Drought Pushes Mexican Feeder Cattle into US

US - In recent decades the US has been a consistent and at times rather large importer of cattle from both Mexico and Canada. Both the Mexican and Canadian cowherds have shrunk in recent years. But, ongoing severe drought situation in Mexico has kept their feeder cattle sales to the US large despite their smaller herd, writes Livestock Marketing Information Centre (LMIC).
calendar icon 20 August 2012
clock icon 2 minute read

At some point, the shrinking Mexican cowherd will confront improved weather conditions. This will cause US feeder cattle import levels to first level off and then decline relative to last year.

It appears given recent weekly trade data, this point may be emerging. According to USDA-AMS, feeder cattle imports from Mexico through week ending August 8 totaled about 992,000 head. That compares to 772,000 head last year and 77% more than the 2006-2010 average volume. On a weekly basis import volumes were just over 51,000 head in early May but this past week declined to about 9,400 head. That was the first week that imports were below 10,000 head since September 2011.

In 2011 Canadian feeder cattle imports were rather small due to:

  1. Their large cowherd decline during the last five years;
  2. More favorable feeding returns than in the U.S;
  3. The impacts of the Canadian dollar’s value on feeder cattle prices.

However, this year a few more Canadian feeder cattle have been sold south. As of the end of July, US feeder cattle imports are nearly 79 per cent larger than last year. But volumes are still relatively small being less than half the average year-to-date total for 2007-2010. Imports of slaughter steers and heifers are down about five per cent averaging around 7,500 head per week so far in 2012. Compared to prior years, import volumes are about 40 per cent lower than the 2007-2010 level. Overall, returning to US import levels of a few years ago is unlikely anytime soon.

Slaughter cow and bull imports from Canada skyrocketed this summer, reaching weekly volumes not seen since 2010. Although weekly volumes have retreated some, imports this summer still remain well above a year ago. Slaughter cow and bull imports from January through July are on average five per cent or 5,500 head larger than last year and 47 per cent over the 2007-2012 average. Large slaughter cow and bull imports are in response to high US cull cow prices driven by strong demand for lean beef products.

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