Given the level of beef and cattle trade between Canada and the US, producers in both countries should be relieved by the labor settlement at Cargill’s High River plant in Alberta, said Brenda Boetel, agricultural economist at the University of Wisconsin-River Falls, in a Livestock Marketing Information Center letter to Extension agents called In The Cattle Markets.
Some question why Canadian labor issues would affect US cattle supply and prices, she said, adding that a brief look at the integration of the North American beef industry might help answer this question.
THE SITUATION
The US has three sources of imported cattle: Canadian slaughter cattle, along with Canadian and Mexican feeder cattle, Boetel said. In 2020, US imports of Canadian slaughter cattle totaled 528,518 head, while 2021 imports are 9.6% fewer than 2020, partially because of a declining Canadian herd. The total supply of cattle coming to the US from Canada has been relatively stable ranging from 480,000 to 580,000 head per year during 2016-2020.
However, the US federally inspected annual cattle slaughter during that time averaged 31.9 million head, with 25.4 million being steers/heifers, Boetel said. Canadian slaughter cattle accounted for an average of 1.6% of US cattle slaughter during the period.
Disruptions at the High River plant could have increased US imports of Canadian slaughter cattle by as much as 85,000 head (0.2% of US cattle slaughter). A strike in Canada would have similar effects as a US facility being shuttered temporarily, she said. Given a limited ability for slaughter increase because of capacity and labor constraints, the increased supply could have meant regional price pressure.
FEEDER CATTLE IMPORTS
While Canadian slaughter cattle imports represent a small portion of domestic supply, imports of Canadian and Mexican feeder cattle are more significant, Boetel said. Total feeder imports from Canada were 118,000 head in 2020 and are up 12.7% (14,000 head) in 2021.
Mexico is the larger supplier of feeder cattle, with total imports of feeder cattle from Mexico at 1.42 million head in 2020 and 2021 being expected to be 22% fewer, a decrease of almost 300,000 head.
Canada is consistently one of the US’ largest beef export markets, taking an average of 6.9% of the total, Boetel said. This percentage has been declining the last five years.
And, the US consistently is the largest source of imported beef for Canada, and the US is the largest beef export market, with the US accounting for an average of 77.3% of total Canadian beef exports over the last three years.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.22 to $142.17 per cwt, compared with last week’s range of $140.55 to $143.75. FOB dressed steers and heifers went for $219.83 to $221.74 per cwt, versus $219.10 to $222.88.
The USDA choice cutout Thursday was up $2.71 per cwt at $262.97, while select was up $0.69 at $248.14. The choice/select spread widened to $14.83 from $12.81 with 117 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.30 to $1.40 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.40 over Mar, which settled at $5.91 1/4 a bushel, up $0.05 1/2.
No delivery intentions were posted against the Dec live cattle contract Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $161.08 per cwt down $0.69. This compares with Thursday’s Jan contract settlement of $162.57 per cwt, down $0.85.