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The Markets – for Dec. 6, 2010


This fall’s strong fed cattle market slipped a bit in the first two weeks of November with prices losing $2.50 per cwt to an average $93.34. Basis levels remained tight at -4.40 per cwt. While seasonal trends suggest it should shrink even further toward the end of the year it is already much tighter than the -9.83 per cwt set a year ago and the four-year average of -13.12 per cwt.

Favourable feeding conditions had average steer carcass weights peaking at 881 pounds at the end of October, just slightly less than the record weights set at this time last year. Weights had dropped to 870 pounds by the first week in November.

Cattle on feed numbers in Alberta and Saskatchewan lots have been increasing through the fourth quarter but on November 1 the 825,620 head reported were still down eight per cent from 2009. Year-to-year marketings were up seven per cent in October while the slow fall run was evident in a five per cent drop in placements. U.S. on-feed numbers on the other hand have been growing. Smaller marketings in the third quarter coupled with larger and heavier placements through the summer create a scenario for increased front-end fed cattle supplies in the USA over the next couple months.

At the start of November Canadian fed steer slaughter was up two per cent at 1,354,003 head. Heifer slaughter was up nine per cent at 920,940 head. Fed cattle exports to the U.S. to the end of October reached 543,924 head, 25 per cent more than in 2009.


The fall feeder run was slow to get started but by mid November market volumes in Alberta were closer to year ago levels. While the numbers increased prices held pretty well. For the most part 550-feeder steer prices have risen throughout the fall to reach an average $133.17 by mid-November, $24 better than the same week in 2009. Heavier cattle followed the same contra-seasonal trend with an overall increase in prices throughout the fall, as 850-Alberta steers averaged $109.89 in mid-November, up $16 from last year. The 850-steer basis at press time was -3.60 per cwt, considerably stronger than the -8.85 posted last year and the four-year average of -14.38 per cwt. Feeder cattle exports to the end of October totalled 188,143 head, down 28 per cent from a year ago.


As expected, cull cattle prices declined seasonally in the past few weeks but still compare well to recent years. D1,2 Alberta cows in mid-November were selling for an average $51.94 per cwt, $17.72 per cwt better than the year before. Butcher bulls averaged $61.08 per cwt the same week.

Cow slaughter has recently seen a seasonal increase, jumping up to levels not seen since last February but overall we were still processing seven per cent fewer cows than last year at this time. Exports through October were also up 10 percent on the year. Good butcher bull prices and the prospect of some feed savings brought a number of bulls out of the herds. Bull slaughter is up 80 per cent to date at 24,668 head, with little change on the exports.



Fed Cattle

A shrinking supply of market-ready Canadian cattle as we move towards the end of 2010 will continue to add strength to the fed market on this side of the border. As well, the fed basis generally narrows toward the end of the year. However, given its current level, it’s hard to know how much more it has left to move. An expected increase in fed supplies to the south is a concern moving forward. The hope is U.S. feedlots will remain current, limiting the price fallout from this increased beef production on the Canadian market. The other drag on the fed market is our near-par Canadian dollar.

Feeder Cattle

The smaller Canadian inventories clearly evident in this year’s smaller/ slower fall run have been good for feeder prices and will continue to stabilize this market as many feedlots are still looking to fill pens. Good pasture regrowth and an open fall helped to spread out the smaller volumes coming to town. The fact that more producers may be encouraged to background their own calves this winter could trim available feeder supplies even further. Rising feed costs is a major risk factor for feeder markets going forward, as is the strong dollar as it will limit exports and reduce buyer competition. Potential imports of U.S. feeder cattle are another risk this fall. Our strong dollar and relatively lower feed costs has encouraged some Canadian feedlots to look south for the feeders they need to fill those empty pens.

Non-Fed Cattle

Cull cattle prices are seasonally low this time of year as producers start culling their herds. Fortunately good demand for grinding and trim meats as well as a reduction in beef imports has provided some useful support to the cull market. Additional forage stocks have also encouraged an interest in feeder-type cows and that has pulled some cull animals from the market as producers wait for prices to improve in the New Year.

About the author


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



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