Fed cattle
The cash market in the U.S. rebounded following a drop in March in response to the mid-month financial turmoil. In Canada, the cash market was not negatively affected and steadily improved, posting new record highs. The first week of April saw the fed steer average in Alberta at $217.59/cwt, an improvement of $7.17/cwt from the previous two weeks and an improvement of $31.55/cwt since the start of 2023. Compared with a year ago, the fed steer average in Alberta was $54.30/cwt higher.
The strengthening price has been driven by spring demand, strong wholesale prices — particularly the middle meats — and smaller carcass weights in both the U.S. and Canada. It has been a long time since we have seen significantly lower year-over-year carcass weights in Canada. The average steer carcass was 910 lbs. the last week of March, which was 12 lbs. lighter than the same time last year. In fact, the last time carcass weights were as light at the end of March was in 2018. This comes as supplies tighten and demand for spring grilling increases.
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Fed basis remains wide even as prices break record-high levels. The first week of April saw a cash-to-cash basis of -$17.57/ cwt, which is more than -$5/cwt wider than a year earlier.
Domestic slaughter numbers were lower through the first quarter of 2023. Combined fed cattle saw 3.5 per cent fewer cattle killed when compared to the first quarter of 2022. During the first quarter, fed steer slaughter was up five per cent, totalling 427,732 head. This was offset by a reduction in fed heifer slaughter of 15 per cent to just 245,482 head. Exports, including fed cows, are down three per cent from a year ago at 125,122 head.
Deb’s outlook for fed cattle: Recent reduction in carcass weights would suggest Canadian feedlots are current which will provide more leverage in the coming month. Smaller supplies coupled with spring demand and strong wholesale prices are also favourable for the near term. Retail beef features heading into barbecue season are expected to fuel fed prices. As front-end supplies of market-ready fed cattle tighten in the coming weeks, prices should continue to improve.
Feeder cattle
Spring weather, melting snow and the promise of green grass had buyers aggressively pursuing feeder cattle. Although feedlots are still struggling with negative margins on sales at time of writing in mid-April, strong technical markets and lower feed costs suggest positive margins on grass cattle even with increased feeder cost. Profit potential coupled with smaller numbers resulting from a reduced Canadian cow herd has increased competition and feeder prices have responded positively.
The 650-lb.-feeder steer average in Alberta at the start of April was $314.22/ cwt, a jump of over $10/cwt in the past two weeks, a 16 per cent improvement since the start of 2023 and $95.61/cwt higher than the same week last year.
Heavier feeder cattle prices have also improved. However, trade volumes have been lower in recent weeks. The 850-lb.- feeder price average at the start of April was $257.60/cwt, a six per cent increase since the start of the year and $70.90/cwt higher than the same week in 2022. Feeder steer basis widened from the end of March to the first week of April, hitting -$8.56/cwt, which is $3.86/cwt wider than the end of March but still $1.50/cwt narrower than last year.
Feeder cattle exports are still slow in comparison to a year ago. To the week ending March 25, only 28,263 head were exported, 62 per cent fewer than the first 12 weeks of 2022. Replacement heifer sales picked up. Special sales and packages of palpated open heifers at spring bull sales have seen prices range mostly from $1,900-$2,400 per head, with some hitting much higher.
Deb’s outlook for feeder cattle: Smaller supplies, lower feed grain prices and improved feeder margins will support all feeder cattle classes. Quality replacement breeding females will remain in demand, increasing buyer competition and decreasing the number of feeder heifers available to enter terminal operations. Grass cattle demand will drive certain weight classes higher as buyers can pencil out a profit based on current costs and projected late summer and fall prices. Expect strong feeder prices in the near term as current feedlots look to fill some pens for the summer and grass operations look to stock pastures.
Non-fed cattle
Cow prices in Western Canada increased steadily to mid-March when they peaked at $134.36/cwt, a 43 per cent increase from the start of the year and nearly 38 per cent higher than the same week in 2022. The first week of April saw the average at $129.66/cwt, which is $4.70/cwt lower than 14 days previous but still $31.67/cwt higher than a year ago. Cow numbers available slowed, which has been evident in the week-to-week comparisons of cow slaughter numbers. The most recent week saw a 12 per cent reduction in cow kill. Year-to-date cow slaughter is at 140,269 head, which is 12 per cent larger than a year ago.
Butcher bull slaughter in Canada is 18 per cent larger than the first 14 weeks of 2022. At time of writing, bull slaughter was at 3,251 head. Slaughter bull exports totalled 6,332 head, eight per cent smaller than a year earlier. In the first week of April, the butcher bull price in Alberta was $148.24/cwt, a small drop from the end of March but still $21.46/ cwt higher than a year earlier.
Deb’s outlook for non-fed cattle: Most cows that were on feed in the fall have likely been marketed at a profit already. This will tighten supply moving into the summer when demand increases for lean ground beef. The non-fed market should be well-supported in the coming month as fed prices remain high, demand for grinding products strong and cow supply small. Expect prices to remain steady to higher through the second quarter of 2023.
