Canfax Weekly Article | Report for the week of February 20, 2023

Moderate volume fed trade last week saw dressed prices steady to $3/cwt higher than the previous week. The bulk of sales were reported dressed at $328/cwt delivered in a full $327-328/cwt delivered trade range. U.S. buyers once again procured Canadian cattle on the five-area average. Cash sales also developed at USD $250/cwt delivered and worked back to around a $199.50/cwt FOB the feedlot live equivalent. Weighted average steer prices closed the week around $2.25/cwt higher than the previous week at $196.39/cwt. Repeatable heifer trade did not develop, and a weekly price trend was not established. Western Canadian fed slaughter for the week ending February 11 realigned to 45,935 head, and YTD was 2% greater than a year ago, totaling 250,762 head.

Calf and heavier weight feeder prices moved in opposite directions last week. The price spread between a 550 lb ($313.80/cwt) and an 850 lb ($246.36/cwt) steer stands at $67.50/cwt; this is the widest the calf/feeder price spread has been since February 2016. Alberta 900+lb heifers for September delivery traded in the low $240s/cwt. Even though basis levels are weaker than the historical average, it cannot be ignored that forward delivery prices are sitting $10/cwt higher than the all-time highs set back in 2015. Based on the latest Statistics Canada data, Canadian imports of U.S. feeder cattle for the month of December totaled just more than 29,000 head. For December, this is the largest import volume on record. 

Western Canadian fed and non-fed prices have been moving in the same direction since the start of the year. Butcher cows traded $1.50-2/cwt higher, and prices are at the highest point since early September. Since the beginning of February, Alberta cow prices have been trading at a $10-12/cwt discount against the U.S. market. Western Canadian cow slaughter volumes remain historically large, but non-fed supplies are continuing to tighten. Eastern Canadian cow prices were reported $5/cwt lower this week.

Bull

• January fed marketings were 19% larger than a year ago and 22% larger than the five-year average.
• U.S. fed buying interest should continue, as wet winter weather in the U.S. is making cattle dirty and reducing production and carcass weights.
• Feed barley prices continue to soften.

Bear

• Canadian steer carcass weights for the week ending February 11 were 7 lb larger than the same week last year at 940 lb.
• Moderate fed harvests are anticipated moving forward to limit cash market leverage.
• Second quarter weather projections for the prairies are generally antagonistic.