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CME: July Canadian Beef Cow Inventory Lower than Previous Year

26 August 2013

US - Over the past ten years, the Canadian livestock industry has undergone a significant transformation, impacted by a sharp rise in feed costs and a steep increase in the value of the Canadian currency, write Steve Meyer and Len Steiner.

Statistics Canada released its latest estimates as to the supply of cattle, hogs and sheep in Canada and the inventory numbers so far show little impetus for growth. This is important as Canada is a significant supplier of feeder pigs to the US market and imports of feeder cattle and slaughter cows make up a notable portion of the beef supply in some areas of the US.

Below are some of the highlights from the latest Canadian numbers and implications for North American red meat output going forward:

The 1 July cattle inventory in Canada was pegged at 13.540 million head, 0.1 per cent larger than in July 2012 but still down about 20 per cent from the inventory peak in July 2005. While beef heifer retention increased in 2011 and 2012, the increases were too small to offset the increase in overall cow slaughter numbers and the increase in the number of cows going to the US. As a result, both the dairy and beef breeding stock continues to remain under pressure and it has steadily declined in recent years.

The beef cow inventory as of 1 July was reported at 3.939 million head, 0.3 per cent lower than the previous year and 27.5 per cent lower than the peak in 2005. The jump in feed costs in recent months appeared to impact the impetus for heifer replacement, with beef cow heifer replacement numbers just 0.7 per cent higher than the previous year.

The beef cow inventory as of 1 July was 952,,900 head, 0.1 per cent higher than a year ago but 7 per cent lower than the peak in 2005. USDA did not conduct a July survey of US cattle operations so we do not have US official statistics to calculate a combined North America total. Based on private analyst estimates, the US cattle inventory as of 1 July was down 1.8 per cent from a year ago.

The calf crop in Canada during the first half of the year (which accounts for about 80 per cent of the annual calf crop) was 1.7 per cent lower than the previous year. Our expectation is that overall 2013 calf crop in Canada will be around 4.453 million head, 1.5 per cent lower than in 2012. The US calf crop for 2013 is currently estimated by analysts polled by LMIC at 33.550 million head, 2.1 per cent lower than a year ago.

The combined US and Canada calf crop for 2013 (using the LMIC estimates) would come at around 38 million head, about 800,000 head or 2 per cent lower than a year ago. The ongoing decline in the calf crop, both in the US and Canada remains bullish for cattle/beef prices in 2014 and 2015. The contraction in cattle supplies becomes even more acute when considering the liquidation in the beef cow herd in Mexico as drought devastated producers there during 2011 and 2012. In all, the Canada inventory numbers offered little relief.

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