Canada Livestock Status Called Unchanged; Cattle Down, Hogs Up

The 2015 outlook for Canada’s livestock industries remains unchanged in that the cattle herd will continue to decline while the hog herd grows moderately.

Prior to the USDA’s National Agricultural Statistical Service’s release of the US and Canadian Jan. 1 livestock numbers today, the USDA’s Foreign Agriculture Service issued its semi-annual outlook.  Statistics in the two reports tend to merge over time, but can differ markedly at first with FAS attaches being somewhat bolder with their initial estimates.

FAS economists said neither the Russian food ban nor the case of Bovine Spongiform Encephalopathy, or Mad Cow disease, in Alberta would have a material effect on overall exports of beef and pork.

The 2015 Canadian cattle herd was expected to show a larger contraction than the USDA’s official estimates.  Cow slaughter dropped about 9% last year, which shows a desire among cattle producers to stop reducing herd size, but heifer slaughter increased by 9%, showing less of a desire to grow the herds.

Since heifer slaughter always is a larger number than cow slaughter, an increase in slaughter has a greater effect on overall herd size than a similar percentage change in cow slaughter.

 

2014 SLAUGHTER, DEMAND ESTIMATES DIFFER

 

FAS economists also differed with the USDA on their estimates of 2014 supply and demand.  Beginning stocks, the annual calf crop and imports were measured, and therefore match, but estimates for exports, slaughter and ending stocks still differ.

Carried into 2015, those differences make for some dissimilarity in forecasts.  FAS economists, for instance, see Canada’s cattle supply starting with 11.8 million cattle while the USDA sees 2015 carryover at 12.0 million.

Beyond that, FAS attaches see slightly larger total exports (mostly in the form of feeder cattle to the US) than the USDA is forecasting at 1.1 million head, compared with 1.05 million.

Cow slaughter, at 425,000 head, is seen falling short of USDA estimates by 25,000.  Calf slaughter could be close to 240,000 head, versus the USDA’s estimate of 250,000, and “other” slaughter is expected to reach 2.95 million, compared with USDA’s 3.0 million estimate.

Canada’s feed cost disadvantage relative to the US narrowed in the second half of 2014 and is expected to remain narrower into this year.  As a result, exports of slaughter and feeder cattle are expected to decline from last year, and slaughter weights are expected to be up as cattle are fed a little longer for extra growth and finish.

Calf slaughter also is expected to decline as more calves are sent to feedlots rather than fattened for veal.

 

CASH CATTLE MARKETS UNTRADED

 

Cash cattle markets Wednesday were quiet with bids from packer buyers at $157 per cwt on a live basis ant at $250 in Nebraska’s dressed market.  Asking prices from feedlots were at $162 to $163 live and $255 to $260 dressed.

Cattle traded last week in a range from $157 to $159 per cwt live, down $1 from the previous week, and at $250 to $254 on a dressed basis, down $4 for the week.

Sharply higher futures prices Wednesday are prompting ideas of higher cash prices this week.  Such ideas are augmented by steady to slightly lower showlist supplies.

Boxed beef prices Wednesday were mixed, with the USDA’s choice cutout down $1.03 per cwt at $248.58 and select up $1.95 at $247.23.  The choice/select spread narrowed to $1.35 from $4.33 on Tuesday.

Volume was moderate with 106 loads of fabricated product being sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was up $0.27 per cwt to $206.65, compared with the Mar futures contract, which settled Wednesday up $4.50 per cwt at $207.22.