Canfax Cattle Market Update | Fed market taking a breath, first half feedlot placements lower

Alberta fed steer prices climbed week over week for almost the entire first half of 2023, with only two of 26 weeks where prices slipped from the previous week. New all-time high prices near $248/cwt (live) were established in June. However, since the beginning of July and through the entire month of August, fed steer prices softened, largely following historical trends, albeit at a significant premium. Alberta live steers averaged $233/cwt in August, a five per cent drop from their June highs. Alberta live steer prices have softened between June and August in seven of the last 10 years, averaging a three per cent drop.

Cattle on feed inventories have been below year-ago levels since January and have been at or below the five-year average since April. Drought conditions in some parts of the Prairies, combined with historically strong feeder prices in June and July, resulted in feedlot placements 32 per cent (48,000 head) higher than June and July 2022, after being 14 per cent (almost 100,000 head) lower from January to May, compared to January to May 2022. Fed prices continue to tread into unchartered territory and have pulled significant numbers of heifers from cow-calf operations intended for breeding into beef production. Total placements were supported by heifers, accounting for 54 per cent of all placements in June, dropping to 40 per cent of all placements in July. The five-year average for heifer placements is 37 per cent and 32 per cent respectively.

From 2013-2022, on average, there has been an 18 per cent drop from first-half high prices to second-half low prices for Alberta live fed steers. From the first-half 2023 high at $248/cwt, this puts the second-half low near $203/cwt. There is generally a dip in fed steer prices in the summer months before rebounding to end the year, though tighter year-to-date cattle on feed supplies in both Canada and the U.S. makes it unlikely that the Alberta fed steer market will come anywhere near such a significant drop.

The calf market is poised to climb until November, increasing feedlot breakevens. As markets shift on both fed cattle prices and input costs, risk management strategies need to adjust as well. The new Quarterly Trends report published by Canfax looks at potential range of profitability using targeted risk management approaches and combinations for all six classes of cattle listed in the Trends report.

For ongoing market analysis and to become a Canfax member, visit www.canfax.ca.

This article was first published in Volume 3 Issue 3 of ABP Magazine (September 2023). Watch for more digital content from the magazine on ABP Daily.