Bright future for livestock
While there are rough seas ahead for Canada’s livestock industry for some months yet, more inviting waters lie not too far off.
Agriculture Canada has released a review and outlook of the hog and cattle industries showing that 2000 should be a better year.
We have already reported that most analysts expect stronger hog prices beginning in the second half of this year. The Agriculture Canada report says the price improvement should continue into 2000 and beyond.
Although hog production is expected to decline in the United States in the coming 12 months, numbers in Canada, particularly in the West, are expected to increase.
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The U.S. herd is down about one percent from the winter of 1998 while in Canada, hog inventory on Jan. 1 was up by 500,000 head, or about four percent compared to last year.
It is expected to grow by a further six percent this year.
This strong increase might have been cause for concern a few years ago, but it will coincide nicely with the startup of new packing plants.
For example, the Maple Leaf plant in Brandon, Man., alone will be able to slaughter 2.3 million head a year, operating with one shift.
This means fewer live hogs will be exported to the U.S. However it also implies more pork will be shipped south so trade friction with the Americans is likely to continue.
Ag Canada forecasts that the average Alberta index 100 dressed price was a money-losing $112.40 per 100 kilograms in 1998. For 1999 it will be $136.48 and for 2000 it will be $156.68.
Meanwhile, the cattle industry has been liquidating.
In Canada, the herd is down 4.4 percent from its peak of 13.4 million in 1996.
Producers are not yet increasing the breeding herd and so the expectation this year is that the total herd will again shrink, by one percent.
The industry will slide into expansion in 2001, Ag Canada predicts.
Although the herd is smaller, production at Canadian beef plants is increasing because more animals are being slaughtered at home. This is thanks to increased capacity at Alberta plants and lower live exports.
For prices, Ag Canada estimates the average price for Alberta steers will be $91.06 per hundredweight this year compared to $83.82 in 1998. In 2000 it will rise to $95.17.
Alberta feeder prices for 500-600 pound steers are estimated to average $127 per cwt. this year and $130 in 2000.
