As the US cattle herd shrinks and boxed beef prices climb, the US market cannot look to Canada to supply the overage of what will be needed, at least through next year, a market analyst said.
Canada’s 2021 cattle inventory bottomed last year, but the latest estimates from Statistics Canada show that this year could wind up being the second lowest of at least the last 13 years. This, combined with a declining US herd indicate a bullish stance on US beef prices is logical, the analyst said. The US also could pull harder on available Mexican feeder cattle supplies.
TOTAL HERD DECLINING
As of July 1, the total US and Canadian cattle herd amounted to 113.185 million head, according to data from Statistics Canada and compiled by the Livestock Marketing Information Center in Denver. This was down 1.280 million, or 1.12%, from 114.465 million last year and down 2.080 million, or 1.80%, from the most recent peak of 115.265 million in 2018.
But it’s not as if the Canadian herd decline wasn’t known. The data showed the Canadian herd declined rapidly from 2009 through last year, while the US herd declined to a 2015 bottom, recovered somewhat to 2018 and then declined into this year.
MEXICO IMPORTS TO THE RESCUE?
If fed cattle prices can rise, the declining US and Canadian inventories may induce feedlots to turn their eyes southward, to Mexico, for additional imports of feeder cattle. And, if they do, any increase may be masked by seasonal increases.
Data from the USDA’s Agricultural Marketing Service and the Animal and Plant Health Inspection Service that was graphed by the LMIC show that US imports of Mexican feeder cattle usually begin to rise within the next couple of weeks.
The gains in Mexican feeder cattle imports then to on to rise into a mid-December high before falling away for the Christmas and New Year’s holidays.
This year, weekly import data show that imports from Mexico have followed the 2015-2019 average very closely, so it would be logical to think the trend would continue through the end of the year, the analyst said.
At any rate, even if Mexican feeder cattle imports do rise faster than the five-year average rate, it would take three to six months for the cattle to show up in the weekly US slaughter data.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $124.51 to $125.93 per cwt, compared with last week’s weekly range of $125.41 to $126.44. FOB dressed steers and heifers went for $194.73 to $197.05 per cwt, versus $198.02 to $199.92.
The USDA choice cutout Monday was down $2.56 per cwt at $342.78, while select was down $2.97 at $312.55. The choice/select spread widened to $30.23 from $29.82 with 59 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA reported Monday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.60 to $2.00 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.40 over Sep, which settled at $5.40 1/4 a bushel, down $0.17 3/4.
No new delivery intentions were posted Monday against the Aug live cattle contract.
The CME Feeder Cattle Index for the seven days ended Friday was $159.56 per cwt up $0.17. This compares with Monday’s Sep contract settlement of $164.05 per cwt, down $0.60.