Feeder cattle prices in Western Canada were steady to $2-$3 per hundredweight (cwt) higher during the first week of 2012. There is a market tendency for feeder prices to jump after the holiday season and this year was no exception.
Small, non-feature groups of feeder cattle were noted at most auction barns, which made buyers more aggressive whenever larger groups of quality animals moved through the ring. For example, a group of 100 large-frame steers averaging 610 pounds sold for $161/cwt west of Edmonton. Heifers weighing 620 lbs. sold for $158 in central Alberta.
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U.S. grains: Wheat, soy and corn bounce off lows as demand stirs
Chicago Board of Trade wheat futures rebounded on Thursday after hitting a five-year low the previous day, and corn recovered from earlier contract lows as technical support and signs of new export demand countered the pressure of ample supplies, traders said.
The U.S. Department of Agriculture reported feeder cattle $5-$10/cwt higher in comparison to two weeks earlier. A healthy group of heifers weighing 618 lbs. sold for $195/cwt in Nebraska.
Producers in the U.S. southern Plains are moving through the expansionary phase, causing feeder cattle to trade at abnormally high prices. Lightweight calves under 400 lbs. have been selling for record highs throughout the fall period but now this strength is moving into the 500- and 600-lb. categories. October feeder cattle futures made fresh all-time record highs last week, reaching over $154. Western Canada should experience larger feeder exports in January and February.
A large portion of Argentina and Brazil has experienced less than 50 per cent of normal precipitation, causing corn prices to rally. Keep in mind Western Canada has experienced above-normal temperatures and below-normal precipitation so far this winter. Feedgrains have upside potential over the next couple of months but this will do little to temper the strength in feeder cattle.
Cattle prices continue to be supported by positive economic data. The U.S. unemployment rate fell to 8.5 per cent as employers added 200,000 jobs in December. Consumer spending is expected to surge over the next quarter, which translates into higher restaurant traffic and stronger beef demand.
