RED DEER – The Canadian cattle herd continues to contract as more cows go to market without being replaced on the farm.
From a peak of 14.9 million in January 2005, the Canadian cattle herd has fallen 12 percent to 13.2 million head, according to the Statistics Canada Jan. 1 livestock census released Feb. 17.
In just the last year, the herd has fallen five percent.
The cow herd, at 4.6 million, is down 5.6 percent since January 2008. Available replacement heifers are down 9.7 percent.
“We continue to liquidate and there will be more contraction this year,” Canfax analyst Rob Leslie told the annual Alberta beef industry council convention in Red Deer Feb. 19.
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The major beef producing provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario all downsized.
“You will continue to see this trend this year,” he said.
The British Columbia cow herd fell 15 percent from last year to 212,000. Alberta dropped seven percent to 1.85 million, Saskatchewan declined four percent to 1.42 million and Manitoba fell 1.8 percent to 601,000. Ontario fell 3.2 percent to 271,000.
The United States is experiencing a similar trend with no turnaround expected soon, said Brett Stuart of Cattlefax. The U.S. herd started to decline in 1996 and never expanded. Under the typical cattle cycle going back to the 1920s, the expansion and contraction phases happen over a 12 to 14 year period.
That is not the case now because the U.S. should have started to rebuild in 2006 when profits were high. It did not happen.
Energy, grain and fertilizer are too costly and profits are disappearing, Stuart said.
The situation has been exacerbated by drought in the southern U.S. with large culls in Texas, where 22 percent of the nation’s beef cows reside. Another 15 percent of the cows are in the southeast where extreme drought has continued for three years.
With smaller herds in both countries, beef supplies are also declining. That should support prices, but demand is wavering.
Per capita beef consumption in Canada is around 48 pounds per year, while the U.S. consumes around 60 lb.
In the mid 1970s, each Canadian ate about 85 lb. of beef
“It is a fairly good indication we need to do some marketing at home,” Leslie said.
But the economic contraction will make that difficult. Fewer customers are going to restaurants in both countries to eat steak. However, fast food outlets where ground beef is a staple have reported considerable profits.
“The lowest value products are carrying the weight, which is not a good spot to be in,” Stuart added.
The faltering economy and a stronger American dollar have had a major impact on the value of byproducts. Hide and organ meat prices fell and resulted in an $80 per head loss last year.
Hide values in the U.S. fell to $35 each from $65 last November, partly because export demand is falling and auto and furniture makers are not calling for more leather.
Both analysts predict lower cattle prices even though cow herds are shrinking and less beef is being produced.
“We have very tight supplies and we have seen supply shifts we haven’t seen in years. We have very weak demand right now,” Leslie said.
Prices will depend on what happens with supply and demand and how soon economic recovery occurs.
“There is a lot of money on the sidelines right now,” said Leslie.