Canfax Weekly Article | Report for the week of January 23, 2023

Alberta direct cattle sales saw moderate volume trade last week, with weighted average steer prices firming $3/cwt higher than the previous week. The bulk of sales were reported dressed from $315-317/cwt delivered. Local live trade was also reported comparable with rail sales at $187.75/cwt. A significant portion of last week’s cash offering traded south at USD $240/cwt delivered and worked back to around a $190/cwt FOB the feedlot live equivalent. Western Canadian-fed slaughter for the week ending January 14 rallied 3% greater than the previous week to 40,893 head, and YTD is 11% larger at 80,651 head. Fed cattle/cow exports to the U.S. for the first week of 2023 were moderate at 8,563 head. Total export volumes for 2022 were 18% greater than 2021 at 754,151 head.

Compared to December, the biggest feeder price advancement has been on 4-700 lb steers, with prices up $17-24/cwt. On the flip side, the smallest price gains from December have been 900 lb+ heifers as prices are up $2/cwt. Over the previous two weeks, 5-600 lb steers have averaged on either side of $300/cwt, the highest price since September 2015. Alberta 850 lb feeder cash-to-futures basis was reported at +$1.58/cwt, stronger than last year and stronger than the five-year average. Most of the bigger-weight feeders purchased right now will be priced against the August live cattle contract. The August live cattle contract has been trading from USD $156-158/cwt, which is just shy of the all-time high set in 2014.

D2 cow prices are currently trading around $100/cwt; for the month of January this is the highest price since 2016. Alberta cow prices are still trading at a discount to the U.S. utility cow market, but the price spread has narrowed. In December, Alberta cow prices were trading at roughly $14/cwt discount, whereas now the discount is closer to $5/cwt. Over the previous two weeks, Western Canadian cow slaughter has averaged more than 9,000 head per week. Compared to the first half of January, non-fed volumes through commercial auction facilities have already started to tighten. Since the start of the year, Ontario cow prices have been flat, averaging in the mid $90s/cwt.

Bull

• U.S. January 1 cattle on feed inventories were 2.9% lower than a year ago at 11.7 million head.
• Front-end market-ready supplies remain manageable.
• Retail beef margins are above average.

Bear

• Seasonally sluggish beef demand will continue.
• Fed prices typically soften through February.
• Carcass weights are expected to remain elevated through the first quarter.