The Canadian Cattle Situation

CANADA - Last fall, I had the opportunity to speak at several Southeastern Manitoba cattle producer meetings. Much the same as in the US, Canadian feeder calf and cow prices had increased when compared to the past couple years, writes Tim Petry, Livestock Economist with North Dakota State University Extension Service.
calendar icon 10 March 2011
clock icon 4 minute read

Producers were wondering whether herd expansion would take place in the US and/or Canada. Several Manitoba producers expressed an interest in expanding their beef cow herds, but also were apprehensive given higher costs of production and the volatility in cattle and corn prices.

On February 17, USDA-NASS released the United States and Canadian Cattle Report which showed interesting comparisons between the two countries. On January 1, 2011, beef cow numbers in the US were about 30.86 million head compared to 4.27 million in Canada. Interestingly, Texas recorded over 5 million head of beef cows on January 1. Both countries experienced beef cow herd declines in the last year with US numbers down about 1.6 percent and Canadian numbers down 2.7 percent. Since 2006, beef cow numbers declined about 5.6 percent in the US and 18.6 percent in Canada. Beef cows declined in the US in 2003, 2004, and 2005 while they increased during that same time in Canada. The main reason for the increase was that Canada was dealing with BSE related market issues and the value of cows was so low that they were not sold.

A contrast in the 2011 numbers was that heifers kept for beef cow replacement were down over 5 percent in the US compared to an increase of almost 3 percent in Canada. The increase in Canada is not too surprising given that beef replacements increased over 19 percent in Montana, over 12 percent in North Dakota, and over 5.5 percent in Idaho. Over 80 percent of Canada’s beef cows reside across the border from those states in Alberta, Saskatchewan, and Manitoba. And, as previously stated, cow numbers in Canada have declined more percentagewise and economic conditions in the cattle industry there have improved nicely.

For the week ending February 25, 501-600 pound feeder steer prices (on a $US basis) were $159.14/cwt. in Southern Alberta and $155.82 in Saskatchewan compared to $147.90 in Montana, with 701-800 lb. steers bringing $133.02 in Alberta, $129.21 in Saskatchewan and $124.10 in Montana.

The Canadian dollar has been steadily increasing compared to the US dollar and is now trading at about a 2 cent premium to the US dollar. Smaller cattle supplies in Canada, higher prices and the strengthening Canadian dollar which makes the US market less attractive are all contributing to fewer cattle imports from Canada. So far in 2011, Canadian feeder cattle imports are down 36 percent, fed steer and heifer imports are down over 23 percent, and cow imports are down almost 39 percent from a year ago. Furthermore, beef imports from Canada have been declining and beef exports to Canada have been increasing.

The Markets

The fed cattle market set a record high for the third straight week. The previous 5-area fed cattle record weekly price on a liveweight basis was set in mid-October 2003 at $108.80/cwt. Prices the last three weeks were the highest averages recorded at $109.68, $111.02, and $112.39. Dressed weight prices also increased 60 cents per cwt. last week to average $180.36 for the week. The Choice-Select spread remains narrow on a historical basis due to the increasing number of choice grading cattle, but did increase 15 cents to $0.61. A good demand continued for the shorter supply of lightweight feeder calves suitable for grass. Most markets averaged $1 to $3/cwt. higher on 500-600 lb. feeder steers with some lots bringing $5 to 8 more. Markets closest to the dry conditions recorded the lower prices while markets nearer to ideal pasture and range conditions saw the more explosive prices. The 700-800 lb. feeder steer market was generally $2 lower to $2 higher with the volatile corn market. After losing 25 cents a bushel the previous week, corn prices in Omaha increased 40 cents to close at $7.04 on Thursday. Distillers grains in Nebraska also followed corn higher.

    Week of 2/4/11 Week of 1/28/11 Week of 2/5/10
5-Area Fed Steer all grades, live weight, $/cwt $112.39 $111.02 $90.96
all grades, dressed weight, $/cwt $180.36 $179.76 $144.54
Boxed Beef Choice Price, 600-900 lb., $/cwt $172.67 $169.91 $150.34
Choice-Select Spread, $/cwt $0.61 $0.46 $1.40
700-800 lb. Feeder Steer Price Montana 3-market average, $/cwt $126.23 $124.10 $101.63
Nebraska 7-market average, $/cwt $132.09 $131.16 $104.40
Oklahoma 8-market average, $/cwt $128.57 $131.03 $101.97
500-600 lb. Feeder Steer Price Montana 3-market average, $/cwt $149.13 $147.90 $122.25
Nebraska 7-market average, $/cwt $156.61 $153.73 $125.89
Oklahoma 8-market average, $/cwt $154.63 $152.60 $152.60
Feed Grains Corn, Omaha, NE, $/bu (Thursday) $7.04 $6.64 $3.61
DDGS Price, Nebraska, $/ton $206.30 $204.38 $105.00
WDGS Price, Nebraska, $/ton $72.60 $70.25 $38.30
Data Source: USDA-AMS Market News

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