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The Markets – for Dec. 12, 2011

Fed Cattle

While many commodities on the board felt the pressure of the European debt crisis in the past few weeks it has not been seen in the fed cattle cash market. Fed cattle prices in Alberta rose just over $3 per cwt from the end of October to post a mid-November average of $112.28. That s more than $19 better than the same week last year. While local fed prices surged, they still haven t kept pace with prices south of the border, which widened the cash-to-cash basis to an average -16.96/cwt. In mid-November the U.S. weekly average reached a record $125.30, fuelled by tight supplies at the start of the month and rising demand for Choice product which in turn has created a historically wide Choice/Select spread.

Locally the November cattle-on-feed report for Alberta and Saskatchewan confirmed the tight supply situation. Marketings were down four per cent and placements up six per cent pushing the total on feed six per cent above the year-ago numbers. However, a smaller number of heifers were placed in October, which supports other indications of heifer retention and herd growth in the future.

To date 2011 fed cattle exports to the U.S. total 350,649 head, which is down 36 per cent from last year. Fed slaughter to date also confirmed the tight supply situation, with steers down eight per cent to 1,249,310 and heifers down 14 per cent at 795,094 head.

Feeder Cattle

Larger volumes of feeders hit the market in the last few weeks of our reporting period, however prices continued to steam ahead, particularly on top quality groups of calves. Supported by smaller calf numbers, high deferred futures, empty pens and good fed prices, feeder calf prices rose on all classes. Yearlings that reached an average just over $135 by late October dropped back a notch during the first two weeks of November to $131 per cwt in central Alberta. That s still $21.50 higher than the same week of 2010. The yearling feeder basis on 850 feeders at mid-November was -11.98 per cwt. It was much tighter in 2010. Feeder steers at mid-November averaged $157 per cwt, up $23.30 on the year. Feeder exports through the first 10 months of 2011 totalled just 68,172 head which is 64 per cent fewer than 2010.

Non-Fed Cattle

Increased numbers did pressure non-fed cattle lower, but this seasonal decrease was in line with the seasonal and historical average decrease of just under $8 per cwt from August to November. Alberta D1,2 cows at mid-November averaged $63.78 per cwt, $11.84/cwt ahead of the same week in 2010. Butcher bulls dropped to $72 per cwt. While domestic cow slaughter picked up in the past couple weeks it s still cumulatively 13 per cent smaller than at the same time last year. In addition the smaller availability of cows is noted in the live exports, which are down 28 per cent in 2011. Bull slaughter domestically currently sits at 16 per cent under a year ago while live bull exports to date are up 17 per cent at 4,700 head.

DebbieMcMillinisamarketanalystwhoranchesatHanna,Alta.

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Debbie McMillin is a market analyst who ranches at Hanna, Alta.

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