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THE MARKETS – for Feb. 14, 2011

MARKET SUMMARY

FED PRICES

The new year saw a contra-seasonal move in fed cattle prices at a time when the market typically struggles to keep up as post-Christmas expenses are realized and consumer spending slows pulling down meat sales. In spite of a strong Canadian dollar, fed cattle prices have climbed nearly $3 from the start of the year to mid-January when Alberta steers averaged $100.03/cwt. That’s an increase of $21.65 over 2009 or $292 per head on a 1,350-pound steer. Another week into January fed steers were trading at $101.92 with some sales as high as 103.65 per cwt. Currentness at the feedlot level and high live cattle futures have spurred on this increase. Global factors such as flooding in Australia and FMD in South Korea have also contributed to movement in the live cattle futures. Fed cattle cash-to-cash basis also narrowed as 2011 got started. By mid-January the basis was -6.81 per cwt, that’s 1.11 better than last year and 8.88 tighter than two years ago at this time.

Although the January 1, 2011 Alberta and Saskatchewan feedlot report found 977,495 head on feed, which was up one per cent from 2010, it was still considerably under the average on-feed number for January and down six per cent from 2009. December marketings were the second smallest since the start of this report in 1999. Placements were up three per cent as feedlots took the opportunity to manage some risk and hedge against strong live cattle futures.

Looking back at 2010 to the 25th of December the exports of fed cattle were up 17 per cent at 605,992 head.

FEEDER CATTLE

Feeder cattle prices have continued to strengthen since the fall, a combination of empty pen space, smaller 2010 calf crop and rising fed prices have all supported the upswing. The 550-pound feeder in central Alberta at mid-January averaged $133.38, up from $130.40 per cwt at the end of December and $30.10/ cwt higher than the same week in 2010. Heavier feeder steers continued to climb to a mid-January average of $112.92, up from the $109.17 posted at the end of 2010 and $22.42 per cwt better than a year ago. At mid-month the feeder basis was -10.18 per cwt, 3.08 wider than a year ago but 17.12 narrower than 2009. Towards the end of 2010 feeder exports were still running much behind 2009. To the week ending Dec. 25 feeder exports were down 29 per cent on the year at 195,864 head.

Auction numbers were also down year over year at the end of 2010. Many producers seem to have opted to hang onto calves this year and background them to utilize some of the excess feed in the countryside while watching the spring market.

NON-FED CATTLE

Fewer cows available and excellent demand for lean trim has pushed D1,2 cow prices higher again. Cow prices started 2011 at the highest level in almost a decade. The second week of January the average D1,2 cows were priced at $60.45 per cwt, $17.09 above 2009 and nearly double the 2008 average. D3s by mid-month averaged $450.94. Butcher bulls have increased in price since the start of the year, averaging $67.10 per cwt in mid-January. Non-fed exports to Dec. 25, 2010 were down one per cent at 227,256 head.

DebbieMcMillinisamarketanalystwhoranchesatHanna,Alta.

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

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