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Currency and Cattle Inventories Moving Higher For US

09 September 2015

US - Herd rebuilding is now in full swing in the US but cattle markets, on fire last year, have been considerably dampened.

A post mid-summer downturn is shown on the five area weekly weighted average price and the weekly choice cutout, with economics having a part to play, with a strong US dollar making the US beef market hard to sell from but easy to buy into.

With cattle prices and supplies still relatively tight from the legacy of the 2012 drought, Ron Plain, University of Missouri, noted that exports were nearly 13 per cent down and imports were nearly ten per cent up for July.

Elsewhere, major beef exporters have seen significantly weaker currencies support beef trade.

Brazil, which regained access into China this year, watched its currency halve since 2011 peaks and slide 40 per cent in the last year.

In Australia, their dollar is the lowest since 2009 and is back 22 per cent down on the Chinese yuan, Meat and Livestock Australia (MLA) stated last week, highlighting a current value of 70 US cents.

Meanwhile, an ambitious Paraguay is on course to smash its own recently set exports records this year, displace Brazil as the main supplier of Chile and explore European trading opportunities.

According to MLA analysts, appreciation of grain-based feeding is resulting in rapid expansion of feedlotting, while beef from environmentally conscious, natural and hormone-free systems is hoped to sell well at home and abroad.

But while US beef is currently being hampered by economics, the weather, barring the western states has been helpful in restoring pasture and rangeland to support larger herds.

Two years of low cow slaughter and higher heifer retention, up 6.5 per cent according to July estimates, has allowed the largest increase in beef cows for over twenty years.

The opposite, however, is true for Canada.

Here, declining herd numbers have not been addressed like they have in the US as drought has returned to western regions, putting Alberta, Canada’s biggest cow province, at risk.

Total US cattle numbers as of July 1 were up 2.2 per cent but down 2.1 per cent in Canada. Canada’s beef cows, replacements and milk cows had contracted 3.4, 1.6. and 0.8 per cent.

Tim Petry, North Dakota State University projected that, with lower price cycles expected in both countries, it would be interesting to see how long both herds continued moving in opposite directions.

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms


Top image via Shutterstock

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