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Canfax Report – for Sep. 8, 2011

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Published: September 8, 2011

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FED PRICES FALL

With the barbecue season winding down and a short slaughter week because of Labour Day, fed cattle prices fell.

The fed steer average fell to $102.09 per hundredweight, down $4.52, and heifers were $102.52, down $4.01.

Some live trade was reported in northern Alberta. Most sales were dressed at about $172 per cwt.

No significant trade was reported from Saskatchewan. U.S. buyers showed interest in Canadian cattle.

The cash to futures basis widened to -$8.61 but is still narrower than the September historical average of -$13.36.

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Sale volume was 18,326 head, down 20 percent from the previous week. There was significant carryover.

Weekly western Canadian fed slaughter to Aug. 27 was about 36,600 head, down three percent.

Weekly exports to Aug. 20 rose 13 percent to 7,689 head.

The fed supply has been marketed early and volume in the coming weeks should be manageable. However, beef demand is lackluster, which is pressuring packer margins lower. The result is fed prices will likely struggle.

COWS LOWER

There were fewer non-fed slaughter cattle at market, but that didn’t lift prices. With packers starting to grade cows, discounts on D4s and heavier fleshed D1, D2 cows pushed prices generally $1 per cwt. lower to average $70.10.

Heightened demand for leaner D3 cows held that class steady.

Rail grade prices fell to $130-$135. Butcher bulls fell $1.20 per cwt.

Weekly non-fed exports to Aug. 20 totalled 3,248, up eight percent from the previous week.

Non-fed marketings are likely to grow through September as cattle move off pasture. This should pressure prices $1-$2 lower.

CASH FEEDERS STRONG

Weaker fed prices and rising feed costs took the shine off feeder cattle futures. In Canada, demand for all classes of feeder cattle is strong.

The feeder cash-to-futures basis is the strongest it has been all year.

The average steer price rose 63 cents per cwt. and heifers gained $1.60. Light calf prices rose sharply while short keep steers and heifers were steady.

Steers and heifers 300-400 pounds rose $4-$6. There was a wide price range due to varying quality.

Steers and heifers 700 lb. and heavier are trading $18 per cwt. higher than the same time last year.

Large electronic feeder sales and special yearling presorts saw sales volumes total 35,706, up three percent from the previous week.

Weekly exports to Aug. 20 were only 647 head, down 28 percent from the previous week.

Price discovery on calves through forward contracts have been sporadic but are showing price support.

BEEF PRICE FALLS

U.S. cutouts fell $6. Choice cutout Sept. 2 was $180.76 US per cwt. and Select was $172.

Canadian cutouts for the week ending Aug. 26 traded slightly lower with AAA at $174.12 Cdn and AA at $172.03.

The Montreal wholesale price for delivery this week was steady at $195-$197.

This cattle market information is selected from the weekly report from Canfax, a division of the Canadian Cattlemen’s Association. More market information, analysis and statistics are available by becoming a Canfax subscriber by calling 403-275-5110 or at www.canfax.ca.

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