CME: Drop in Canadian Breeding Herd

US - According to Steve Meyer and Len Steiner, Cooperatives Working Together (CWT), the cooperative of dairy cooperatives that has run the series of dairy herd retirement programs over the past few years, announced today that its latest round of buyouts will remove 26,412 dairy cows from production, reducing milk supplies by just over 517 million pounds per year.
calendar icon 29 October 2009
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The round will also remove nearly 500 bred heaifers. Bids were accepted from 154 farms in 33 states. CWT auditors will hit the countryside next week verifying that farms meet the conditions of the program and tagging cows to go to market. The cows will begin moving soon afterward and all bidders will be notified by November 16 as to whether their bids were among those accepted.

This is the fourth CWT buyout in the past 12 months. CWT officials claim that the program has removed five billion pounds of annual milk production. CWT officials said in a press release that they are “pleased that participation ... has brought us to our goal of aligining supply with demand,” apparently indicating that they expected this level of participation. Some observers say that the number of cow retired was less than was expected. Dairy cow slaughter has exceeded year-ago levels by 12 per cent so far in 2009. The slaughter surge associated with the three previous 2009 buyout rounds can be clearly seen in the following chart.

This flow of dairy cows has very likely supplanted some beef cow slaughter and, when combined with excellent range and pasture conditions in much of the US, has slowed the reduction of the US beef herd. Beef cow slaughter has been lower then year-ago levels since late February and now stands 9.4 per cent lower YTD.

Statistics Canada reported today in its October Hog Statistics report that the Canadian breeding herd on 1 October numbered 1.353 million head, 4.5 per cent lower than one year ago. The reduction leaves the combined US-Canadian breeding herd at 7.227 million head, 3.4 per cent lower than one year ago. The fall breeding herd (the US herd is measured on 1 September) last year was 3.5 per cent lower than that in the fall of 2007 when the two countries’ combined breeding herd reached its peak of 7.741 million head. Some observers believe that the combined breeding herd must get 10 to 12 per cent below that level before the pork sector will return to profits. The cut from the fall of ‘07 now stands at 6.8 per cent.

Canada’s producers had 10.467 million “other pigs” (ie. market pigs) on farms on October 1. That number is 7.6 per cent lower than last year. The inventory of pigs weighing less than 20 kg (44 lbs.) has led these market hog declines for much of the past 5 years. Not so in 2009 as Canada’s exports of weaner/feeder pigs are down 26 per cent YTD as of October 4, leaving relatively more of these small pigs in Canada’s market herd. The number of farms with hog operations fell from 8,500 to 7,700 since last October.

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