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The Markets – for Sep. 12, 2011

Fed Cattle

Following an up-and-down trend in July, a weaker Canadian dollar coupled with tight fed supplies domestically led to a stronger summer fed market. Board premiums and strength in the U.S. cash market also pushed the Canadian fed market higher.

Fed steers increased $7 per cwt in the first half of August to an average $105.41, about $16 above last year. The fed cattle basis narrowed compared to the five-year average through most of the summer, currently sitting at just -8.51 per cwt. The pre-BSE five-year average for August is -10.37.

Cattle-on-feed on August 1, 2011 in Alberta and Saskatchewan totalled 671,690 head, five per cent more than a year ago but six per cent smaller than the August 1 five-year average. This larger on-feed total is the result of smaller marketings which in turn are due to smaller placements through the last part of 2010 and early 2011. That trend continues with July placements running five per cent below year-before numbers and 31 per cent below the five-year average for the month.

Steer slaughter to date is 859,750 head, 11 per cent fewer than last year while fed heifer slaughter is also down 11 per cent at 578,601 head. At the start of August the average steer carcass weight was 858 pounds, up 20 from the same week in 2010. That is a bit of a turnaround as carcass weights have been running lower than last year through much of 2011. The combination of lower slaughter and lighter carcass weights has reduced Canada s beef production by a projected 18 per cent from last year, the smallest it has been since 1995. Live cattle exports to the end of July at 235,716 head were down 39 per cent on the year.

Feeder Cattle

A weaker dollar, a stronger fed market and very light summer volumes have also led to positive price movement on heavier-weight feeders. A friendly deferred feeder board has also been supportive for both current and delayed delivery. The 850-feeder steer price at mid-August averaged $125.63, up $2.88 from the week previous and nearly $21 over 2010. Very limited trade on light feeders in Alberta at mid- August had 550-feeder steers averaging near $144, up about $26 from last year. The feeder basis the second week of August was -6.91 per cwt, which compares to -12.34 per cwt last year and a -15.03 five-year average.

Non-Fed Cattle

D1,2 cows were trading in the low $70s for several weeks, reaching an average $71.13 in mid-August which is $10 per cwt ahead of last year and $26.50 better than 2009. The drought in the U.S. southwest has hit a region with a large number of beef cows, forcing many ranchers to sell off some or all of their herds. The drought-induced kill in the southern U.S. has dumped extra supplies of non-fed beef into the market however, demand for this product has maintained prices fairly well, particularly in Canada where cow buyers have had smaller volumes to work with. Canadian cow slaughter is down 15 per cent from a year ago; bulls are off nine per cent at 13,643 head. Butcher bull prices had levelled off to an average $81.18 by mid-August after slipping lower over the past month. Live exports of slaughter cows and bulls to the end of July totalled 105,349 head, down 21 per cent.

DebbieMcMillinisamarketanalystwho ranchesatHanna,Alta.

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

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