As the value of the US dollar against other currencies rises, the effects of the move affect international trade of all commodities. Short beef supplies as the US rebuilds its cattle herds could add impetus to the desire to import more cattle or beef.
Last year and this year so far, feeder cattle imports from Canada have done just that – rising at peak demand times to points well above the average of the previous five years.
Feeder cattle imports from Mexico, however, have shown little divergence from the seasonal pattern.
The difference between the two countries may be just a matter of normal volumes, with feeder imports from Mexico being much higher than those from Canada, rendering changes in Canadian cattle imports much more volatile than those from Mexico.
But if that’s the case, studying the year and average trends of weekly prices from Canada could reveal more subtle changes.
The Livestock Marketing Information Center graph shows that tight supplies and a strong US dollar allowed feeder cattle imports from Canada to spike in late March and early April this year and last year.
That was followed by a seasonal slump in the summer months as grass and forage availability kept Canadian feeder cattle at home. The previous five-year average shows a secondary increase in imports in the fall that correlates to seasonal declines in pastures and traditional weaning times.
Last year, that secondary fall bulge in shipments from Canada was exacerbated by the same things that brought on the spring spike: a strong US dollar and feedlot demand as ranchers kept heifers at home for breeding.
It is difficult to predict, however, whether a 2014-style surge in Canadian feeder cattle imports will take place this year or whether the fall increase will be more similar to the average. The US greenback certainly is strong enough, but mounting feedlot equity losses on fed cattle could limit demand.
The seasonality for an increase in fall feeder cattle imports from Mexico is greater than the same trait from Canada. Prices last year even followed the 2009-2013 average almost perfectly, with weekly spikes and dips coming in the same weeks.
This year, those weekly changes are more random, but the overall trend certainly follows the average. And, since this has been the case all year, it follows that feeder cattle imports likely will rise in the fall toward a mid-December peak.
CASH FED CATTLE TRADE QUIET
No bids were reported from packer buyers in Plains cash markets Tuesday, but asking prices were reported around $146 per cwt on a live basis and $225 on a dressed basis.
Cash fed cattle markets last week were lower with live-basis trades ranging from $140 to $143 per cwt and dressed-basis transactions at $220 to $223. This compares with trades the previous week of $143 to $147 live and $228 dressed.
The USDA reported mixed boxed beef prices Tuesday with its choice cutout down $0.91 per cwt at $239.16 but select up $0.26 at $228.65 with 116 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was $205.48, down $0.84. This compares with the Sep settlement Tuesday of $204.30, up $2.95.