Fed cattle prices averaged $87.69/ cwt in December as packers dealt with slower seasonal meat movement and sellers with limited exports of fed cattle moving to the U. S. According to USDA, Canada exported 649,083 cattle for immediate slaughter in 2008, down 23 per cent from 2007.
In 2008 Canadian steer slaughter was just under 1,460,600 head, basically unchanged from 2007, however fed heifer slaughter was down three per cent at 980,885 head. Fed slaughter in December was 162,000 head, up two per cent from December 2007.
By the second week of January prices picked up, to $87.35/cwt, supported by rising cutout prices brought on by the reduced slaughter numbers at the end of 2008. This was $2.82 ahead of the first week of 2009 and $4.50 ahead of the same week in 2008. The continuing weakness of the Canadian dollar also supported the Canadian fed cash market.
The CanFax Cattle on Feed survey reported 1,034,855 head in major lots in Alberta and Saskatchewan on January 1, 2009, up five per cent from the year before. December placements were down 18 per cent year to year, due primarily to low feeder prices and extreme temperatures. Domestic slaughter and exports, at 159,000 head in December, were down three per cent from 2007.
The fed cattle basis in the second week of 2009 was -17.16/cwt under the U. S., the widest it’s been except for January 2005. By comparison it was -6.90/ cwt in 2008 and -13.38 in 2007.
The feeder cattle market trended lower in the fourth quarter of 2008 with 550 lb. Alberta feeders losing $1.76 from November to post a $103.72/cwt average in December. The falling prices and frigid temperatures convinced many producers to wait for better prices in the new year.
Lighter volumes of heavier feeders were also met with reduced prices towards the end of 2008. The December 850 lb. feeder steer price average was $90.01/cwt, down 6.39/cwt from November.
The feeder basis is extremely wide. It ended 2008 at -19.73/cwt and continued to fall to -27.93/cwt by mid-January. The mid-month 850 lb. feeder basis was -19.43/cwt. Feeder exports tailed off in the final months of the year but ended 2008 up six per cent year to year at 572,930 head.
Trim and grinding cut demand remains strong as economic conditions lead consumers to look for cheaper cuts of meat. This has helped to support cow prices. Slaughter numbers in Canada were large throughout 2008 at 737,893 head, up eight per cent from 2007. Total exports were also significant in 2008 totalling 157,000 head. While a large number of cows were exported this is still smaller than the pre-BSE totals mostly due to the new age requirements at the border and added costs.
Cull cow prices continued to fall through the fourth quarter, losing an average of $5.76 from October to December and ending the year with an Alberta average of $37.85/cwt. D1,2 cows in the second week of 2009 averaged $40/cwt in Western Canada, ranging from $30.75 to 47/cwt depending on age and quality.
Butcher bulls in December averaged $48.99/cwt and remained relatively steady since. The average bull price in 2008 was $52.33/cwt with highs posted in late summer.
Debbie McMillin is a market analyst who ranches at Hanna, Alta.