RED DEER — Cattle herd expansion has been going full throttle in the United States since 2015, but Canada has not responded, said Brian Perillat of Canfax.
“We’ve got nothing here. It is not happening,” he said at the Alberta Beef Industry Conference held Feb. 15-17 in Red Deer.
Cow numbers are flat and heifers are not being held back beyond those replacing culls that went to slaughter.
There was little incentive to expand the herd even when calf prices hit $3 a pound. Perillat suspects many banked the windfall rather than investing in more cattle.
Those expensive calves also resulted in record losses of up to $600 a head in the feedlot sector. Calf prices settled and eased the pressure on feedlots, which are now clearing $200 to $300 a head.
Enthusiasm was low when prices rallied.
“We’ve seen a 25 percent rally since the fall lows, which in any market conditions would be a pretty major rally, but it was unexciting,” he said.
Fewer calves coming down the pike meant January cattle-on-feed numbers were down, but that could change later in the year.
There is plenty of beef even without expansion. Carcass weights soared to about 920 lb. but have become more manageable in recent months.
“We could see our bigger bulge of beef coming in September to October,” Perillat said.
Canada produced 10 percent more beef last year because of large carcass weights and fewer exports of live cattle to U.S. packing plants.
Some of the biggest kills in five years occurred last fall at around 64,000 head per week, so plants are running steady.
Canada is exporting very few feeder cattle. Up to 18,000 head left every week at one time, but that is down to about 2,500 a week. Some U.S. feeders were imported for the first time in many years.
“I don’t see a lot of feeder cattle going south unless we see our fed cattle market really soften,” he said.
The beef supply is becoming burdensome in the United States.
One million more cows have joined the U.S. herd, which will result in more cattle headed for slaughter.
Another 400,000 cows may come along next year, taking the herd size back to what it was in 2010 when inventory numbers hit 27 million cows.
“We will have a lot of beef around for the next five years,” said Duane Lenz, general manager of Cattle fax.
He said commercial beef production should total 25.6 billion lb. in 2017 and 26.5 billion lb. in 2018.
The U.S. needs more demand and more exports to take that extra beef.
The average American ate about 80 lb. of beef in 1984, compared to 54 lb. per capita in 2016.
“If we have trade disruptions, that could put more beef in the domestic market,” Lenz said.
Record pork and poultry production exacerbates the problem, so Americans may have to eat 215 lb. of meat each this year.
“We are going to have a lot protein around, especially as we hit summer,” he said.
Massive amounts of product are coming in July-September, so fat prices could falter below $1 per lb.
“Summer concerns us,” Lenz said. “We have got a lot of product to move.”
Retail prices are falling, which may be an incentive to buy. Recent trends show more people are buying meat at the grocery store, but fewer are going to restaurants.
Restaurants felt the burden of higher priced beef and higher minimum wage laws. The only way they could recover added costs was to raise prices.
Exports have been positive, and Lenz predicted they could increase another five percent this year. However, many of these predictions are in doubt if U.S. President Donald Trump makes good on his vow to change trade agreements.