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The Markets – for Nov. 14, 2011

MARKET SUMMARY

Fed Cattle

A lower Canadian dollar and increased buyer competition from the U.S. led to a strong fed market in the first week of October. Prices reached $110.73, an increase of $5.05 in one week. Fed steers in Alberta at the end of the second week averaged $108.94, up $17.81 per cwt from a year ago and more than $31 better than 2009. A lower Canadian dollar and a slow reacting cash price led to a widening basis at the start of the month. By mid-month it was $13.09 under the U.S. market.

The Alberta and Saskatchewan cattle-on-feed for October 1 was up four per cent over last year. The year-to-date total of 709,278 head sits three per cent above 2010 but 10 per cent below the 10-year average, a reflection of the shrinking Canadian cow herd. Placements through September are down six per cent due to the smaller number of available supplies and the nice fall weather that kept more calves on pasture.

Fed slaughter and exports continue to run lower. Steer slaughter to date is down nine per cent from 2010 and heifer slaughter is down 14 per cent. Export shipments of slaughter cattle to the U.S. are down 37 per cent year to date at 307,904 head.

Feeder cattle

Nice fall weather and good harvest conditions kept many calves on grass through September however, traditional fall run volumes were starting to hit auction markets as this column was written in mid-October. Producers are eager to take advantage of a favourable market. Since August yearlings have hovered mostly between $126 and $128 per cwt but in mid-October the 850 steer average edged up to $130.70, which was $22 better than 2010 prices and up $40 from 2009. Calf prices were also up substantially with 550 Alberta steers averaging $159.67 at mid-month, compared to $127 a year ago. The feeder basis has widened since our last report. It averaged -13.32 so far in October, but tightened to -10.80 at mid-month. Feeder exports to date total 65,446 head, which is 64 per cent fewer than we shipped at this time last year.

Non-fed Cattle

Cow prices dropped some since summer but are holding well when you consider the large U.S. kill over the past few months. Solid demand for grinding product and trim combined with the decline in fed supplies and non-NAFTA imports had D1,2 cows posting an overall average of $71.30 in 2011, but that slipped at bit to $67.83 at mid-October. Still, that is $13.38 better than 2010. Butcher bull prices dropped over the past several weeks, but are mostly trading in the mid-$70 range. Cow slaughter in 2011 is down 14 per cent, bulls are off 17 per cent. Cow exports are down 28 per cent but bull shipments are up 18 per cent at 30,432.

DebbieMcMillinisamarketanalystwhoranchesatHanna,Alta.

About the author

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

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