CME: Canadian Global Pork Exports Forecast to Continue Growing

US - Livestock, meat, and byproduct (tallow, hide, etc.) markets are highly linked across North America (US, Canada, and Mexico). Today, we highlight recent data and reports regarding Canada and Mexico, writes Steiner Consulting Group, DLR Division, Inc.
calendar icon 22 September 2017
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We begin with an overview of the monthly Canadian cattle on feed data which are collected and published by CanFax (see their website here). Then we glean some points from the recently released livestock sector reports on Canada and Mexico by USDA’s Foreign Agriculture Service (FAS), called GAIN reports.

GAIN reports are developed by specialists at US embassies. The new Canadian report is available here, and the one on Mexico is here. Those reports cover both the cattle/beef and hog/pork sectors.

The Canadian Cattle on Feed survey includes feedlots in two provinces, Alberta and Saskatchewan (see graphic). As of 1 September, the on-feed count was up 5.3 per cent (30,500 head) year-over-year and was similar to the prior 5-year average (2011-15). Both animals marketed by feedlots and placed on-feed have been above a year ago for several consecutive months.

In recent months, declining feeder animal exports to the US have increased supplies available in western Canada. Further, drought bolstered placements of animals during August as yearling animals came off grasslands earlier than normal.

Per the FAS report on Canada, cattle numbers had been expected to increase some in 2017. However, those projections have been revised downward based on the 1 July (mid-year) inventory data. Further, the FAS suggests little if any cattle herd expansion in 2018. In contrast, the Canadian swine sector is forecast to continue growing throughout 2018.

Canadian beef production in 2018 is forecast to increase slightly (up 0.4 per cent) following a projected 2.2 per cent rise in 2017. For pork, both increases in slaughter levels and carcass weights are forecast, resulting in tonnage produced in 2017 up 2.5 per cent year-over-year. In 2018, pork output is expected to continue to uptick (rising 2.0 per cent from 2017’s).

Mexico’s livestock sectors are steadily growing. The 2017 calf crop increased about 300,000 head (4.2 per cent) year-over-year. Next years (2018’s) calf crop is forecast at 7.5 million head (up 1.4 per cent from 2017’s).

Production may increase more than the calf crop in percentage terms, because more cattle are in feedlots and also are being slaughtered at heavier weights than previously, as they are on-feed for more time.

Turing to the trade picture, FAS reported that Canadian cattle exports to the US in 2017 would be the smallest in five years, bumper crops and low feedstuff costs kept feeder animals in Canada. But, live cattle exports are expected to be higher in 2018.

Exports of hogs and pigs to the US should post year-over-year gains driven by new US slaughter plants.

Canadian pork exports worldwide are forecast to continue growing. To meet Mexican domestic pork needs, imported tonnage from the US is forecast to continue higher (see graph through 2016).

Beef purchases from the US by Mexico are expected to post year-over-year gains in 2018, driven by their higher income consumers.

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