Alberta fed steers slipped for six consecutive weeks from $115 at the start of April to $103 by mid-May, which was still almost $12 better than last year. The fed cattle cash-to-cash basis at mid-month was -6.42 per cwt, somewhat wider than the average year-to-date basis of -4.05 per cwt, but narrower than the -10.47 at the same time last year.
The Alberta and Saskatchewan cattle-on-feed report listed 1,000,899 head as of May 1, down three per cent from the year earlier. April marketings at 143,768 head were down 18 per cent from March in keeping with the tight numbers on feed since the start of the year. This marked the smallest April marketings since the start of this report in 2000. Reduced marketings are the result of reduced placements. In the past 12 months, with the exception of November and December 2010, the placement number has been lower than its comparable month from the year before. This month was no different. April placements were down seven per cent. To date in 2011 producers have placed 119,000 fewer cattle in western feedlots compared with the same five months of 2010.
Fed steer slaughter for 2011 as of May 7 was down 13 per cent at 430,604 head, while heifer slaughter was down six per cent at 365,652. To the end of April fed cattle exports were down 34 per cent from the same period in 2010 at 160,065 head.
Lightweight steers picked up in recent weeks as warmer weather led to spring grass. After a dip to $146 per cwt towards the end of April 550-pound feeder steers popped back to an average $154.50 by mid-May. A small increase was noted on the heavier feeders as well, with 850 steers that had dipped back to an average $115.50 at the end of April picked up another $1.67 to post $117.17 at press time in May. This compares to $117.21 on 550-pound steers and $98.56 on heavy feeders last year at this time.
Earlier in the spring demand for replacement-type females lent support to the heifer market however in recent weeks while steers gained ground heifers moved in the opposite direction. The 550-pound heifer average slumped from $136.10 to $129.90 per cwt from late April to mid-May. Heavier heifers saw the same downward movement from $115 to $108 by mid-month.
The 850-pound feeder basis held relatively steady over the past month. By mid-May it was running at -7.66 per cwt, which is 8.27 narrower than the same week in 2010. To date the average 850 basis has been historically tight in 2011 averaging -6.90 per cwt over the first 18 weeks compared to -12.67 in 2010 and -18.40 in 2009.
Total feeder exports to the end of April totalled just 39,614 head, down 57 per cent from 2010.
While cull cow prices have slipped back slightly in recent weeks they have certainly enjoyed a strong trend in 2011. Following the high reached in April at $80.45 per cwt prices softened to an average $74.08 by mid-May. That is still well ahead of the $60.01 posted in the same week last year. The average D1,2 price to date in 2011 is $71.41 per cwt compared to $50.97 in 2010 and $48.84 in 2009. Butcher bulls by mid-month were trading at an average $85.59 per cwt, in a range from $76 to $97. Exports of cull cattle to the end of April were only 67,003 head, down 26 per cent on the year. Cow slaughter is also down, by 14 per cent, but bull kill is up eight per cent.
Supply is still one positive in the fed market as placements were down for the better part of a year but a seasonally large supply of calves will be ready for slaughter in late May and June. Exports are down and packers seem comfortable with their current inventory. A strong dollar and the fact the basis generally widens through June add further instability. As well, beef demand was slow off the mark in the face of rising retail costs and fuel bills, but any warm weather after such a cool spring should trigger some added barbecue sales. It all points to some seasonal downside in the fed market so it will be important for feedlots to remain current. Any increase in demand along with overall light supplies should lend some support to prices through this soft spot.
As farmers rush to catch up on field work feeder numbers will remain low with prices tied heavily to quality. Feeder prices usually trend up through summer, peaking in the third quarter, but the high prices earlier this year coupled with rising break-evens raise the possibility of a contra-seasonal trend. More likely the smaller calf crop and the relatively higher 2011 fed market will keep feedlots eager which will lend support to near-term feeder markets. Look for mostly steady prices on limited volumes at auctions over the next few months.
Cull prices generally peak towards the end of the second quarter however the $80.45 high for April D1,2 cows will be tough to top. Softening fed prices, the dollar and rising ground beef prices are negative factors pushing against a still strong demand for trim and grinding products and limited cow supply. Current seedstock prices will likely pull cows away from the slaughter market adding some support to cull prices.