For the week ending Dec. 6, Alberta packers were buying fed cattle on a dressed basis in the range of $475 to $485 per hundredweight (cwt.) delivered, down $25 to $30 per cwt. from a month earlier.
Using a 60 per cent grading, this equates to a live price of $285 to $291 per cwt. delivered. Feedlot margins are now in negative territory with break-even pen closeouts near $300 per cwt. Western Canadian slaughter volumes have been lower than expected through November, causing the number of cattle on feed 180 days or more to increase.
Processing weights are at or near record highs. Weakness in the fed cattle market has caused the feeder complex to come under pressure. Given the value of the April live cattle futures, it appears that feedlot margins in the spring period could be underwater by $300 to $400 per head. Feedlot operators are exhibiting a cautious tone as they scale down replacement ownership.
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Fed cattle supplies are not tight — they’re burdensome. In declining markets, feedlot operators hold back on sales in hopes of higher prices only to sell at lower levels once cattle become too heavy. It will take about three to four months to work through the backlog of market-ready cattle in Canada and the U.S.
U.S. cattle on feed as of Nov. 1 were 11.7 million head, down 2.2 per cent or 260,000 head from Nov. 1, 2024. More importantly, cattle on feed 180 days or more as of Nov. 1 were 1.3 million head, up 670,000 head from 12 months earlier. Dressed weights are up about 20 pounds from last year and 50 lb. from two years ago. U.S. November slaughter was down about 170,000 head from November 2024. Market-ready fed cattle supplies are building, not decreasing.
In Western Canada, cattle on feed in Alberta and Saskatchewan as of Nov. 1 were 1.037 million head, up one per cent or 5,709 head from Nov. 1, 2024.
Cattle on feed 180 days or more as of Nov. 1 were 152,279 head, up 3.2 per cent from last year. Over the past four weeks, western Canadian slaughter has been down about 25,000 head from year-ago levels. Cattle are starting to become backed up in Alberta feedlots. Steer dressed weights are more than 1,000 lb.
Consumer beef price remains high
Wholesale beef prices have been holding value, but packing margins are in negative territory. Earlier in November, Tyson Foods announced it was closing its beef plant at Lexington, Nebraska, and curtailing slaughter at its larger plant in Amarillo, Texas.
The beef market is experiencing softer demand as retail prices remain at record highs. Consumers in the U.S. and Canada are contending with inflation, which lowers buying power. Unemployment levels have been creeping higher over the past year in the U.S. and improving slowly in Canada. Consumer spending is expected to slow significantly in the first half of 2026, which will result in lower beef demand.
At the time of writing this article in early December, 850-lb. backgrounded mixed steers were trading at $450 to $460 per cwt. in central Alberta. In January and February, we’ll likely see the market shave off about $20 to $30 per cwt. from these levels.
There are a couple factors to consider for the feeder market. First, we’re expecting the U.S. border to open to Mexican feeder cattle in January or February 2026. Second, we’re expecting a marginal year-over-year increase in the U.S. and Canadian calf crops during the 2025 calendar year.
These calves will start to come on the market in the spring of 2026. Feed grain prices are expected to percolate higher. We’re expecting the barley market to rally $30 to $40 per tonne from current levels. Finally, feedlot margins are expected to remain in red ink for an extended period. History tells us that feedlot operators need to endure one full round of feeding and then there is a serious downward adjustment to the feeder market.
Price for bred heifers and cows supports expansion
Bred heifers and bred cows have been selling very strong. Prices for bred heifers have been quoted between $6,500 and $7,800. Second, third and fourth calvers have been in the range of $4,000 to $6,000. The cattle herd on both sides of the border has been slowly moving into expansion over the past year. Beef cow slaughter in the U.S. is expected to drop to 10-year lows, which is a positive signal.
Cow-calf producers and backgrounding operators should avoid selling in January and February. The fed cattle market is expected to experience a seasonal rally from mid-March through April. This will provide a good opportunity for sales. Producers shopping for grass cattle should step forward in February because the longer-term forecast calls for average to above-average precipitation during the spring period for Alberta and Saskatchewan. Pastures will be experiencing early development and remain favourable, enhancing demand for grassers.
