle and cow exports to the United States totalled 10,335 head, up 63 per cent from the same week last year. This is the largest export volume in the last 11 weeks. As Canadian fed prices continue to be steady to weaker, a larger export number to the U.S. was expected.
In Ontario, dressed sales were steady at $415 per cwt. delivered, with few cattle marketed to the U.S. Depending on freight and dressing percentage, sales to the U.S. were working back in the mid $250 per cwt. f.o.b. the feedlot.
In the U.S., early-week trade opened at US$188 per cwt. in Oklahoma, $2 per cwt. softer than the previous week. The second half of the week saw trade bump up to $190 per cwt. in the south, steady with the previous week.
Kansas sales going north out of state were at $193 per cwt. delivered. The north was quiet, with spotty trade at $198 per cwt. live and $312 per cwt. dressed, up $2 per cwt. from the previous week.
Last week’s U.S. slaughter was estimated at 600,000 head, 16,000 head larger than the previous week. This may put pressure on cut-out values.
Cow prices rebound
Over the past month, butcher cow prices rebounded $10 per cwt. and are within $2 of record highs set in early June. Western Canadian packer competition has improved, with both major packers active on the market.
D2 cows averaged $192.44 and D3s averaged $177.17 per cwt. Butcher bulls averaged $212.45 per cwt.
Cow rail prices are only $35-$45 per cwt. back of the fed market, which is historically narrow. Over the past few weeks, some grain-fed cows traded through commercial auction facilities. Little premium was paid for grain-fed cows compared to run-of-the-mill cows.
In Western Canada, cow carcass weights are larger than fed heifer weights, which does not happen often. A month ago, Alberta cow prices were trading at a $12 per cwt. discount against the U.S. utility cow market, but prices are now par with the U.S. market.
In Ontario, cows were reported $7-$9 per cwt. higher, establishing new record highs. In Eastern Canada, packers are focused on getting through backlogged fed numbers, and cow slaughter volumes have been historically small.
Year to date, Canadian non-fed beef production is nine per cent below last year. Non-fed supplies are expected to increase from July to August.
Light feeder volume
Last year, the yearling run was underway by now, but this year cattle are still out on grass and auction volumes are light.
Eastern Canadian feedlots have been active on the forward delivery calf market, but interest on yearlings remains moderate, which is not uncommon. Many drylotted and grass cattle from Manitoba/Saskatchewan are coming west to Alberta feedlots.
Over the past 25 years, 900 pound and heavier steers have only established second half of the year price highs in July twice, suggesting higher prices are still ahead.
The forward delivery calf market has been lightly tested in recent weeks. British Columbia and Alberta steers weighing 500-599 lb. for October/November delivery traded from $412-$495 per cwt. with a weighted average price of $462.73 per cwt. based at 553 lb.
Last year, 500-weight steer calves for fall delivery were trading around $380 per cwt. This suggests calf prices are 22 per cent, or $450 per head, higher than last year.
Cost of gain would be around $1.50 per lb. steer calves were purchased for fall delivery to finish, targeting the August 2025 fed market with an out weight of 1,500 lb. and assuming the feedlot can buy feedgrain at $285 per tonne for the entire feeding period. These steers purchased for fall delivery would have a break-even price around $266 per cwt.
Cutouts down
In U.S. beef trade, cutouts eased one to 1.5 per cent lower last week to US$312.46 per cwt. and $295.11 per cwt., respectively, as summer heat arrived in force.
