CME: Dramatic Decline in Beef Cow Inventories08 March 2013
US - Statistics Canada released its semi annual estimates of cattle and hog inventories which combined with the recently released numbers from USDA provide a more complete picture of overall cattle and hog supplies in North America (Mexican numbers are somewhat more opaque but are an important part of the picture given the significant number of Mexican feeders flowing into US feedlots), write Steve Meyer and Len Steiner.
Please note that Statistics Canada has cut the frequency of the hog inventory report from quarterly to semi-annually due to budget cuts. This makes it more challenging to properly match up US and Canadian data during certain parts of the year and reduces the supply flow visibility. Below are some of the highlights from these reports:
- Despite the surge in grain prices in North America in the second half of 2012, combined US/Canada hog inventory levels at the end of 2012 was 79.068 million head, just 0.1 per cent lower than the previous year. The Canadian hog inventory as of 1 January 2013 was 12.720, down 0.5 per cent from the previous year.
- The combined US and Canadian hog breeding herd took a step back (see chart). The breeding stock through Q2 of 2012 had been steadily increasing following the dramatic liquidation after the 2008 feed price spike and the financial crisis. However, at the end of 2012 the breeding herd inventory in Canada was pegged at 1.208 million head, down 0.9 per cent from 2011 levels. The combined US and Canada hog breeding stock was 7.025 million head, slightly above year ago levels but down 0.7 per cent compared to where it was back in June 2012.
- Statistics Canada has stopped reporting estimates on the pig crop and farrowings. The lack of this data makes it difficult to come up with any sort of reliable estimate as to the supply of pigs coming to market in the coming quarters. It is a reminder of the impact that budget cuts can have on the quantity and quality of data, which sometimes is taken for granted.
- Cattle inventories in Canada as of 1 January 2013 were estimated at 12.275 million head , 0.5 per cent higher than the previous year. This is the second consecutive year that Canadian inventories have increased but the inventory level remains dramatically lower than its 2005 peak of almost 15 million head.
- As with hogs, the beef cow inventories have declined dramatically since the grain price spike and financial crisis. The combined US and Canadian beef cow inventory as of 1 January 2013 was 33.252 million head, down 2.6 per cent from the previous year. The combined inventory is now down almost 12 per cent compared to where it was in 2006. Canadian producers intended to rebuild their beef cow herd in 2012 as the number of heifers held back for beef cow herd replacement jumped 5.6 per cent. This follows a similar kind of increase in 2011. But despite two consecutive years of increases in heifer retention, the beef cow herd in Canada has continued to decline. High feed costs and drought in the US have cut short any expansion plans. The beef cow herd in Canada as of 1 January was 3.956 million head, down 1 per cent from a year ago and down 25 per cent from its peak in 2005.
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