Cattle producers might feel like they are clamped in the vise of low prices, oversupply and low demand, but this turn of the cattle cycle is right on track with those of the past.
This is the third year of the liquidation phase and now is the time to expand, said market analyst Anne Dunford of Canfax.
A cycle of expansion and reduction runs through the industry every 10 to 12 years.
Bred cows are selling at auction and don’t appear to be in the slaughter mix so they may be finding new homes, Dunford told the Western Stock Growers Association convention in Calgary.
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Even though the cow kill has slowed and bred cows are going somewhere, extremely high numbers of heifers continue to head for the feedlots. So far this year, 84 percent of available heifers were slaughtered. The 20-year average heifer kill is 64.5 percent.
“Our cow herd is getting smaller and our numbers are down. We can’t feed heifers forever,” she said.
“Until we start seeing some holdback and heifer retention going on in this business, there is no way we will be making a move back to expansion.”
Ironically, cattle-on-feed numbers dropped in Canada but Alberta increased the amount it was finishing. Alberta’s 2.2 million for this year is 70 percent of the national fed numbers.
Feedlot operators are trying to fill expanded pen space with fewer calves available, so prices recently have started to show improvement.
There may be fewer animals available but those remaining cows continue to produce record amounts of beef.
Projections of 3.3 billion pounds of beef by year end surprised analysts who thought 1997 would be the peak year of production.
Cows are weaning bigger calves, resulting in bigger carcasses. In 1975 the average carcass was around 600 lb. This year a carcass averaged 780 lb. That is up from 1997 when the average steer dressed out at 713 lb., a record weight. Throughout this year, weights have been above the 1997 averages on a month-to-month basis. This means there is eight percent more beef or an equivalent of 118,000 extra live cattle. This adds to an already bloated supply of meat in Canada with close to nine billion lb. of beef, chicken and pork expected by year end.
Pork a problem
Extra pork at this time of lower prices is not welcome.
The United States has increased its hog production by nine percent this year and Canada went up by four percent. The Americans are killing two million hogs a week and all that meat must find a spot in the retail case.
About half of all beef sold in grocery stores is sold in response to an advertised feature. This season the surplus of pork has taken over the ads, said Dunford.
