COW/CALF CORNER
The Newsletter
From the
Oklahoma Cooperative Extension Service
April 6, 2015
North American
cattle situation: Canada
Derrell S. Peel,
Oklahoma State University Extension Livestock Marketing Specialist
The
North American cattle and beef market is a complex set of cattle and beef flows
among Canada, Mexico and the U.S. These trade flows played a role in the
unprecedented production and prices that occurred in 2014 and will play a role
in 2015 and beyond. Trade impacts among the NAFTA countries were
generally as expected in 2014. Beef imports from Canada increased while
beef exports to Canada decreased compared to 2013. Cattle imports from
Canada and Mexico also increased year over year along with beef imports from
Mexico. Canada and Mexico accounted for a combined 31.1 percent of U.S.
beef exports and 30.9 percent of U.S. beef imports in 2014. The impact of
Canada and Mexico on the U.S. cattle and beef market may be different in 2015.
More detail on the Canadian situation follows.
U.S.
imports of Canadian beef increased 11.9 percent in 2014 compared to one year
earlier. Canadian cattle slaughter and beef production increased year over year
in 2014 as cattle inventories continued to decline. However, cattle
slaughter and beef production are expected to decline in 2015. Canadian
beef exports are expected to close to 2014 levels in 2015 due to tight
supplies. Nevertheless, U.S. imports of Canadian beef are up nearly 14
percent in the first two months of 2015. U.S. beef exports to Canada have
continued to fall in 2015 with January and February combined beef exports to Canada
down 20.9 percent.
Canadian
feedlots have struggled with competitive disadvantages to the U.S. and limited
cattle supplies. Feedlot placements in Canada dropped sharply in the
second half of 2014. Feedlot placements in Alberta and Saskatchewan were
down 16.9 percent year over year in the four months from last November through
February. March 1 cattle on feed inventories in Alberta and Saskatchewan
were down 11.7 percent from one year ago. Feedlot marketings in these two
major Canadian cattle feeding provinces were down 14.6 percent in January and
February compared to the same two months last year. Fewer feedlot
marketings in Canada impacts Canadian beef production and slaughter cattle
exports. Combined January and February U.S. imports of Canadian slaughter
cattle were down 34.6 percent year over year, including a 55.1 percent decrease
in slaughter steer imports; a 40.8 percent decrease in slaughter heifer
imports; and 21.4 percent fewer cull cows imported for slaughter.
Record
high U.S. feeder prices and a strong dollar favor Canadian exports of feeder
cattle to the U.S. U.S. imports of Canadian feeder cattle increased 37.8
percent in 2014 over the previous year. This increase consisted of a 60
percent year over year increase in feeder heifers exported to the U.S. along
with a 7 percent increase in feeder steers exported to the U.S. In the
first two months of 2015, total U.S. imports of Canadian feeder cattle are up a
more modest 7 percent; the result of a 51.2 percent increase in feeder steer
imports combined with a 12.6 percent decrease in feeder heifer exports.
January
1, 2015 Canadian cattle inventories confirmed that cattle herd liquidation
continued in 2014 with a beef cow herd of 4.78 million cows, down two percent
from the previous year. Beef replacement inventories were down one
percent as well, indicating that herd expansion has not yet started in
Canada. This is consistent with slaughter and export data indicating that
heifer slaughter in Canada was up 9 percent in 2014; 24 percent more slaughter
heifers were exported to the U.S. and 60 percent more feeder heifers were
exported in 2014 compared to 2013. Decreased feeder and slaughter heifer
exports so far in 2015 may indicate that heifer retention is beginning in
Canada.
Decreased
beef production in Canada in 2015 will hold beef exports close to 2014 levels
despite favorable exchange rates. U.S. imports of Canadian beef may
moderate in the coming months from the strong year over year increases posted
in January and February, though the U.S. may be picking up a larger share of
total Canadian beef exports. Slaughter cattle imports from Canada are
already down year over year and will likely remain lower due to decreased
Canadian feedlot production. Herd rebuilding may result in fewer cull cows
exported to the U.S. for slaughter in 2015. U.S. imports of Canadian
feeder cattle may also moderate in coming months as a result of tight Canadian
cattle supplies and increased heifer retention in Canada. Compared to
2014, Canada is likely to contribute relatively less to U.S. beef supplies,
slaughter cattle supplies, and feeder cattle supplies in 2015.
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does not constitute or imply endorsement by Oklahoma Cooperative Extension
Service.
