In a week where news of a case of bovine spongiform encephalopathy in a Canadian cow rocked the beef industry, it might be hard to see any good. But there were positive developments.
Governments reacted decisively to the BSE news. Agriculture and health spokespersons generally released information in a timely, believable and understandable manner. Media coverage, while at times overwhelming, mostly avoided sensationalism and was accurate.
The result – people are reassured that the danger to human health is low.
So far, Canadian consumers did not fall into a panicked avoidance of beef.
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American consumers also took the news in stride. Going into the important Memorial Day weekend, indications were that beef barbecues were, as always, an important part of the holiday fun.
All this indicates that if it is soon proven that the BSE outbreak is isolated and borders reopen, the damage to the market and producers’ income will be limited.
Another small blessing was that this freeze happened when feedlots had the fewest cattle in pens in years. The number of cattle on feed in Alberta and Saskatchewan feedlots as of May 1 was down 31 percent from last year at the same time.
The reason is the drought-induced cattle sell-off last year. Also, the cattle cycle is in its herd reduction phase.
Also, strong fed prices this spring coaxed feeders to move cattle as soon as they were ready, meaning there were few heavy
animals around that would get too fat in just a few days.
However, feedlots have lost a lot of money in the last couple of years and can’t carry many more losses. The borders must open soon.
Another positive development during the week was the reversal in the loonie’s rapid rise. It fell on May 22 and 23, recovering only slightly May 26, closing at 72.83 cents US.
Statistics Canada reported that inflation in April dropped to three percent from 4.3 percent in March, thanks largely to lower gasoline prices.
That means the Bank of Canada is unlikely to increase interest rates. Analysts had thought that if the interest rate gap between the United States and Canada widened, money would flow into Canada and increase the value of the loonie.
For now that trend has stalled, giving exporters a chance to catch their breath after a dizzying ride.
