In this file:
· CCA Report: North American trade deal still top priority
· Feeder cattle market digesting many variables
CCA Report: North American trade deal still top priority
From the February 2019 issue of Canadian Cattlemen
By David Haywood-Farmer, Canadian Cattlemen
February 6, 2019
January proved to be an action-packed start to 2019 for the Canadian Cattlemen’s Association (CCA). With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) firmly in force, and the Canada-U.S.-Mexico Agreement (CUSMA) anticipated to come into force within the expected timelines in spite of the partial U.S. government shutdown, the CCA shifted focus to the value of trade and areas for further regulatory co-operation within the North American market with key U.S. industry allies and partners.
The CCA agenda included the American Farm Bureau Federation meetings in New Orleans, Louisiana, the National Western Stock Show in Denver, Colorado, and the National Cattlemen’s Beef Association (NCBA) annual convention, also in New Orleans. The CCA also travelled to Washington, D.C., to discuss regulatory co-operation on matters including re-inspection of meat at I-Houses and the timelines for getting live cattle across borders.
The CCA was also well represented on the home turf, with leadership attending the Ontario Cattle Feeders Association and Saskatchewan Cattlemen’s Association meetings, the Saskatchewan Beef Industry Conference and earlier this month (February) Manitoba Beef Producers meetings.
The ratification of CUSMA is on the minds of beef cattle producers on both sides of the border. As I wrote this column, the ongoing U.S government shutdown was in its third week. If not resolved by January 12, 2019, it would become the longest such shutdown in U.S. history. NCBA senior vice-president of government affairs Colin Woodall said the partial shutdown has many in the cattle industry concerned. The biggest problem is the uncertainty it creates, he said.
Getting the USMCA (as it is called in the U.S.) ratified is the NCBA’s top trade priority and the same is true in Canada, where the agreement is known as CUSMA. The CUSMA will come into force the first day of the third month of all countries completing their respective ratification process. Mid-March had been the popular estimate of the earliest that the U.S. Congress could approve the agreement. In early December, U.S. President Donald Trump triggered the six-month notice for the U.S. to withdraw from the old NAFTA as a means to gain leverage over Congress to move diligently in approving the new agreement. The CCA will continue to monitor the situation closely.
The effort is important to the competitiveness of the Canadian beef cattle industry. The U.S. remains the industry’s largest export market accounting for about 75 per cent of Canada’s beef exports. Japan was Canada’s second-largest export market again in 2018, accounting for about eight per cent of exports. Hong Kong and Macau were the third-largest export market, Mexico was the fourth largest, and China rounded out the top five.
With North American meat supplies set to continue to grow in 2019, domestic and international demand will be critical. Market risk...
Feeder cattle market digesting many variables
Market Talk with Jerry Klassen
By Jerry Klassen, Canadian Cattlemen
February 6, 2019
The feeder cattle market was quite volatile throughout the final quarter of 2018. The weaker Canadian dollar enhanced demand from south of the border. At the same time, domestic feedlot operators were contending with rising feed grain prices and uncertain fed cattle prices for the first and second quarters of 2019. April live cattle futures made new contract highs in early January but June and August contracts continue to be at a $9 to $11 discount to the April contract. This price structure for fed cattle caused the spread to narrow between short-keep yearlings and calves. I’ve been somewhat bearish on the feeder market throughout the fall period. Recently, I’ve received many inquiries asking if I had changed my price outlook because the yearling market finished 2018 on a strong tone. Therefore, I thought this would be an opportune time to discuss a few market factors to monitor over the next couple of months.
First, I want to draw attention to the U.S. feeder cattle situation. The USDA reported the number of feeder cattle outside feedlots as of October 1 at 30.142 million head. This is only 0.1 per cent above last year’s number of 30.125 million head. There are ideas that the U.S. calf crop may not be as large as earlier anticipated. Canadian feeder cattle exports to the U.S. are expected to finish 2018 approximately 65 per cent above 2017.
There have been minor changes to U.S. beef production estimates for 2019. Although U.S. feedlot inventories are running above year-ago levels, feeder cattle placements in the lighter-weight categories from September 2018 through November 2018 were sharply below year-ago levels. Therefore, we’ve seen downward revisions in U.S. beef production estimates for the first and second quarters of 2019. More specifically, it appears that U.S. fed cattle supplies could be rather snug during April and in the first couple weeks of May.
I’ve included a table that gives the USDA quarterly production estimates. Notice that 2019 first-quarter production is expected to finish only 100 million pounds above year-ago levels. Beef supplies become extremely burdensome in the second quarter as the USDA is forecasting production at 6.975 billion pounds...
more, including table