Canfax Weekly Article | Report for the week of September 18, 2023

The bulk of Alberta cash sales were reported dressed at $390/cwt delivered. Light live trade was steady to stronger than rail sales from $232.00-233.25/cwt. This week’s cash basis strengthened modestly from last week, but continues to be seasonally weak at around $16/cwt. This did encourage U.S. buying interest but few, if any, cattle traded South. Weighted average steer prices firmed $1/cwt higher than the previous week to $233.19/cwt. Kill schedules remained static from the end of September to second week of October. Western Canadian fed slaughter for the week ending September 9th were fully steady with the previous week at 42,172 head. Year-to-date fed cattle/cow exports were down 5% from year ago, totaling 308,292 head.

Alberta 350 lb steer calves averaged just over $500/cwt, while 550 lb steers are at $400/cwt. Over the past month, Alberta 550 lb steer prices have strengthened $26/cwt. It is worth noting that over the past 20 years, 550 lb steer calf prices have never established second half of the year highs in September. In a bull or upward trending market, it is more common to see second half of the year highs in December. Western Canadian calf prices have been impressive, relative to the Eastern Canadian market. Over the past month, 5-599 lb steer calves in Alberta have been at a $16/cwt premium to Ontario. Over that same time frame, Alberta 5-599 lb heifer prices have been at a $42/cwt premium compared to Ontario.

Non-fed volumes have increased and we’re still seeing a lot of exposed cows hit the market. With more numbers on offer, packers have seasonally gained leverage over the cow/calf segment. Alberta cow prices have moved to a discount against both the U.S. and Ontario market. This week butcher cow prices traded $15/cwt lower through commercial auction facilities, while dressed prices were $5/cwt weaker. From their highs in June, cow prices have dropped 12%. Over the past ten years (excluding 2014), the average decline from spring highs to fall lows is 24%. Using an historical decline, this would put prices on track to bottom in the $120/cwt area, which is not out of the question. Based on both the five-year and the twenty-year indices, cow prices historically bottom in late November.

Bull.

• Higher cattle futures are offering hedging opportunities.
• New crop grain prices for October delivery have eased lower.
• U.S. packer buyers are showing interest in Canadian cash cattle.

Bear.

• September 1st cattle on feed inventories are the second largest since reporting began.
• Packers are seasonally gained leverage over the salvage cow market.
• Fed cattle carcass weights are seasonally trending larger and typically peak in October.