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The Markets – for Oct. 10, 2011


Fed cattle prices to mid-September were pressured lower as smaller weekly kills allowed packers to go long on inventory and increase their purchasing power. While U.S. prices rallied in the past few weeks, local prices struggled and lost ground, widening the basis to -14.73, the widest it s been since spring 2009. Early September fed steers averaged $101.71, off $5.50 from three weeks earlier but $12.33 higher than last year.

Slower fed cattle movement in recent weeks coupled with good feeding conditions increased year-over-year carcass weights. By early September steer carcasses averaged 870 pounds, up 17 pounds from 2010 and 22 pounds over 2009. Fed slaughter in 2011 to the start of September totalled 994,390 head, down 10 per cent from last year while heifer slaughter is down 12 per cent at 638,065 head. Exports of fed cattle to date are down 39 per cent however weekly shipments have picked up in recent weeks.

Growing on feed numbers in the U.S. are drought-related placements of young calves that would typically remain on wheat pastures and back-grounding lots through the next few months. This will swell the volumes of market-ready cattle in early 2012 but carve a hole in the numbers normally placed in late 2011 and early 2012.


The 2011 fall run got underway with strong prices for yearlings and calves for current and delayed delivery. Volumes will increase over the next month as producers finish up their fall field work, however the calf volumes will likely be spread throughout the fall as good grass conditions hold calves out on pasture. The trend to later calving also has more calves being weaned later in the fall. Today s strong feeder prices are a result of good fed prices in 2011, the smaller North American beef herd and strong live cattle futures for spring and early summer 2012. Early September 550 steers in central Alberta averaged $151, almost $24 better than the same week in 2010. Yearlings were up $17.88 over 2010 averaging $127.20 by the second week of September. The feeder basis started September at -2.21, the narrowest it has been this year, and widened slightly by mid-month to -5.15 per cwt. Year to date the 850 feeder basis has averaged more than 6.00, tighter than the same weeks in 2010. Feeder exports are down 63 per cent.


Following a long run with prices holding within a narrow trading range of $70-$71, D1,2 cow prices dipped to $67.33 in early September. Drought-driven volumes of southern U.S. cows filled supply lines to compete with the opens normally culled off grass. Volumes here are expected to pick up in the coming weeks as producers make culling decisions. Cow slaughter to date is off by 16 per cent, but started to pick up last month with 8,146 coming to market in the first week of September, seven per cent more than the week before. Slaughter cow exports are down 28 per cent year to date. Bull prices also slipped, averaging $79.12 in early September. Domestic bull slaughter to date in 2011 is down 14 per cent while exports at 27,379 are down 27 per cent on the year.


About the author


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



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