Cattle prices are struggling this spring as beef demand is lackluster and packers are not struggling to get cattle supply.
The bull run of fed cattle prices of the last few years that peaked about this time last year is definitely over.
Alberta live steers last week traded at $163.38 per hundredweight, down about $39 from the same point last year.
In most years there is a spring rally in fed cattle but the most recent price was the lowest of the year, down $10 or more from January and February.
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And although the rallying Canadian dollar is not helping the situation, the Canadian fed cattle market is doing a little better than the U.S. market.
The Alberta cash market to Chicago futures basis last week was +$3.49, quite strong for the season.
North American cattle prices in 2013-15 had been driven higher as the cattle cycle hit its tightest supply period, which had been exacerbated by drought in the U.S. southern plains and high corn prices that forced American producers to cull their herds more aggressively than normal.
Feedlots filled their pens with increasingly expensive feeder calves. The lots then pushed the higher prices up through the chain to fed cattle and beef.
Last summer, with pen replacements so expensive, feedlots determined it was more economic for them to use relatively inexpensive feed grains to fatten cattle already in the lot to a heavier weight than to buy lighter replacements for feeding.
But even with this strategy they were losing money.
Carcass weights soared to record highs through the fall and winter when normally they would decline in winter.
In Canada they have stayed stubbornly in the 925 to 950 pound range, about 60 pounds heavier than last year at the same time and about 80 pounds heavier than two years ago.
So although Canadian cattle slaughter this year is down three percent, beef production is up three percent. In the U.S. both slaughter and carcass weights are up over last year.
In Canada, AAA cutout early this month was trading at about $280 per cwt., down from $320 at the same time last year.
Canfax still expects cattle supply will tighten seasonally and carcass weights will also get smaller as they often do at this time of year as more fed calves enter the slaughter mix.
And late spring is the big grilling demand season so a spring fed cattle price rally is still possible, before the usual fall off of prices into summer. But Canfax notes the clock is ticking.
Kevin Grier’s Canadian Cattle Buyer newsletter says American packers are operating profitably and should be able to keep kill rates high enough to prevent market-ready animals from backing up.
He also expects the two big federally inspected plants in Alberta will increase slaughter as we progress through spring.
Looking ahead to summer, the U.S. cattle on feed report issued April 22 showed placements into feedlots were up over last year at the same time for the second month in a row.
Cattle placed in March will be slaughter ready in August.
With the increasing numbers, summer and fall fed prices will be below the prices set early this year, say the agricultural economists at the Livestock Marketing Information Center in Colorado.
