Beef cattle sell-off in Alberta eases with rain

* Improving pasture, poor crops add to feed supply

* Alberta herd may thin 20 to 30 percent

* Packers not affected yet by smaller herd

By Rod Nickel

WINNIPEG, Manitoba, Aug 5 (Reuters) - Farmers have slowed the sell-off of beef cattle in Alberta, Canada's top producing province, as feed supplies improve in the parched Canadian province.

Farmer sales to auction marts have leveled off at 16,000 to 16,500 head per week, said Scott McKinnon, market analyst with CanFax. That suggests that recent rain has improved pastures enough that farmers are grazing feeder cattle longer, he said.

"Some of the pressure's off," McKinnon said.

Prospects for winter feed supplies have also improved due to poorly growing cereal crops that won't make milling or malting quality and will sell instead for animal feed, McKinnon said.

"The moisture now has basically stopped the (faster) flow of cattle," said Ken Ziegler, beef specialist with the Alberta government. In late June, auction marts had limited the number of cattle farmers could bring in during a week.

Farmers' prospects of feeding their cattle are better but still grim. Only those pastures with at least 3 inches (76 mm) of rain recently are likely to improve significantly because of the lateness of the growing season, said Barry Yaremcio, beef and forage specialist with the Alberta government.

Farmers with dried out pastures earlier grazed their cattle on hayland, which is usually their source of winter feed, Ziegler said.

The province's beef herd is expected to shrink by 20 to 30 percent from 1.85 million head this year, Yaremcio said, as farmers have faced low prices, high feed costs, and restrictive country-of-origin labeling on exports to the United States.

Statistics Canada will release livestock inventory data on Aug. 20.

Farmers typically buy cows to restock their herds in fall, but may not this year unless prices improve and they're confident in feed supplies, Ziegler said.

Cows are selling at a five-year high of 40 to 45 Canadian cents per pound for hamburger, but that's sharply lower than prices before the 2003 discovery of mad cow disease (bovine spongiform encephalopathy) in a Canadian herd crashed prices.

Prices for cow-calf pairs are still relatively weak at between C$650 and C$1,300 ($607 to $1,215).

August live cattle futures LCc1 on the Chicago Mercantile Exchange, which influence prices in Canada, were trading around 84 cents per pound, down more than one-fifth from a high of $1.07 last September.

Alberta farmers sell through auction marts to feedlots, which sell finished cattle to packers like Cargill [CARG.UL] and XL Foods. Those processors haven't yet felt the pinch of herd downsizing because they operate on margins that dictate how much they buy, Ziegler said.

If the herd shrinks too much, supply may become a problem for packers, he said.

($1=$1.07 Canadian) (Editing by Walter Bagley)