Western Producer Livestock Report

Fed prices down

It was another bad news week for cattle prices, with Canadian prices falling in response to lower American values due to slumping wholesale beef prices, concerns about growing market-ready cattle supplies and negative news about BSE.

Canfax said prices started the week in the upper $70s per hundredweight, but closed in the $73-$76 range.

Weekly average steer prices fell $6.50 per cwt. and heifers fell $5.

After passing many cattle the week before, sellers felt they needed to sell last week, even at the lower prices. Trading volumes reached nearly 22,000 head, up 35 percent from the week before.

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Packers appeared comfortable with their inventory.

The kill reached 67,000 head nationally, putting it seven percent higher than the same week in 2003.

Plants also killed more than 8,000 cows, the highest level since May 20.

Alberta prices Feb. 5 were steers $73.75-$75.25 per cwt., flat rail $126-$127 and heifers $76.75, flat rail $126.

Canadian fed prices are affected by U.S. market volatility as beef destined for export works its way back into the domestic market, often winding up as low-value hamburger.

American cutouts lost another $10 US per cwt.

Canadian packers reported slower business into the United States. Wholesale beef prices in Canada reflected the lower direction from the U.S., with the Montreal price down $5-$6 Cdn in a range of $139-$141 per cwt.

The Calgary market is down $5-$7 on steers in a range of $134-$135. Fed cattle trimmings have collapsed. Fifty percent trimmings that in mid-December averaged 93 cents are now 39 cents and the 85 percent trimmings that were $1.52 are now $1.31.

Byproduct values have also declined as a result of lower rendering values.

Feeders also weak

Alberta feeder auction market volumes jumped, with just under 17,900 head trading.

That was 90 percent more than the week before, but less than half the number that traded a year ago.

Price pressure mounted mid-week in step with lower fed prices. Steers were generally $5-$7 lower, with the exception of 400-500 lb. steers trading $11.50 lower.

Heifers 400-600 lb. were $1.25-$3 softer, while 600-900 lb. and heavier were $4.50-$5.50 lower.

D1,2 cows traded $1.50 lower.

Canfax noted that financial institutions are pressuring feedlots to improve their balance sheets, causing them to sell the fats and pay less attention to refilling pen space.

Prices are anticipated to keep dropping until feedlots believe they’ve reached a break-even level, if the border remains closed, Canfax said.

Stock bred cows were $300-$550 on poor quality and $550-$875 on good quality. Bred heifers traded $400-$800 in light trade in central and northern Alberta.

Cow-calf pairs in northern Alberta were $600-$800 on limited trade.

Hogs up

Canadian hog prices rose last week as bad weather continued to delay deliveries on both sides of the border.

Packers were willing to pay higher prices to ensure the supplies they needed.

According to HedgersEdge.com, packer profit margins improved to a projected $5.35 US per head for Feb. 5, up from $2.65 the day before and 20 cents the week before.

The higher live hog and pork prices supported stronger futures prices, with the February contract reaching a four-month high, Manitoba Agriculture said.

The Iowa-Minnesota daily direct hog price (plant mean, 51-52 percent, lean carcass converted to live weight) rose from $43.87 per cwt. on Feb. 2 to $45.91 Feb. 5.

Prices increased about 4.5 percent for the second week in a row.

News that avian flu was sweeping Asia caused the U.S. to ban imports of birds from eight Asian countries. Traders believe the news is positive for U.S. pork exports.

Japanese pork prices soared because of the ban on U.S. and Canadian beef imports.