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.
Cattle futures rally
Chicago live cattle futures fell early last week but then posted strong gains at the end of the week as the United States cash market appeared stronger.
Packer margins in the U.S. are extremely profitable and the market expected that packers would buy cattle to produce the beef that retailers will likely want as October Pork Month draws to a close. U.S. wholesale beef is the lowest in four years.
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The strong slaughter pace is expected to pull cattle in early and start to shrink the number of market-ready cattle.
In Western Canada, the Canfax fed steer weighted average was $132.40 per hundredweight, up $2.68, and heifers were $131.41, up $1.97.
The futures rally arrived too late to affect prices a lot, but it encouraged a few feedlots to hold cattle over a week.
Most of the trade happened before the futures rally. As a result, the cash-to-futures basis strengthened to a very strong contra-seasonal +$5.81 per cwt.
Western Canadian fed slaughter for the short holiday week ending Oct. 15 fell nine percent to 37,698 head.
Weekly exports to Oct. 8 fell 13 percent to 7,388 head.
Fed supplies are expected to tighten modestly during the rest of the year.
September fed marketings exceeded projections as fantastic feeding conditions maximized performance and strong packer margins encouraged timely marketing.
Cows weaken
Alberta and Ontario cow prices fell as they normally do this time of year, but Alberta D1, D2 cow prices are at a $13 premium over the U.S. utility market.
That is the largest premium since April 2015.
The wide spread presents the potential for a price pull-back, even though supplies are manageable.
D1, D2 cows ranged $80-$95 to average $87.10 per cwt., down $1.69. D3 cows ranged $70-$85 to average $77.72.
Rail grade prices ranged $170-$175.
Butcher bulls have dropped $8 over the past three weeks and are at the lowest level since May 2014.
Speculative buying interest to put cows back on feed has been light thus far, but demand is anticipated to improve into November.
Feeder cows averaged $94 with trade reported up to $110.
Fall feeder run
The calf run is in full gear with British Columbia, Alberta, and Saskatchewan posting the largest weekly auction volumes of the year.
Forward-contracted calves are also being delivered, keeping trucks and processing personnel busy.
Alberta 550 pound steer prices have fallen 39 percent from February highs. The U.S. market is down 38 percent in the same period.
Alberta 550 lb. calf prices are the lowest since December 2013, while US calves are at the lowest prices since December 2010.
About 25 percent of feeder cattle on offer were yearlings.
A larger percentage of the yearlings on offer have been heifers. The market is pricing in a very small price spread between calves and yearlings.
The spread between 550 lb. and 850 lb. heifer is $4.55. Typically 550 lb. animals trade at a $22 premium over 850 lb. heifers.
The futures market rally and weaker Canadian dollar should stabilize prices.
Beef weakens
U.S. boxed beef prices hit annual lows with Choice at US$177.89 on Oct. 20, down $3.71, and Select at $167.74, down $4.87.
It was the first time that Choice had been below $180 since August 2012.
A strong slaughter pace is pushing beef on the market and driving down the price.
But packer profit margins continue to be attractive.
Canadian cutouts to Oct. 14 were AAA at C$237 per cwt., down $9.13 and AA at $231.93, down $6.64.
