American processors are having an easier time because producers placed fewer cattle in feedlots in March and April
The backlog of slaughter cattle that developed when many North American packing plants slowed or shut down in early days of the COVID-19 pandemic might be gone by December in the United States.
In Canada, it might take a little longer.
In a fourth quarter update organized online by meat and livestock analysts J.S. Ferraro, agri-economist Rob Murphy said the U.S. backlog of about 800,000 head is slowly being processed and as of last week he estimated it at less than 200,000 head.
U.S. processors handled higher than usual slaughter numbers in June, July and August, said Murphy, and totals in coming months are also expected to exceed average.
Canfax estimates the U.S. weekly slaughter at 654,000 head, which is 11,000 head larger than last year. Canadian weekly slaughter in Western Canada is about 49,500 head.
Market analyst Kevin Grier of Kevin Grier Market Analysis and Consulting said Canadian processors saw an encouraging bounce back in the third quarter after a temporary shutdown at Cargill in High River, Alta., and a slower pace at JBS in Brooks, Alta., caused by worker illness with COVID-19 in spring. Other Canadian processors also experienced temporary closures or a slower pace.
“My views in terms of the fourth quarter, supplies are going to be available and I think we can expect Canadian slaughter to be up about three percent in this quarter,” said Grier.
“(However), I think we’ve got more of a backlog in Alberta than most areas in the United States so I think we’re working through it. The packers are doing a lot of Saturdays and we are getting through it but the price spread in Alberta versus the United States is probably not where cattle feeders would like it to be at this time of year.”
Murphy said the difference in American ability to work through the slaughter cattle backlog is due to a 23 to 25 percent reduction in feedyard placements that occurred in March and April. Placements were also down in February so the combination of a three-month placement reduction created a “hole” in cattle supplies.
Now, six or seven months later, that means fewer cattle coming to slaughter, allowing processors to further address the backlog.
“As we move into the first quarter of next year, January and February, we still should start seeing year-over-year increases in steer and heifer slaughter,” Murphy said.
“The fourth quarter, I think you can expect as a whole that we keep slaughter pretty close to year ago levels and as we get into Q1 there’s a decent chance that we’re going to have a three to four percent increase in fed slaughter.”
Slaughter weights rose during the backlog, in both Canada and the U.S., as cattle remained on feed longer awaiting a processing spot.
“The carcass weights were a problem in summer. They are becoming less so with each passing week and hopefully that will be resolved by the time we move into Q1,” Murphy said about the American situation.
Canfax reported that U.S. carcass weights have been above year-ago levels throughout 2020. In late May and June, they were 50 pounds heavier than last year and recently are about 25 lb. heavier than year ago. The high for U.S. weights so far this year is 928 lb.
In Canada, Canfax said average steer carcass weights during the week ending Oct. 10 tied the record high of 952 lb. set in April 2016. Weights tend to peak at the end of October or in early November.
“Given the peak so far this month of 956 lb., it would suggest that carcass weights are likely near their peak weights for the fall,” Canfax said in its latest report.
“Given current U.S. weights and seasonality, the U.S. is likely to hit record high carcass weights this year, and Canada will likely stay near record large weights as well. Fed slaughter rates are higher than a year ago in Canada and the U.S., and with carcass weights being record large, the backlog of cattle continues to weigh on the market, which may limit the seasonal rally for fed prices later this fourth quarter.”