Beef Watch: Canadian cattle inventories continue to decline on strong beef demand
Prepared by the staff of Canfax and Canfax Research Services, divisions of the Canadian Cattlemen’s Association
via Canadian Cattlemen - November 28, 2019
Canadian cattle inventories continued to decline in 2019 with strong beef demand supporting cattle marketings. A pork shortage in China due to African swine fever has sent all meat prices to record highs in that country and resulted in strong demand for protein imports. As the virus is sweeping through Asia, production losses are expected to grow and the impact on the global animal protein market will be dramatic and long-lasting. International demand for Canadian beef has been strong, but uncertainties remain regarding market access to China, the U.S.- China trade war and the new trade agreement between the U.S. and Japan.
In the domestic market, fed cattle prices have been under pressure with increased cattle supplies. Poor feedlot margins are limiting feedlots’ willingness to pay, but significantly lower feed costs are expected to support calf prices this fall.
Canadian inventories continued to decline
The Statistics Canada July 1 cattle inventory report showed that numbers continued to decline. Total cattle inventories dropped 1.3 per cent to 12.3 million head, which is the lowest level since 1988.
Beef cow inventories were down 1.7 per cent to 3.7 million head, which is the smallest since 1989. Beef breeding heifers are down 4.8 per cent at 637,800 head. This is the lowest level since 2010, and the third lowest since 1987. Total beef breeding female inventories are down 2.2 per cent to be the smallest since 1988. Yearling steer and slaughter heifer inventories were down 4.5 per cent to 1.5 million head and 4.7 per cent to 840,000 head respectively. On the other hand, calf numbers were up just over one per cent. The higher number of calves was the result of five per cent more calves on dairy farms and seven per cent more calves in feeding operations. The higher number of calves in feeding operations is likely related to more U.S. feeder imports this year.
The declines in cattle inventories stem from a shrinking breeding herd, while increased cattle marketings this year accelerated the drops. As of late-September, steer slaughter was up five per cent, heifer slaughter was up six per cent and cow slaughter was up two per cent. Live cattle exports have also increased with steers up 25 per cent, heifers up 67 per cent, bulls up six per cent and cows steady in the first seven months. Feeder exports were up nine per cent with heifers accounting for 77 per cent of the total, up from 69 per cent last year. Annual fed marketings are projected to increase 10 per cent (or 280,000 head) with steers up seven per cent (or 131,000 head) and heifers up 14 per cent (or 149,000 head). Non-fed marketings are projected to increase two per cent with cows up two per cent (or 16,000 head) and bulls down two per cent (or 1,000 head).
While the increase in fed marketings is partly supported by feeder imports, which are up 44 per cent year-to-date in 2019, the very dry start to spring in parts of Canada resulted in more replacement-type heifers being marketed and put into feeding programs rather than exposed. Tight hay supplies last winter resulted in large cow slaughter the first quarter. The beef cow culling rate is projected to be 13.8 per cent, which would be the second year at liquidation levels.
Looking forward to 2020, weather will continue to be the key factor in herd expansion. The African swine fever outbreaks in China and other Asian countries are causing a dramatic reduction in global meat supply. This could boost trade and meat prices in the global market, providing an opportunity for expansion in the beef sector.
U.S. inventories peaking ...
African swine fever (ASF) update ...
Strong exports ...
Fed market under pressure ...
Calf prices supported by lower feed cost ...
Replacement ratios ...
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