We still haven’t reached bottom in cattle
The numbers are in and to no one’s surprise Canadian producers followed their American colleagues by shrinking the national beef herd for the fifth year in a row, this time by 1.3 per cent to 13 million head.
Canadian beef cow numbers are down 3.8 per cent on the year to 4.47 million head with some variations across the country.
B. C. producers continued to retrench, culling another seven per cent of their cow herd while Saskatchewan’s herd remains largely untouched at 1.38 million. Manitoba reported three per cent fewer cows, Ontario’s herd dropped nearly two per cent and Quebec’s was 3.5 per cent smaller.
If anything it is surprising that the numbers were not lower. Alberta Agriculture was predicting substantial cuts in cow numbers back last fall when dry weather and low feed supplies were sending females to town. On Jan. 1, however, Statistics Canada found about 1.7 million beef cows in Alberta. That’s a drop of about six per cent, which is substantial, certainly, but not nearly as severe as we had been led to expect.
On the plus side that pile of older cows born before 1999 is shrinking too. Right across the country these older cows that tie us back to those awful events of May 2003 are leaving the herd for good. From January 1, 2007 to 2010 producers culled two-thirds of these older cows, from a total of 1.4 million head down to 464,000. If you prefer to be a pessimist, 10 per cent of the national cow herd is still 10 years old or more.
Again, no surprise, but this liquidation cycle will continue for a while yet. The number of beef replacement heifers was down 3.9 per cent across the country. Drought fears continue to play out in Alberta where producers are carrying 4.7 per cent fewer replacements this winter. Curiously, the same optimism that convinced Saskatchewan producers to maintain their cow herds has them holding onto the same number of replacement females as last year. Ontario farmers are keeping seven per cent more heifers this winter, which is another surprise.
The liquidation continued in the U. S. as well with beef herd down one per cent at 93.7 million head, with one per cent fewer beef cows and two per cent fewer replacement heifers. Steers over 500 pounds were down two per cent on the year while calves under 500 pounds were up slightly.
Fewer cows, means fewer calves for feedlots to chase down, fewer fat cattle for packers and probably fewer tons of beef going through the pipeline. Although one has to be careful about prediction drops in meat production based on a shrinking herd. Canada’s herd has been shrinking for five years but 2009 was the first year when beef production declined to any great extent. Cow beef was propping up the numbers until last year. But it’s likely we will have less beef to sell this year.
The inventory report more or less confirms what we’ve all suspected for some time now. The more immediate question is “what does it all mean?” Many analysts are expecting better prices as the supply of cattle tightens, especially if an improving economy can put some bounce back into the demand for beef.
Kevin Grier of the George Morris Centre recently took a detailed look at the Northwest U. S. numbers and discovered some good news for Canadian producers. The supplies of slaughter steers and heifers in the states of Washington, Idaho and Utah declined by one per cent on January 1. That follows a six per cent decline back in January 2009. In fact, Grier found the local supply of slaughter steers and heifers has dropped by about two per cent per year over the last decade. That goes a long way to explaining the growing dependency of plants such as Pasco and JBS Hyrum on cattle from outside their immediate region.
Canadian exports of slaughter cattle were down 15 per cent last year if you include cows and bulls. Take out the cows and bulls and fed cattle exports were down 21 per cent but 49 per cent of that smaller volume of cattle was shipped to Washington State, according to CanFax. This compares to 34 per cent in 2007 and 35 per cent in 2008. Utah took another 15 per cent, and another 14 per cent went to Pennsylvania, largely out of Ontario.
Grier’s analysis suggests the Northwest will have to dig deeper for Canadian cattle despite the hurdles thrown up by COOL. As he notes the scheduling issues caused by COOL are a major problem for Alberta cattle feeders. Canadian cattle, for example, can only go to Pasco on Thursdays or Tuesday if age and source verified. Not only are there yield and efficiency problems but it means that large cattle feeders cannot have their trucks on the road and moving in the most efficient manner.
It makes you wonder why those ranchers in the Northwest are so supportive of COOL.