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CME: Likely Identification of BSE Case in Florida; Beef Cow Herd Expected to Drop in 2019

30 August 2018

US - A couple of news stories Tuesday night indicated that a case of BSE may have been identified in Florida. At this point we have not seen a USDA confirmation of this and will wait until that happens before we make a more complete statement, reports Steiner Consulting Group, DLR Division, Inc.

Last year a case of non typical BSE was identified in Alabama and the market largely shrugged it off. OIE currently recognizes the US as having a negligible risk of BSE and it is unlikely that finding another case will change that status. However, we will have more to say on this when we get official confirmation from USDA.

Last week, StatCan released the results of its semi-annual livestock surveys and USDA provided a summary of the combined inventory in both countries. The reason for looking at the combined supply is because over the years the beef and pork industry in the two countries has been tightly integrated. There is a significant number of Canadian feeder pigs which are then finished in US operations.

Canadian producers also ship feeder cattle into US feedlots and send fed and non-fed cattle for slaughter in US plants. Some large US packers have operations in both countries and fill orders depending on which plant is closer to the customer.

Below are some key highlights:

Different from the US, where there has been a significant increase in the beef cow herd, we see no impetus for beef industry growth in Canada. The total beef cow inventory as of 1 July was estimated at 3.726 million head, 1.2 per cent lower than a year ago.

The Canadian beef herd has declined steadily since its peak in 2005 and it is now some 31.5 per cent lower than it was 14 years ago. While producers looked to maybe increase the herd modestly in the last two years, that has not happened and we expect the beef cow herd to decline further next year.

Heifers retained for beef cow herd expansion were estimated at 670,000 head, 2.6 per cent lower than the previous year. This was the first year-on-year decline in beef heifers since 2014.

Drought conditions and strong prices in the US market have worked against herd rebuilding efforts, with more cattle either going to feedlot/slaughter or into the US market. Producers in Alberta and Saskatchewan have had to purchase feed and place cattle in backgrounding operations rather than keep them on pastures.

The supply of cattle in feeder/stocker operations was 2.237 million head, 1.5 per cent higher than last year. On the other hand, the supply of cattle in cow-calf operations was down 2.7 per cent.

A recent CBC report quoted a producer as saying: "There's a lot of people that are looking to sell off 40 per cent, 60 per cent or their entire herd."

The total inventory of all cattle and calves on 1 July was estimated at 12.435 million head, 0.8 per cent lower than a year ago. This is the lowest 1 July Canadian cattle inventory since 1988.

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