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Canfax report

Fed market steady

Alberta direct cattle sales got off to a sluggish start last week, but prices averaged fully steady with the previous week.

Most sales were dressed from $276-$278 per hundredweight delivered. Canadian steer carcass weights for the week ending March 10 surged 13 pounds larger than the previous week to 917 lb. but were four lb. lighter than a year ago.

Western Canadian fed slaughter for the week ending March 10 was eight percent smaller than the previous week at 32,889 head. Year to date western fed slaughter is nine percent larger, totalling 302,112 head.

Canadian fed cattle exports to the U.S. for the week ending March 3 totalled 4,240 head and year to date are down 18 percent at 40,648 head.

Last week, the Canadian dollar slipped below 77 cents for the first time since June 2017. A weak Canadian dollar moving forward should continue to encourage U.S. buying interest.

Fed carcass weights were larger last week, but seasonally weights should begin to trend smaller. Yearling supplies are beginning to tighten and significant fed calf volumes are not anticipated until late April.

U.S. fed supplies are expected to trend larger and current supportive U.S. fed prices are expected to ease lower. Spring beef demand should continue to improve.

In the U.S., moderate trade developed last week with live sales steady to US$1 higher than the previous week in the south at $126-$127. Live trade in the north was steady to $2 higher from $128-$129 and dressed sales were steady to $3 higher from $205-$207 delivered.

Steer carcass weights for the week ending March 3 trended sideways at 883 lb. and are seven lb. heavier than the same week last year. Feeder placements indicate larger market-ready supplies are anticipated.

It’s a bull market

In the non-fed sector, D1 and D2 cows traded from C$81-$96 per cwt. in the West, to average $89. D3s ranged from $70-$87, to average $78.60. Slaughter bulls rose by $1.73 compared to the week previous, to average $103.95.

Western Canadian cow slaughter volumes totalled 8,300 head two weeks ago. That was the largest weekly volume seen for the middle of March since 2008.

With barley and forage prices ticking higher, there has been additional pressure to market speculative purchased cows. Even though cow carcass weights are 15 lb. larger than last year, it appears cows are being marketed in a timely fashion because D4 grade cows are down eight percent in Western Canada.

So far this year, 63 percent of the bulls marketed in Canada were sold for export to the U.S. With non-fed prices picking up in the U.S., western Canadian bull prices have moved higher as well. Averaging C$104 with top end sales reported in the low $120s, Alberta butcher bull prices are trading at the highest point this year.

Dollar bumps feeder trade

Western Canadian feeder prices traded about par with the U.S. market, but Alberta calf prices (550 lb. steers) are sitting at a $23 discount to the U.S. This is the largest discount since July 2015.

Canadian feeder exports to the U.S. have thus picked up. Looking back at last year, with cheaper feed grain prices, a lot of lightweight cattle were placed in Alberta-Saskatchewan feedlots from January to April.

Terminal feedlots do not appear to be as aggressive on the grass cattle market this year. Assuming fewer lighter cattle are put on feed this spring and export volumes continue to rise, this should bode well for the fourth quarter fed cattle market.

Looking at the cash market, it was a tough week for the feeder market as 800 lb. and larger steers and heifers established new lows. From their highs in January, 850 lb. steers have dropped seven percent. From January highs to first quarter lows, the average decline over the past five years stands at around 10 percent. By the end of last week, heavier feeders looked another couple dollars softer.

A lot of backgrounding calves bought in fall had break-evens in the $185-$190 area, based at 850 lb. With 800-900 lb. steers averaging in the mid $170s, losses on these backgrounded feeders are more than $100 per head.

Even though margins are not great, producers have been willing to sell a portion of their inventory. With 850 lb. feeder basis levels at the weakest level since July, some of these calves bought for backgrounding will be retained and taken to finish.

Beef trade mixed

U.S. cut-out values were mixed this week with Choice firming US$1 higher to $224.99 and Select easing modestly lower to $216.31. Overall, demand was light to moderate on a light to moderate offering.

The ground beef market lost gains seen the previous week, sliding $9 lower. Retailers are looking for warmer weather to jumpstart spring grilling demand.

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.

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