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DEB’S OUTLOOK – for Feb. 14, 2011

FED CATTLE

Looking ahead in the near term, fed cattle prices may be pressured by weaker packer margins and increased U.S. production resulting from an increase in market-ready supplies and larger carcass weights. A Canadian dollar hovering near par can also cause pressure on the fed market without much notice. On the flip side, Canadian feedlots are very current and should remain so in their marketings through the first quarter. Another factor is the average Canadian steer carcass weight that started the year 13 pounds under last year so domestic supplies should be tight. Seasonally, beef demand improves towards the end of the first quarter and into the second as retailers look to consumer choices for spring. These factors should help stabilize any negative tone in the market looking further out.

FEEDER CATTLE

The trend for heavier feeders is to dip through the first quarter of the year. Prices have increased and cost of gain is rising which may put a lid on heavy calves for a while. The seasonal trend for light-weight calves is up through the first quarter as supplies are tight and buyers look to secure grass cattle needs. However, given the higher prices already seen in 2011 and the higher feed grain costs it’s hard to know how much of this seasonal increase has already been achieved. One positive note is the amount of snow cover across much of the Prairies. This will ensure grass in many areas and thoughts of green grass in a few months always gives a boost to feeder prices.

NON-FED CATTLE

Cull cattle should continue to see steady to firmer prices as the seasonal trend for cows is to increase through the first quarter. Looking back over the first 12 weeks of the past few years, cow prices increased 22 per cent in 2010, 23 per cent in 2009 and 33 per cent in 2008. That sort of increase may not be seen in 2011 as cow prices are already running at a high level, however a milder upswing may be in the cards. Since our cow market is exporting both live and boxed product to the U.S. the strong Canadian dollar will continue to be a factor in what cows bring.

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