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CME: 1 January Cattle Inventory Lowest in 15 Years

18 February 2010

US - Statistics Canada released on Tuesday its semiannual Cattle Statistics and quarterly Hog Statistics reports which provide government estimates of cattle and hog inventories, according to Steve Meyer and Len Steiner.

The theme for the Canadian beef and pork sectors is the same as that of their US neighbors: Downsizing. But in Canada, the reductions are much more dramatic due to the negative impact of a strong Canadian dollar on Canadian producers’ revenues. That same stronger Canadian dollar means lower costs as well but the exchange rate does not impact costs and revenues equally. For example, most Canadian observers estimate that about 50 per cent of Canadian pork producers’ costs are indexed to the value of the dollar while virtually all of their revenues are tied directly to the dollar. When a rising Canadian dollar (a downward move of the line in the graph below) reduces all revenue and only half of costs, it takes no math wizard to see the negative impact on profits.

And thus declining cattle and hog inventories beginning in 2006 — well before the surge in feed costs that began in 2007.

Some highlights from Tuesday’s reports are:

  • Total cattle inventory on 1 January of 13.015 million head was the lowest in 15 years. That total was 1.3 per cent lower than one year ago.

  • The 4.170 million beef cows on Canadian farms on 1 January were the fewest since 2000. The herd is also 4.3 per cent smaller than on 1 January 2009.

  • The 1 January stock of all beef cattle was 7.924 million head, 2.8 per cent lower than one year ago.

  • Canadian cattle and calf slaughter in 2009 was 3.7 per cent lower than in 2008 and Canadian cattle exports were down 32 per cent from 2008 — a fact at least partially attributable to the US’s mandatory country-oforigin labeling program which went into effect last year.
  • Canada’s hog inventory on 1 January was 11.6 million head, 4.5 per cent lower than one year before. Of the major Canadian hog production provinces, the 2009 decline was the largest in Ontario at 236,000 head and 7.6 per cent. Hog numbers dropped by 5.3 per cent in Alberta as well. The smallest decline among the major hog provinces was in Manitoba (-1.9 per cent), the home of Canada’s newest and most competitive packing plant in Brandon.

  • The January hog inventory was the smallest in 12 years.

  • Canada’s sow herd fell to 1.335 million head , 4.3 per cent lower than one year earlier. That year-on-year decline compares to 4.5 per cent in October and puts the Canadian herd nearly 300,000 head (18.3 per cent) smaller than at its peak on 1 January 2005.

  • Canada’s pork producers farrowed 724,600 litters in the Oct-Dec quarter. That number is 7.9 per cent lower than one year earlier and the report estimates the same year-on-year decline for the fall pig crop. These numbers do not square well with a dow herd that is only 4.3 per cent smaller than one year ago.


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