For the week ending Feb. 8, Alberta packers were buying fed cattle on a dressed basis at $460/cwt, up $10-$15 from the week ending Jan. 25.
Using a 60 per cent grading, this equates to a live price of $276/cwt delivered. This is up from the early January prices of $432-$438/cwt. Wholesale beef prices continue to trade at or near historical highs. The healthy packer margins are encouraging the slaughter pace. Western Canadian steer carcass weights are running 47 pounds below year-ago levels as market-ready fed cattle supplies tighten in Western Canada. Feeder cattle prices made fresh historical highs in early February as healthy feedlot margins encouraged finishing operators to reload. In central Alberta, larger-frame lower-flesh tan mixed steers averaging 1,000 lbs. on light grain and silage diet with full processing data sold for $355.
Steers averaging 500 lbs. were readily selling in the range of $525-$550/cwt across the Prairies. Tariff concerns have spurred on marketings from cow-calf producers resulting in larger auction market volumes. For August delivery, the market for 1,000-lb. steers off grass is relatively even with nearby values.
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Cattle on feed 120 days or longer in Alberta and Saskatchewan, as of Jan. 1, 2025, were 110,617 head, down 42 per cent or 77,428 head from Jan. 1, 2024. Market-ready fed cattle supplies in the short term are rather snug, resulting in the stronger Alberta market. Given the placement data on the Alberta and Saskatchewan Cattle on Feed report, market-ready fed supplies will continue to decrease into April and early May before increasing in June and July.
During late January and early February, there was an increase in fed cattle exports to the U.S. We’ll likely see this export pace continue as tariff fears loom over the cattle market. In the U.S., it’s a demand-led rally in the fed market. Cattle on feed 150 days or longer as of Jan. 1, 2025 were 2.304 million head, up 1.2 per cent or 27,000 head from Jan. 1, 2024.
This comes as average weights are up 46 pounds from year-ago levels. Supplies are not considered tight south of the border. U.S. first- and second-quarter beef production will likely finish similar to year-ago levels.
The latest data from Statistics Canada showed sales at food and beverage retailers during November were down 1.6 per cent from October. Sales at Canadian supermarkets and other grocery retailers were down 1.5 per cent from a month earlier.
The Canadian beef market is experiencing sluggish demand due to weaker consumer spending. South of the border, U.S. consumer spending during the fourth quarter was up 4.2 per cent. on a seasonally-adjusted annual rate.
Wholesale choice beef during the first week of February was trading at US$330/cwt while select product was quoted at US$317/cwt. It’s important to realize these prices are historical highs and above the COVID-19 pandemic price levels. The nearby wholesale beef market has incorporated a risk premium due to uncertainty in beef production in the deferred positions. Beef is typically sold on longer-term contracts. Strength in the summer and fall market is pulling up nearby values.
The U.S. calf crop for the 2024 calendar year was estimated at 33.529 million head, down only 34,000 head from the 2023 figure of 33.563 million. This was higher than we were expecting. The Jan. 1 U.S. Department of Agriculture inventory report had heifers for beef cow replacement at 4.672 million head, down only 46,000 head from 12 months earlier. The Canadian Livestock Inventory Report will be released Feb. 25.
We’re expecting the Canadian calf crop to come in at 4.25 million head, down 35,000 head from the 2023 output. U.S. and Canadian cow calf producers are expected to hold back heifers for herd expansion during the summer and fall. This will result in lower feeder cattle supplies and keep the market supported at the current levels.
Trade resumes
In late November, the U.S. closed the border to Mexican feeder cattle after a positive detection of new world screwworm (NWS) in southern Mexico. On Feb. 1 this year, USDA’s Animal and Plant Health Inspection Service (APHIS) announced the resumption of cattle imports from Mexico.
We’re expecting the U.S. to import 150,000 to 200,000 head per month of Mexican feeder cattle in February and March. To put this in perspective, Canadian feeder cattle exports to the U.S. during all of 2024 were approximately 151,000 head. The U.S. usually imports about 1.2 million head from Mexico per year. The closure of the border contributed to the stronger feeder and fed cattle prices in Canada and the U.S. The resumption of U.S./Mexican feeder cattle trade will weigh on the cash and feeder cattle futures.
At the time of writing this article, the implementations of U.S. tariffs and Canadian retaliatory measures were delayed for 30 days. However, the threat remains. This is the wild card moving forward.
Barring tariffs, we expect the Alberta fed market to remain firm and make fresh historical highs in April or May. There will likely be some pressure in June and July on the fed cattle market as market-ready fed cattle supplies increase on both sides of the border. The feeder market is expected to remain firm throughout the spring and summer.
If heifer retention occurs as expected, this will be supported, but with the market at historical highs, the cattle market has factored in the lower supplies in the deferred positions. Don’t expect further upside moving forward. The resumption of U.S./Mexican trade will also temper the upside and weigh on the market in the short term.
