In this file:

 

·         Canfax report

Canadian fed slaughter volumes are up 10 percent compared to last year and Canadian fed cattle exports to the United States are running above year ago levels, so fed cattle supplies are being aggressively worked through the system…

 

·         Canadian prices divorce from U.S. fundamentals

Market Update with Jerry Klassen: Alberta feeding margins are in the red by $200 per head for feedlots selling in the spot market

 

 

Canfax report

 

The Western Producer (Canada)

March 7, 2019

 

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.

 

Slaughter volumes rise

 

Canadian fed slaughter volumes are up 10 percent compared to last year and Canadian fed cattle exports to the United States are running above year ago levels, so fed cattle supplies are being aggressively worked through the system.

 

Following seven consecutive weeks of lower prices, weighted average steer prices strengthened $2 per hundredweight, averaging $150.19 per cwt. Fed heifers also rose by $2.52 last week to average $149 per cwt.

 

Packer competition was more evident last week with all three western Canadian packers buying cattle. Dressed sales ranged from $250-$254 delivered. Packer lift dates started to tighten up. Two weeks ago they were buying cattle for three to five week delivery, but last week most cattle that traded were scheduled for the week of March 18.

 

Over the past 10 years, the average increase from first quarter lows to second quarter highs stands at 12 percent. Assuming first quarter lows are in the books, an historical increase would put fed prices on track to establish second quarter highs in the mid $160s per cwt.

 

With dry conditions last summer, grass cattle came in ahead of schedule and there could be a bigger than normal hole between yearlings and fed calf supplies. Placements of feeders weighing more than 700 pounds in October and November were down 11 percent and 17 percent, respectively, compared to the previous year

 

Fed prices are expected to trend higher into the spring and could rally 12 percent from first quarter lows to spring highs.

 

Over the past 30 years, slightly more than 50 percent of the time first highs have occurred in either March or April. Cash to futures basis levels historically strengthen from February to March. With fed cattle prices struggling for much of February and losses getting close to $250 per head, some feedlots have opted to push some February cattle into March.

 

D2 cows edge higher

 

Non-fed prices trended unevenly steady last week with D2 slaughter cow prices firming higher to average $83.75 per cwt., and D3 prices easing lower, averaging $73.57. Slaughter bull prices averaged $95.29 per cwt.

 

Dressed slaughter cow bids trended sideways from $162-$167 per cwt. delivered with the top end paid for fed white-fat cows with 70 plus days on feed.

 

Western Canadian non-fed slaughter had trended over 10,000 head for the previous five weeks, but for the holiday week ending Feb. 23 slaughter volumes eased 19 percent lower to 8,695 head.

 

Year to date, western non-fed slaughter was 14 percent larger at 80,382 head. Market supplies are beginning to tighten and seasonal price upside is anticipated.

 

Auction action

 

A few more feedlots came to auction last week with warmer weather, and average prices eased modestly lower. Stocker prices traded barely steady to $5 per cwt. lower last week, and light feeders saw prices generally $2 per cwt. lower.

 

Large feeders over 800 lb. continued to seasonally soften with prices slipping $2.50-$5.50 per cwt. lower. The steer calf to yearling spread continued to widen to $45.95 per cwt., indicating aggressive interest in grass cattle and a sign of the current weak fed market.

 

Auction volumes of 33,680 head were 29 percent larger than the previous week but were 13 percent lower than the same week last year. Year to date auction volumes were down three percent compared with a year ago.

 

The U.S. Department of Agriculture reports Canadian feeder exports to the United States for the week ending Feb. 16 surged 98 percent larger than the previous week to 4,958 head. Feeder cattle exports typically trend seasonally larger through to the end of March. Year to date feeder exports were 17 percent larger, totalling 19,103 head.

 

Calf prices have firmed higher through March in three out of the past five years. From March through April, 500 to 600 pound steer calf prices have strengthened 10 out of the past 12 years. Prices for large feeders are expected to soften through the remainder of the first quarter.

 

Beef trade ...

 

more

https://www.producer.com/2019/03/canfax-report-232/

 

  

Canadian prices divorce from U.S. fundamentals

Market Update with Jerry Klassen: Alberta feeding margins are in the red by $200 per head for feedlots selling in the spot market

 

By Jerry Klassen, Grainews (Canada)

March 7, 2019

 

There was unusual price behaviour in western fed and feeder markets during the first weeks of February.

 

Earlier in January, Alberta fed cattle prices reached a high of $166 on live basis for March delivery. By mid-February, Alberta packers were only bidding $150 on a live basis for March 1-15 delivery. At the same time, U.S. fed cattle prices in the Southern Plains were rather firm, edging from US$123 on live basis in mid-January to US$125 in mid-February.

 

While U.S. feedlot margins are in positive territory hovering around US$50 per head, Alberta feeding margins were in red ink by $200 per head for feedlots selling fed cattle in the spot market. Negative margins in Alberta have set a negative tone for the feeder complex. Short keep replacements also dropped about $12 from the January highs but calves were only down $5 to $8 from last month.

 

In central Alberta, mixed steers with medium flesh levels and averaging 850 pounds were trading for $179 while mixed steers weighing 650 pounds were valued at $205 during the second week of February. The market is in a very precarious situation moving forward. U.S. fed cattle supplies are expected to tighten in April. Restaurant and retail demand tend to make a seasonal high in late March and early April. These two factors should result in higher prices for both fed and feeder cattle prices.

 

The U.S. slaughter came in above expectations during November and December which resulted in cattle moving to market sooner than anticipated. This situation has tightened U.S. market-ready supplies during the first quarter of 2019. Unofficial data has the January slaughter finishing about 20,000 head above year-ago levels. I’m expecting a similar year-over-year increase for February and March. The USDA WASDE report had U.S. first-quarter beef production at 6.490 billion pounds, which is only 25 million pounds above the first quarter of 2018.

 

The Canadian January slaughter came in at 216,458 head, up 17,976 head from January of 2018. Canadian exports of slaughter cattle during January were only down about 2,600 head from year-ago levels. If we take into account the placements by weight category on the cattle-on-feed reports, market-ready supplies in Alberta and Saskatchewan should be very similar to year-ago levels during February and March.

 

One would initially think that the Canadian market should be trading at a premium to U.S. values. However, Canadian packers have done a good job of trading in this market environment by booking larger supplies three to four weeks forward. We’ve also seen a few U.S. plants do this as well, but there is still sufficient open demand in the nearby positions to sustain the U.S. fed cattle market at the current levels. I’m expecting the Alberta fed cattle basis to remain relatively weak until mid-March...

 

more, including table

https://www.grainews.ca/2019/03/07/canadian-prices-divorce-from-u-s-fundamentals/