Canfax Weekly Article | Report for the week of May 8, 2023

The Western Canadian fed market has clearly exceeded expectations as prices continue to rally, setting new highs. Over the past seven weeks, fed prices have rallied $20/cwt going from $210/cwt to now averaging in the low $230s/cwt. Competition on the cash market was good, with both major packers buying cattle. Dressed sales were reported from $385-390/cwt delivered. Cattle were being scheduled anywhere from immediate to the first week in June delivery. Basis levels are now right in line with the five-year average (+$9.03/cwt). From their highs in late January, Western Canadian steer carcass weights have declined 89 lbs. Despite seasonally lower carcass weights, Canadian Prime and AAA grade percentage was reported at 74.65%.

Good feeder demand was observed last week, and prices traded generally steady to $1/cwt stronger. Middle weight 5-600 lb steers and heifers firmed modestly higher and established new historic highs. Good grass interest also firmed 6-700 lb steer calves $3/cwt higher than the previous week to a new record high. A light test of 1,000 lb Alberta heifers saw a significant $30+/cwt price premium to spot for deferred September delivery. Total auction volumes were 14% larger than the previous week at 30,525 head and were 11% larger than the same week last year. YTD feeder exports continue to track significantly below year ago, down 55% at 43,080 head.

Slaughter cow prices rallied $3-4/cwt higher than the previous week. D2 slaughter cows averaged $150.21/cwt and are within $1/cwt of record highs seen in 2015. D3 cows traded $20/cwt back of D2s averaging $130.14/cwt. Dressed cow bids rallied to a new historic high this week, with reports from $280-290/cwt delivered. Butcher bulls continue to trade in a tight range and averaged $155.23/cwt. Western Canadian non-fed slaughter for the week ending April 29 was 21% lower than the previous week at 5,965 head and YTD was up 11% to 135,648 head.

Bull:

• Carcass weights continue to trend lower.
• Feeding margins have improved, and cash cattle are trading in the black.
• The cash basis is finally strengthening.

Bear:

• Grilling season buying is winding down.
• Beef margins at retail are trailing pork.
• Poultry production continued to ramp up.