McMillin: Fed cattle market sees little improvement
The Markets with Deb McMillin, from the April 2021 issue of Canadian Cattlemen
By Debbie McMillin, Contributor, Canadian Cattlemen
April 1, 2021
A larger domestic slaughter supply coupled with heavier carcass weights limited seasonal improvement in the fed market. The fed steer average in mid-March was $149.93/cwt, $0.98/cwt lower than the start of the month and down $2.65/cwt when compared to a year ago. Mid-March 2020 was the start of the market disruptions due to the COVID-19 pandemic and year-over-year comparisons will begin to show that in the coming weeks.
However, feedlot losses continue and cattle are being pulled ahead as cost of gain is encouraging fewer days on feed. In addition, set-aside-program cattle are still entering the slaughter mix. Fortunately, strong domestic and export beef demand has continued, retail beef sales are strong and food service sales are increasing. The Canadian basis is very strong, currently at +$7.67/cwt over the U.S. Fortunately, this is the case as feedlot margins are slim and the historical five-year average cash-to-cash basis is -$6.78/cwt.
Cattle on feed in Alberta and Saskatchewan on March 1 totalled 1,004,254 head, down seven per cent from a year ago. Fewer feeder cattle exports plus feeder imports meant larger placements through February. Placements were up 19 per cent to total 145,243 head. Fed production to date in 2021 was 17 per cent above a year ago, resulting from a 10 per cent increase in fed steer slaughter and a 23 per cent increase in fed heifer slaughter. Carcass weights are still well above year-ago levels.
Exports of fed cattle, including cows, are seven per cent below a year ago, at just 81,624 head reported in the first two months of 2021.
Debís outlook for fed cattle: Typically, spring highs are realized between late March and mid-April as grilling season approaches. Domestic and export demand remain strong, which will support the fed market. In the coming weeks more cattle that were placed in the set-aside program will become available, limiting upside potential in the near term. However, supplies should remain manageable as feedlots have been pulling cattle forward throughout much of the first quarter.
Deferred live cattle futures continue to trade at a premium to the near months, which is uncommon. However, supply fundamentals and demand suggest limited seasonal strength as we move into the second quarter. The market will be affected whether COVID-19 restrictions are lifted, or if case numbers surge and restrictions are added.
Feeder cattle ...
Debís outlook for feeder cattle ...
Non-fed cattle ...
Debís outlook for non-fed cattle ...
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