Canfax Weekly Article | Report for the week of March 7, 2022

Alberta fed prices firmed $1/cwt higher last week with the bulk of sales reported at the top end of the previous week from $274-275/cwt delivered. Thin live steer trade was reported at $162.50/cwt. Heifer sale volumes were slight, but prices were fully comparable with steers. The majority of cattle traded were scheduled for harvest the week of April 4th. Western Canadian fed slaughter for the week ending February 26th was down 1% from the previous week and YTD volumes were 2% larger totaling 329,531 head. Canadian fed cattle/cow exports to the U.S. for the week ending February 19th were 2% larger than the previous week and YTD volume were 4% larger totaling 73,245 head.

Alberta 550 lb calf prices are trading at $20/cwt discount to the U.S., the largest discount since the summer of 2015. Canadian feeder cattle exports to the U.S. were the third largest weekly export volume over the past five years. Last week AB, SK and MB 1000 lb heifers for September/October delivery traded from $190-197/cwt with a weighted average price of $194.05/cwt. The five-year average price for 900+ lb heifers for Sep/Oct is $169-170/cwt. If we look at purchasing these 1000 lb heifers for fall delivery at $195/cwt delivered, targeting February with an out-weight of 1450 lb and you can purchase new crop barley at $400/mt this fall, that would put your cost of gain on heifers close to $1.80/lb. In this scenario the feedlot would need $190/cwt price to breakeven. Going against the February 2023 live cattle contract, the feedlot would need a Zero basis contract just to breakeven.

Over the past four weeks butcher cow prices have increased $11.50/cwt, going from the upper $70’s/cwt to the low $90’s/cwt. Non-fed volumes through commercial auction facilities are seasonally tightening and slaughter volumes have also started to moderate. Even with this latest price surge Alberta cow prices are still the cheapest in North America.

Bull

• Fed cattle/cow exports to the U.S. are larger than year ago.
• Large harvests have worked through much of the slaughter inventory backlog.
• Cutout values are expected to seasonally strengthen.

Bear

• The employees at Canadian Pacific Railways voted overwhelming in favor of a strike mandate and the earliest potential strike would be March 16th.
• Basis levels remain historically weak.
• Carcass weights are larger than year ago.

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