Fewer cows culled than expected

CALGARY — Dry conditions in parts of the Prairies might bring an earlier than usual fall calf run but so far those same conditions haven’t resulted in more cows coming to town.

Brian Perillat, senior analyst at Canfax, gave a generally bullish analysis Aug. 17 to those at the Canadian Beef Cattle Industry Conference, but noted this year might bring some feed cost challenges.

“We’ve had a pretty good feed cost advantage for all of last year, a lot of feed wheat around and feed barley supplies were fairly ample.

“This year, the U.S. corn crop sounds to be fairly positive. We’ve certainly got our production challenges up here.… It’s a little bit too early to start calling how bad it’s going to be or how much less we’re going to have but nonetheless we’ve seen our barley prices creep up much quicker than corn.”

Feeders are unlikely to have access to large feed wheat supplies this year, unlike last year when disease issues and a wet harvest wreaked havoc with quality grades and made more feed wheat available.

On the cow side, Perillat said August is often the peak cull cow market but that hasn’t materialized this year. Cow prices peaked in early June and Alberta cows have been trading at a premium compared to those in the United States.

“Given dry conditions, we haven’t seen … a flush of cows come to market, which has been positive. I think there’s a lot of carryover grass and pretty good subsoil moisture coming into this year, so we haven’t seen a flush of cows being liquidated by any means, and that’s despite the fact that we are seeing those prices coming down.”

Perillat said the cow-calf market overall has been positive but with huge variations. The coming year looks good again for the sector, although hay and feed costs are likely to be higher than last year.

The Canadian beef cow inventory is still around 12 million head, about the same as it has been for the past seven years.

Perillat said there’s little evidence of expansion. Heifer retention is just enough to keep the herd stable.

Canadian cows are trading at a premium relative to the U.S. so local demand has been strong.

On the slaughter side, Perillat said capacity saw a small uptick when Harmony Beef in Calgary began operations.

The two major plants, Cargill at High River and JBS at Brooks, are running at capacity and packers’ margins are doing well.

Because of capacity at plants, a few more fed cattle are being exported but Perillat didn’t note any major volume.

On the feeder side, “our exports were down significantly over a couple years ago. We’re down again this year…. Cattle are staying in Canada to get fed and slaughtered.”

Beef exports are up almost six percent, year to date, which equates to about $2.5 billion.

Canada exports about 45 percent of its beef production, most of it to the U.S., and imports about 20 percent of the beef consumed.

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