Fed cattle
In the 26 weeks of recorded sales in 2023, 23 of the weeks saw week-over-week improvements. The peak was the third week of June at $247.84/cwt, which was a $61.80/cwt improvement from the start of 2023 and 41 per cent higher than the same week in June 2022. The start of July saw the average price take a seasonally normal dip, recorded at $242.11/cwt the first week of July, which was $67.63/cwt higher than a year ago.
After two years of a weak Canadian fed-cattle basis, it has finally strengthened, hovering on either side of par with the U.S. market. The cash-to-cash basis was at -$0.82/cwt in early July, compared to -$16.40/cwt a year earlier. Cash-to-futures basis at the start of July is +$9.83/cwt.
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Fed steer and heifer slaughter were both under year-ago levels, steers down seven per cent at 757,083 head while heifers were down nine per cent at 493,487 head. Fed cattle carcass weights remain lighter than last year. As of June 24, the year-to-date fed steer carcass weight was nine lbs. lighter at 912 lbs., while the year-to-date fed heifer carcass weight average was 833 lbs., 13 lbs. below last year. The third week of June saw the average steer carcass weigh in at 875 lbs. and fed heifer carcass at 796 lbs.
Retail beef prices decreased slightly and came back into line with pork and poultry prices, supporting consumer purchases. Good demand for beef, particularly grilling cuts, continued through the second quarter of 2023.
Deb’s outlook on fed cattle: The fed market in the summer generally trends lower. Following the strength through the first half of 2023, we can expect some pressure on the market. However, fed steer and heifer exports to the U.S. remain steady, particularly fed heifers. Demand also remains solid for higher-graded middle-meat cuts. Although fed cattle numbers will grow through the summer, smaller on-feed numbers indicate supply will be manageable. These factors will increase seller leverage and limit the downside in the fed market throughout the remaining summer months.
Feeder cattle
Feeder cattle volumes through the start of July are seasonally some of the lightest of the year. Light tests at the auction market show feeders trading in a sideways pattern, depending on the quality and type offered. Some movement of drought-pressured grass cattle sales have been noted as pasture conditions decline. Deteriorating pasture conditions across parts of the Prairies have led to some feeder cattle being pulled off grass weeks ahead of planned.
Cattle off grass are fetching a premium over backgrounded cattle in the same weight classes. The 850-lb. feeder average was $295.50/cwt in early July, an improvement over last year of $88.87/cwt or 43 per cent. The 750-lb. steer weight class in the first week of July averaged $313.83/cwt, $99.16/cwt higher than the same week in 2022. The number of lightweight calves trading hands this time of year is small. However, the 550-lb. steers averaged $351.50/cwt, nearly $120/cwt higher than last year. There has been a light test of calves sold with fall delivery. Mid-500-lb. calves with October and November delivery ranged from $365-$391/cwt.
Feeder cattle exports to the U.S. were still down from a year ago. At just 76,770 head as of June 24, they are running about 42 per cent back from the same time last year. The 850-lb. feeder cash-to-futures basis was still wide, at -$27.75/cwt. This was $10/cwt wider than last year and nearly $19/cwt weaker than the five-year average.
Deb’s outlook on feeder cattle: Scattered rain has brought relief in some areas as pasture conditions and forage crops are barely hanging on. However, expect early movement of feeders and cows as producers evaluate fall grass conditions and capacity limitations. Tight supplies are expected to support the fall feeder run. However, we need to monitor feed supply. Drought conditions and limited feed grain availability will affect local feeder prices. Ample U.S. corn is already making its way into Canada, which will support feeder prices. Deferred delivery sales indicate a strong feeder market come fall, but weather, harvest, inflation and interest rates could all play a role and need to be monitored.
Non-fed cattle
Cull cow prices have been well-supported through the second quarter. The D2 cow price peaked in May at $157/cwt, up from the April low of $129.66/cwt. The early July average of $153.50/cwt was down $3.50/cwt from the May high. However, compared with the beginning of July 2022, the 2023 price is $47.90/cwt higher.
Although dry pasture conditions have increased the number of cull cows available, supplies at local packing plants have remained manageable, while cow exports are larger when compared to last year. Demand for grinding and trim meats for summer burgers remains strong, trading at annual highs.
According to Statistics Canada, exports of cows for the first five months of 2023 were down 26 per cent from a year ago while the USDA reports slaughter bull exports to the third week of June at 14,062 head, down 16 per cent from a year ago.
Domestic slaughter numbers are larger in 2023 for non-fed cattle. Cows kill was up five per cent from last year at 238,216 head as of the third week of June. Bull slaughter was 25 per cent larger at 8,299 head.
Deb’s outlook on non-fed cattle: While recent rains have been very welcome across the Prairies, many pastures remain in poor condition. In addition, hay crops are light, leaving questionable winter forage in some areas. Expect additional drought-forced sales. As the fall run brings additional cows to town, the non-fed market will soften seasonally.
