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THE MARKETS – for Sep. 6, 2010

Fed Cattle

A slightly weaker Canadian dollar and strength in cut-out values in recent weeks has created opportunity for a rise in fed steer prices. At mid-August the Alberta fed steer price was $89.14 per cwt, up $8.34 from the same date a year ago. The strong August market resulted from current feedlots holding leverage as buyers face somewhat limited supplies. The fed cattle basis is currently $7.16/cwt under the U. S., which is $5 narrower than six weeks ago and $1.86 tighter than the five-year average of -$9.02/cwt at this time of year. Basis levels tend to weaken through September before narrowing again towards the end of the year.

Cattle-on-feed numbers in Alberta and Saskatchewan on August 1, 2010 continue to decline as a result of aggressive marketings in July and smaller placements. The total number of cattle on feed as of August 1 was 639,857 head, down one per cent from last year. The number of fed cattle marketed for slaughter here or the U. S. in the two provinces during July was up 17 per cent from last year and three per cent from June. Placements in July were smaller at 62,635 head, down 23 per cent from a year ago. Nationally the federally graded fed-cattle slaughter to date is 1,617,230 head, with four per cent more steers and eight per cent more heifers than last year.

Feeder Cattle

The number of yearling feeders available at auction marts has increased in recent weeks, along with the quality and selection. 850-weight Alberta feeders at mid-month were trading for $104.79 per cwt in central Alberta, up $6.32 from the same week in 2009. To date most cattle have been sold locally however outside interest has been evident. Annual trends would suggest yearling prices were nearing their seasonal peak. The calf trade was still limited at mid-August as good grazing conditions do not favour early weaning this year. With the fall run just around the corner, steer prices for 550-calves at mid-month averaged $117.50, up $6, from last year.

At this time of year the feeder basis is generally tighter and this August has followed the trend with the 850-weight feeder cash to futures basis at mid-month narrowing to -$12.34 per cwt.

Non-Fed Cattle

Leading up to weaning and culling season, cow prices were still strong in mid August given the limited number of animals available. Strong demand for grinding meats has supported prices through the summer. A new average high was reached in August at $60.88 per cwt, well above the $45.11 average set last year. That is the highest average price seen since BSE. At one point the marketed traded as high as $67.25. Since the start of 2010 the cow average price has increased 43 per cent. These prices have already lead to some cow-calf pairs being split. Cow slaughter in Canada to date is three per cent below the same time last year, at 322,972 head.

Slaughter bull prices to mid-August were still high at $72.43 per cwt. These higher prices continue to bring more bulls to town. Domestic slaughter to date is 15,018, 95 per cent more than the same week in 2009.

DebbieMcMillinisamarketanalystwho ranchesatHanna,Alta.

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

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