The Canadian cattle herd continues to grow, not by choice, but by the misadventure of a single case of BSE halting exports since May 2003.
Total herd size hit a record level of 16.76 million on July 1, up 6.5 percent from the same time in 2003, reports Statistics Canada. The beef cow herd rose to 5.34 million, an increase of 8.6 percent.
In contrast, the U.S. beef cow inventory was unchanged since the beginning of the year at 33.5 million head, for a total of 98 million head in all classes, said Canfax senior market analyst Anne Dunford.
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“There are very tight supplies and smaller numbers south of the border, which offsets what is happening here in Canada,” she told the Canadian Cattlemen’s Association convention in Calgary on Aug. 18.
Cattle herds in the four western provinces grew substantially from July 1, 2003.
As of July 1 this year, British Columbia had 950,000 head, up from 885,000, Alberta had 6.4 million head, up from 6.1 million; Saskatchewan had 3.5 million, up from 3.2 million and Manitoba had 1.7 million, up from 1.5 million.
Dunford said the disruption in normal marketing patterns, where cattle move from farm to feedlot to packer at certain ages, has made it difficult for producers to make informed decisions. There are fewer cattle in feedlots, even considering the seasonal factor of lower numbers in summer. About 600,000 are on feed compared to a normal seasonal figure of 800,000 in Alberta and Saskatchewan.
Dunford speculates there could be 818,000 steers and heifers outside commercial feedlots.
Poor prices have driven most producers’ decisions to keep animals at home.
During the first quarter of 2004, the price for 850 pound steers collapsed and optimism fell when it was clear the American border would not soon open for live cattle.
August U.S. fed steer prices have been around $110 Cdn per hundredweight while in Canada packers were paying only $65. The basis this summer has widened to as much as $55 per cwt. from the normal $10.
Fed steer prices are weak across the country.
“What is happening in the West is happening in the East from the pricing perspective. It is the same kind of disaster,” Dunford said.
The calf market has also turned sour.
Last fall’s calf market was strong, but prices collapsed in the early part of 2004 and no one can predict what this year’s calf run may be worth.
“Everything ran into a brick wall in the first quarter of 2004,” she said.
This market dysfunction makes it difficult to calculate purchase prices, cost of gain and breakevens.
Another unknown is this year’s feed grain harvest. Grain costs directly affect livestock feeders, cost of gain and therefore the price they are willing to pay for calves.
Barley could yield a 13 million tonne crop. If significant quantities of wheat or malt barley are damaged by early frost, there will be plenty of feed grain available, pressuring its price lower. The Americans also have a large corn crop coming, which could further cut feed prices.
As for actual beef movement, steer carcass weight is under control so far this year, after all-time record weights last fall.
However, the disconnect continues among retail, wholesale and producer prices. There have been record high retail prices while packer bids to producers remain extremely low.
Despite that, Canadians have supported the industry this past year.
Canada is producing 60 million pounds of beef on a weekly basis and per capita consumption improved by five percent, to 51 lb. per person. Canadians are chewing through 67 percent of the domestic beef production while exporting 27 percent to the U.S. and six percent to Mexico.
