Canfax report: August 4, 2016

Fed market firms

The Canfax weighted average fed steer price was $147.64, up $2.70 per hundredweight.

That was impressive, considering Ontario fed prices established new lows and two weeks ago the northern U.S. fed market hit prices not seen since July 2012.

Western Canadian carcass weights are becoming an issue.

Regional steer carcasses were 894 pounds, up six lb. from the previous week and the heaviest since the beginning of May.

From their lows in early June, weights have risen 52 lb. and remain well above year ago levels.

Producers are looking for flat bids with no weight breaks or are negotiating weight breaks larger than 1,000 lb.

With increased slaughter rates and larger carcasses, Canadian weekly domestic beef production from fed cattle reached 44.81 million lb., the most this year and the second most in the past five years.

The cash market saw light volume and all cattle sold in Canada. Delivery was scheduled for mid-August.

The Chicago August live cattle contract rallied thanks to the U.S. cattle on feed report, which showed fewer than expected cattle placed in American feedlots, and on ideas that retailers will soon start to stock up for Labour Day.

The cash-to-futures basis weakened to -$2.07 from +$2.59.

Both Alberta slaughter plants ran five-day kill schedules, but export volumes remained brisk, ranging around 3,500-5,700 head a week compared to 2,000-3,400 last year.

The market tone is steady to lower and there is a chance annual lows could be revisited heading into August.

The U.S. cash trade had hardly developed by press time July 29.

Live sales in Texas and Kansas were reported at US$116 per cwt., up $1 from the previous week.

In the northern United States, dressed bids of $185-$186 were being passed.

Cows rise

D1, D2 cows ranged C$92-$107 to average $99.30, up 61 cents. D3 cows ranged $82-$96 to average $88.20.

Rail grade cows were $185-$190.

Bulls were $124.41, up $1.86.

August is traditionally known as a good cow market. There could be a few more cows on offer, but an average of $100 per cwt. or slightly more should be achievable.

Light feeder trade

Only 4,890 feeders were at auction, one of the smallest non-holiday week volumes seen since the BSE market disruption.

Average steer and heifer prices were down slightly, but with the limited volume it was difficult to establish a strong market trend.

Feeder prices are mostly steady because light volumes and limited feeding profitability have precluded any seasonal price rally.

Calf prices are on a slight downward trend.

Feeder steer prices are about $80 per cwt. below a year ago, while calf prices are more than $100 lower.

Heavy steers saw the best demand last week thanks to interest from Eastern Canada, while their heifer counterparts were under pressure.

There is limited trade for feeders off grass or calves for forward delivery because buyers and sellers aren’t motivated to step into the market.

The Chicago futures market might be near the summer low.

The deferred live cattle futures contracts must strengthen before feedlots will be willing to take on a significant inventory of feeders.

U.S. beef lower

U.S. boxed beef prices fell again with Choice down US$1.94 at $198.76 per cwt., and Select was down 11 cents at $189.71.

They were the lowest prices of the year. It was the first time in the year that Choice closed below $200.

Weekly Canadian boxed beef to July 16 rose with AAA up 65 cents and AA up $7.41.

Strong higher end meat cuts lead the way, while middle meats moved lower.

AAA is seven percent lower and AA is down 10 percent from the same week last year.


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