While the U.S. cattle industry debates if and when there will be a turn in the cattle cycle, there seems to be little question that Canadian producers have already started on turning the cattle cycle there.
Good pasture conditions this past summer and prospects of record-high cattle values for 2013 have induced producers to limit the number of female animals they send to market. The change in cow slaughter rates has been particularly dramatic (see chart). Normally this is the time of year when weekly cow slaughter, both in the U.S. and Canada, hits the annual highs for the year. So far, however, average weekly cow slaughter numbers in Canada remain lower than what they were in June and July.
A Closer Look: CME Takes A Look At U.S. Cow Slaughter
Since Sept. 1, Canadian cow-calf operators and dairy producers have sent 54,875 cows to market, 49% less than a year ago and 55% less than the five-year average for this period. The July 1 cattle inventory survey for Canada pegged the beef cow inventory at 3.958 million head, up about 0.1% from the previous year, but down almost 1.5 million head or 27% from the peak in 2005.
Meanwhile, the Canadian dairy cow inventory in July was 954,000 head, down about 0.5% from the previous year. With dairy feed costs running particularly high, it’s unlikely there will be much of an increase in dairy cow numbers for Canada.
But that isn’t where the bulk of the cows are. The Canadian beef cowherd will likely expand, in part reflecting the lower cow slaughter rates. In addition to limiting the number of cows going to market, cow-calf producers also appear to be retaining more heifers.
This has been the case for much of this year, but the data was particularly telling in the latest cattle on feed survey. CanFax each month surveys feedlots in Alberta and Saskatchewan, a region that accounts for about 80% of feedlot capacity in Canada. The November survey pegged the total feedlot inventory in the area at 774,201 head, down 11.8% from the previous year. Feedlot placements in October were down some 22%, driven largely by smaller heifer placements.
Placements of steers in feedlots during October were down 12%, while placements of heifers declined 37% compared to the previous year. Since July 1, feedlots in Alberta and Saskatchewan have placed 234,294 heifers on feed, about 71,000 head or 27% less than the previous year. Also since July 1, Canadian cow-calf operators and dairy producers have reduced cow slaughter by about 65,000 head (38%).
However, one item that needs to be considered with regard to Canada is how trade with the U.S. affects the overall live animal and beef flow. Indeed, high cow prices in the U.S. and more limited slaughter capacity in Canada have pushed more cows to the U.S. market. Since July 1, slaughter cow shipments to the U.S. were 73,833 head, about 29,000 head, or 63.4% higher than a year ago. Even with this increase, however, there is a net increase in the number of cows that have been retained, a number that will likely show up in the Jan. 1 cattle inventory survey.