CANADA - Statistics Canada has published the results of its semi-annual surveys of the Canadian hog and cattle industry, showing that Canadian cattle supplies are shrinking and will likely be smaller still in 2016, while hog numbers are growing at a much slower pace than in the US, write Steve Meyer and Len Steiner.
Below are some of the highlights from these two important surveys and implications for North American beef and pork output in the next couple of years.
Beef/Cattle: The cattle inventory in Canada as of July 1 was estimated at 13.005 million head, 2.1 per cent lower than the previous year.
The lower inventories were not a surprise considering that the January 1 count showed total inventories down 2.5 per cent from the previous year.
The decline in Canadian inventories comes at a time when the cattle cycle in the US has turned a corner.
So far, it has been particularly difficult for Canadian producers to rebuild the herd for a number of reasons.
Sharply higher cattle prices in North America and a strong US currency have limited US beef exports into Canada and have encouraged Canadian producers to ship more feeder cattle and breeding animals to the US.
Drought in the Canadian prairies this summer also prevented Canadian producers from retaining more heifers. Some of the heifers that would have been retained in the Canadian beef cow herd likely were sold into the US where pasture conditions last year and this year have been well above average.
As a result, the Canadian beef cow herd as of July 1 was 3.792 million head, 134,400 head (-3.4 per cent) lower than a year ago. Heifers retained for beef cow replacements were down 0.6 per cent while heifers retained for dairy cow replacement declined 3.1 per cent.
The decline in the beef cow herd and fewer heifers held back for breeding stock replacement imply a smaller calf crop in 2015 and 2016.
Statistics Canada did not provide an estimate for the calf crop in 2015 but we would expect the calf crop this year to be down about 2.7-2.9 per cent compared to a year ago.
The calving ratio was quite high last year as strong feeder prices provided cow-calf operators with an incentive to better manage the herd. Lower feed costs also may have been a contributing factor. We expect the calving ratio to be high this year as well but it still is a wild card.
A calving ratio closer to the long term trend would imply an even smaller calf crop in 2015.
Currency markets and pasture conditions remain two key drivers for the Canadian cattle industry going forward. Current conditions certainly favor US feedlots and processors, who are able to outbid their Canadian counterparts.
The result could be further reduction in Canadian packing capacity and higher beef prices for Canadian consumers.
Canada also will likely import more beef from Australia and New Zealand and we could also see some Brazilian and Argentine fresh beef going there although their lack of country specific TRQ will limit overall volumes.
Pork/Hogs: The Canadian hog industry is slowly expanding even as the overall base (breeding herd) is now about 25 per cent smaller than what it was 10 years ago.
The total inventory of hogs and pigs as of July 1 was estimated at 13.225 million head, 1.1 per cent larger than a year ago.
The breeding herd was 1.226 million head, 0.8 per cent larger than last year and now back at the level it was in 2010.
The impact of PEDv in Canada was not as severe as in the US but it did have some effect. The number of pigs saved per litter has rebounded in the last six months and the pig crop at 14.079 million head was up 4.6 per cent compared to the same period last year.
Higher inventories in the US and Canada imply a notable improvement in North American pork supplies for the remainder of this year and in 2016.
The weak Canadian dollar has made Canadian pork more competitive in world markets and remains supportive of feeder pig exports to the US. YTD Canadian feeder imports are up 9 per cent.
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