Fed cattle under pressure
There is a strong cautious note in the market. The aftermath of Hurricane Katrina and drastically higher fuel prices have many in the trade wondering what the impact might be on beef demand.
With more money going to fill up the tank, people might dine out on beef less. Also, more than a million people are homeless or upset from their normal lives. Hundreds of grocery stores and restaurants in the region are closed or damaged. Also, Labour Day, the last big barbecue weekend of the summer, will be disrupted in a large part of the United States.
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Canadian packer demand was weak last week, resulting in average fed cattle prices that were 50-75 cents per hundredweight lower than the week before, Canfax said.
U.S. business was slow to develop and wound up about $2 US per cwt. lower on a dressed basis than the week before.
Local packers, comfortable with inventory, bid for delivery in the second half of September. Volumes traded were smaller with about 26,000 head selling, down 28 percent from the week before, Canfax said.
Alberta prices Sept. 1 were steers $78.65-$83.35 Cdn per cwt., flat rail $134.25-$136.20 and heifers $78.20-$83.35.
Fed cattle supplies in Western Canada and the U.S. should be ample in September, which will keep packers on both sides of the border from having to aggressively bid.
The stronger Canadian dollar is also hurting fed cattle prices, said Canfax.
Beef weakens
Canadian cutouts fell $2 on AAA and $1 on AA.
Loin and rib primals were weaker. As is typical for this time of year, interest improved in the chuck and round.
U.S. cutouts rose last week after the previous week’s $3 US improvement in the cash fed cattle market. Choice rose $2 while Select gained $1 but movement was slower by 20 percent.
The Calgary wholesale price is steady for delivery this week at $142-$144 Cdn.
Feeder demand good
Alberta auction market volume backed off slightly, with about 41,000 head trading. That was 27 percent larger than a year ago, Canfax said.
With a few early calves starting to show up in the mix, buyer interest appeared strong.
Steers 300-500 pounds traded $2.25-$3.75 per cwt. higher, while heifers 300-500 lb. were $1-$3 higher.
Yearlings still make up the majority of the weekly volumes, with prices steady to 50 cents stronger on steers. Yearling heifers on the other hand were steady to $1 lower. Buyer interest in cows perked up a bit as D1, 2 cows averaged $3 higher. Butcher bulls rose $1.75.
It’s the time of year where cow-calf producers are more focused on taking crop off than moving calves to town. Large volumes of calves are not anticipated to move until mid-September.
Lower fed cattle prices could have a trickle down effect on yearlings. Last week’s cow kill in the West was five percent larger than the week before, which should support prices.
Most stock bred cattle were $450-$750 in northern and central Alberta. Cow-calf pairs brought $650-$1,250.
Hog prices down
Falling pork prices and adequate hog supplies caused U.S. cash hog prices to dip last week after starting out strong.
The Chicago lean hogs futures contracts also fell. After Labour Day hog supply usually increases and demand wanes. Also, as with beef, traders worried that high fuel prices might curb demand for pork.
The U.S. Department of Agriculture estimated week-to-date slaughter through Sept. 3 at slightly more than two million head, down 2.1 percent from the year before.
The Iowa-southern Minnesota cash price Sept. 2 was $51.50 US, down from $52 the week before.
The USDA composite pork carcass cut-out value Sept. 2 was $73.59, up from $75.49 Aug. 26.
Lambs stronger
Ontario Stockyards reported 2,484 sheep and lambs and 166 goats traded last week. All classes of lambs sold at prices $5 Cdn per cwt. higher. Sheep and goats traded steady.
