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CME: Canada's Cattle on Feed Placements Up in November

16 December 2015

CANADA - The Canadian Cattle on Feed report has been released by CanFax, so Steve Meyer and Len Steiner discuss the effects on the market.

Alberta and Saskatchewan, Canada’s main cattle feeding areas, are included in the report.

For the month of November placements were up 4 per cent and marketings were up 5 per cent compared to a year ago.

This gave a total cattle on feed inventory for December 1st of 966,000 head, up almost 2 per cent compared to 2014’s.

Looking back on the year, Canadian placements were below year ago numbers January through May, and in September and October.

Like the US feeding industry, September and October are the largest placement months for Canada. Cattle on feed inventory lagged below year ago from January to August of this year, but has tracked slightly above year ago September through December.

Year-over-year increases in cattle on feed inventory since September is in line with the 5 per cent year-over-year decrease in slaughter that has taken place over the September through November time frame this year.

Dressed steer weights have also been record high for Canada, and are tracking 25-40 pounds above year ago levels, a significantly larger increase than normal.

The end of November recorded dressed steer weights at 951 pounds, 46 pounds above year ago weights. Canadian cattle slaughter, through November, dropped 8 per cent compared to 2014.

Steer slaughter was down 2 per cent and both cow and heifer slaughter were down 15 per cent. Canadian feeder cattle exports to the US were down 32 per cent through November (down 133,000 head) and Canadian slaughter cattle exports to the US were down 48 per cent (down 173,000 head).

Putting this together with Canadian slaughter and feeder cattle prices that both started down trending in June, it seems the industry is in a situation somewhat similar to the US of feeding cattle to heavier weights partially in hopes of a market rebound.

Although placements have not lagged significantly below a year ago, beef cattle inventory numbers do not suggest and increase into 2016.

This would indicate a Canadian fed cattle supply even to slightly below that of 2015 and could provide some support to prices in the country.

Based on the July Canadian cattle inventory numbers from Statistics Canada, cattle on beef operations were down 3 per cent (down 254,000 head) and cattle on feeding operations were down 2 per cent (down 37,000 head).

Beef cow inventory on cow calf operations was down 3 per cent (down 114,000 head) and heifers held for beef cow replacement were down 1 per cent (3,600 head).

With ongoing drought in the western region of Alberta, and a lack of significant beef heifer and cow hold back in slaughter data, it is not very probable Canada will see increases in beef cow inventory as of 2016. Why should the US care?

In 2014, 14 per cent of annual US beef exports were sent to Canada, and the US imported over 1.9 million head of Canadian cattle destined to the beef industry. The COOL ruling by Congress will impact this dynamic one way or another, and it is yet to be seen how that will play out.

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