Canadian feeder cattle are being shipped to the United States in near record numbers because of high priced grain in Canada.
Canfax, the market information arm of the Canadian Cattleman’s Association, estimates by the end of the year about 450,000 feeder cattle, or one-quarter of the country’s feeder herd, will end up in American feedlots to be fattened for slaughter. It will be the second highest number of export feeders in the past 15 years.
Already feeder cattle exports to the United States are up 32 percent from a year ago.
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To the end of September, Agriculture Canada reported 308,027 feeder cattle were exported compared to 229,559 during the same period a year ago.
The only other year exports were as high was 2002 when Canadian barley prices were high. That year 574,908 head of cattle were exported to the U.S.
The reason cattle are flowing south is simple, said Bryan Wolton, general manager of the Alberta Cattle Feeders Association.
“It’s economics.”
Higher priced Canadian grain, low feeder prices, a higher Canadian dollar and new costs for Canadian slaughter and dead stock removal because of regulations related to prevention of BSE all make it difficult to feed cattle in Canada.
“If you do the math, it makes sense for some people to be feeding their cattle in the States,” Wolton said. “It’s not good right now.”
He will be part of a delegation making a pitch to the Alberta government asking for aid to offset the high cost of feed grain for livestock producers.
“There’s no profit in the business right now.”
Bart Holowath, senior market analyst with Canfax, said the difference in prices between the two countries makes it difficult not to sell cattle to the U.S.
At the beginning of October, 800 pound steers in Nebraska sold for $1.20 to $1.23 per lb. In Alberta, 850 lb. steers sold for 95 cents per lb.
A cost-of-gain model from Nebraska on Oct. 9 estimated a 550 lb. steer fed to 1,250 lb. would cost 61.99 cents for every pound of gain, including interest and other charges.
With it only costing $13 a head to test and ship Canadian cattle to the U.S., Holowath expects the exports to continue.
“We’re going to continue to see feeder cattle exit Canada.”
A region by destination report tracked most of the Canadian feeders to Iowa, Kansas, Missouri and Nebraska, but the majority are going to Nebraska.
“It’s the cheap cost of gain and close geographically,” Holowath said. It’s especially attractive for feeder cattle from Saskatchewan and Manitoba.
Sheila Mowat, general manager with the Manitoba Cattle Producers Association, said it’s easier to ship cattle to the U.S. than to Ontario or Alberta.
Mowat said producers are concerned about the price paid for calves and what the low prices mean for the province’s cattle feeding industry.
Jack Hextall, with the Saskatchewan Stock Growers Association, said a significant number of Saskatchewan feeder cattle are going to the U.S.
“The American cost of gain is cheaper than ours.”
Hextall said many producers who feed cattle throughout the winter are not rushing to fill their feedlots until they can see profit in the business.
“They’re playing the waiting game.”
Holowath said he would continue to watch the markets to see if younger calves just being weaned are also shipped south or if it’s only a trend with feeder cattle.
Wolton said prairie feedlots are constantly searching for cheaper feed.
Some have bought supplies of dry distillers grain as an alternative, but most are turning to American corn.
Doug Chambers with Quality Grain in Lethbridge said a recent U.S. Department of Agriculture report showed as of September there were 707,000 tonnes of outstanding sales of corn to Canada compared to 311,000 for the same time a year ago.
Feedlots are bringing in American corn by the truck and grain car load.
“They are using all the byproducts, every type of byproduct they can get their hands on,” Chambers said.
