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CME: Canadian Producers Limit Number of Females Slaughtered

28 November 2012

CANADA - A good growing season and high cattle values have been major factors in the reduction of female cows slaughtered at a time when heifer slaughter is often at its annual peak, reports the CME Group.

While much of the debate in the US cattle industry is whether there will be a turn in the cattle cycle, and if so when, there seems to be little question that Canadian producers have already started on turning the cattle cycle there. Good pasture conditions this past summer and prospects of record high cattle values for 2013 have induced producers to limit the number of female animals they send to market.

The change in cow slaughter rates has been particularly dramatic (see chart). Normally this is the time of year when weekly cow slaughter, both in the US and Canada, hits the annual highs for the year. So far, however, average weekly cow slaughter numbers in Canada remain lower than what they were back in June and July.

Since September 1, Canadian cow-calf operators and dairy producers have sent 54,875 cows to market, 49 per cent less than a year ago and also 55 per cent less than the five year average for this period.

The July 1 cattle inventory survey for Canada pegged the beef cow inventory at 3.958 million head, up about 0.1 per cent from the previous year but down almost 1.5 million head or 27 per cent from the peak in 2005.

The dairy cow inventory in July was 954k head, down about 0.5 per cent from the previous year. With dairy feed costs running particularly high, it is unlikely we will see much of an increase in dairy cow numbers for Canada. But that is not where the bulk of the cows are. The beef cow herd will likely expand, in part reflecting the lower cow slaughter rates.

In addition to limiting the number of cows going to market, cow-calf producers also appear to be retaining more heifers.

This has been the case for much of this year but the data was particularly telling in the latest cattle on feed survey. CanFax surveys each month feedlots in Alberta and Saskatchewan, a region that account for about 80 per cent of feedlot capacity in Canada.

The November survey pegged the total feedlot inventory in the area at 774,201 head, down 11.8 per cent from the previous year. Feedlot placements in October were down some 22 per cent, driven largely by smaller heifer placements.

Placements of steers in feedlots during October were down 12 per cent while placements of heifers declined 37 per cent compared to the previous year. Since July 1, feedlots in Alberta and Saskatchewan have placed 234,294 heifers on feed, about 71,000 head or 27 per cent less than the previous year. Also since July 1, Canadian cow-calf operators and dairy producers have reduced cow slaughter by about 65,000 head (38 per cent).

One item that needs to be considered with regard to Canada however is how trade with the US affects the overall live animal and beef flow. Indeed, high cow prices in the US and more limited slaughter capacity in Canada have pushed more cows to the US market.

Since July 1, slaughter cow shipments to the US were 73,833 head, about 29k head or 63.4 per cent higher than a year ago. Even with this increase, however, there is a net increase in the number of cows that have been retained, a number that will likely show up in the January 1 cattle inventory survey.

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