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CME: Canadian Beef Cattle Inventory Declines

18 November 2015

CANADA - At the start of 2015, the Canadian beef cow herd totalled 4.4 million head (beef cows plus replacement heifers), down 2 per cent from 2014, write Steve Meyer and Len Steiner.

Dairy cows and replacement heifers totalled 1.4 million.

July inventory numbers confirmed the trend in another year-over-year beef cattle inventory decline.

The beef cow and replacement heifer total was down another 1 per cent in July compared to 2014 to 4.5 million head.

The Canadian beef cattle herd has faced inventory declines between 1 per cent and 8 per cent, consecutively, since 2006.

Canadian cattle inventory numbers are reported by both CanFax and USDA-NASS. Exceptionally high feeder and fat cattle prices in the US during 2014 pulled in a significantly larger number of feeder and fed cattle from Canada, and combined with their declining inventory (supply) Canadian cattle prices increased due to increased demand and decreased supply.

During 2014, Alberta feeder steer and slaughter steer prices increased consistently from January through December. A 550 pound feeder steer, in Alberta during December of 2014, was recorded at $309.44 per cwt. (Canadian dollars) or $253.37 per cwt. in USD (using December exchange rates).

For 2015 so far, both feeder and fed cattle prices have stayed at a steady, but high level the first half of the year, with fed cattle posting recent declines starting in July.

Looking at Canadian cattle on feed reports, published by CanFax, cattle on feed inventory numbers for 2014 were fairly consistent and tight with the previous five year average for that data series.

In 2015, inventory numbers were down between 6 per cent and 12 per cent compared to 2014 until August when they reached (and have stayed at) slightly above year ago numbers.

Placements in 2015 have been below year ago seven out of the eleven months on record so far. Steer and heifer slaughter in Canada, through October, was 9 per cent below 2014.

According to USDA-ERS monthly trade data, in 2014 the US imported 1.2 million head of feeder cattle, and 724,000 head of slaughter cattle from Canada.

These were significantly higher numbers than previous annual imports, with an 18 per cent increase in feeder cattle imports and an 7 per cent increase in slaughter cattle imports, compared to 2013.

Through September of 2015, feeder cattle imports from Canada were 23 per cent lower and slaughter cattle imports were 34 per cent lower than 2014.

To put numbers in perspective, the value of the US dollar did not start to take off until late summer of 2015. However, US cattle and beef prices continued to be record high through September of this year.

This shows that although exchange rates do play a role in trade, they are not the only deciding factor and often not the most important.

Looking forward, while the US is on track for increasing the national beef cattle herd inventory, Canada seems to be more of a mixed bag.

Canadian cow slaughter, through October, are 14 per cent below 2014 (down 58,000 head). If this trend holds it could indicate slight year-over-year growth in Canadian cattle numbers. However when looking at the rate of slaughter cows compared to cow inventory levels, so far 2015 is only one percentage point below that of 2014, not indicating significant herd growth.

This is important to the US because in 2014 Canada was the fourth largest importer of US beef behind Japan, Hong Kong, and Mexico, at 364 million pounds. Even with a softer export market for US beef this year, Canada continues to be a very important trading partner.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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