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Stabilisation in Beef Sector & Modest Growth in Pork

12 March 2012

USDA Foreign Agricultural Service

CANADA - There are no significant changes forecasted, with the first signs of stabilization in place for the cattle sector and an expected modest growth in the hog sector. Cattle exports will remain dependant on feed price differential and sustained demand. Pork exports are estimated at a higher level, given an increased pork supply due to a larger than anticipated slaughter volume and heavier carcasses.

Cattle inventories published by Statistics Canada reported a lower than anticipated total count, confirming, however, the earlier forecast of stabilization in the sector by showing an annual increase for the first time in seven years. Surprising were the numbers published for the inventory of beef cows, given that 2011 saw a reduced cow cull, reduced cow exports and an increase in heifer retention. Post reviewed the calf production downward by 90,000 head compared to the earlier USDA estimate.

Cattle exports will continue to be influenced by the availability of cheaper feeds, with recent months pointing towards a reduction in the cost advantage Canada has experienced over the recent period. The big un-known in this equation, in addition to the evolution of grain prices, is the transition from an export monopoly in wheat and barley to a free market system, scheduled to occur this summer with the elimination of the Canadian Wheat Board.

At the same time, a mild winter in the Canadian West saw many herds out on the pasture much earlier than in normal conditions, which would point towards reduced export incentives. Nevertheless, demand in the United States remains extremely strong given the scarce supplies, which ultimately prompted Post to review upwards by 100,000 head the total number of cattle exports.

With fewer cattle available domestically, Post also revised downwards the total slaughter figure, by 20,000 head. Beef caw slaughter is anticipated to continue to slow down though, as farmers make plans for a cautious expansion.

Despite lower slaughter numbers, beef production is not expected to decrease due to heavier carcasses. As demand for beef remains stable in the domestic market and sustained in export markets, finishers will deal with reduced animal supplies by adding more weight to each carcass.

In a scarce market, both import and export numbers have been adjusted upwards to reflect the movement in various cuts, necessary to balance the market. The strong Canadian dollar will continue to fuel imports, while the demand on international markets will facilitate increased exports.

Further Reading

- You can view the full report by clicking here.

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