OTTAWA: U.S. cow herd expansion is the fastest in 40 years, yet the Canadian cattle population has remained stable for seven years. Recent Canadian census data showed Alberta had a three percent increase in beef cows for 2016. “We haven’t seen much change in our cattle growth, but we have seen more slaughter cattle around in Canada,” said Brian Perillat, market analyst with Canfax. Market shifts have resulted in fewer live animals leaving the country, and slaughter rates have increased at home, where prices for finished cattle are highly competitive. “At times, Alberta had the strongest prices in North America for fat cattle,” he said at a June 13 Alberta Beef Producers meeting in Edmonton. Two weeks ago 42,000 fed cattle were killed, which was one of the largest amounts in five or six years. Feeder cattle are also staying close to home. Exports are down 43 percent so far this year, totalling 71,628 head.
Canadian beef demand has been a positive story even when retail prices climbed higher. The bulk of consumer dollars is still spent on beef, and there has also been a small uptick in per capita consumption. The packing, feeding and cow-calf sectors are making money at this point. Feedlot profits were around $500 to $600 per head in 2014 and 2015, but this year they have reached more than $700 a head. However, there were some big losses last year because feeders had to pay record prices for calves. They had to feed them to much heavier than normal weights to minimize their financial losses. Steer carcasses were averaging close to 900 pounds last year compared to recent numbers showing they are down to around 830 lb. “The heavy carcasses we were seeing in late 2016 were these very expensive calves and pushed their way through the system and turned into losses for the feedlots,” he said. Cow-calf profits are all over the map. “Cow-calf prices have been volatile, but generally we are aiming for a profitable year for the sector this year,” he said. He predicted a softer fed market this fall, depending on the Canadian dollar and feed costs.
Alberta cull cow prices are at a premium to the United States, so the cow slaughter here is a bit higher and there are fewer exports. The U.S. will see more beef available as its expanding calf crop goes to market, but volume should not be burdensome because export markets continue to develop. A recent U.S. deal with China sounds promising but includes caveats. No beta agonists are allowed, and traceback is expected. The cuts are similar to a deal that Canada achieved a couple years ago. Perillat calculated that less than 10 percent of U.S. cattle would be able to meet the requirements of the Chinese market.
Canada has also diversify and increase its export markets. The U.S. accounts for 71.5 percent of Canadian exports versus 77 percent last year. The rest goes to Japan, Hong Kong, Macau, Mexico and China. The five biggest exporters to Canada came from the U.S., Australia, New Zealand, Uruguay and Brazil. “Twenty percent of our consumption is imported beef.”
