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Agricultural News

Derrell Peel Offers a Look Ahead at US and Canadian Beef Cattle Trade for 2016

Mon, 15 Feb 2016 15:34:18 CST

Derrell Peel Offers a Look Ahead at US and Canadian Beef Cattle Trade for 2016 Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel looks at cattle trade between the United States and our neighbor to the north, Canada.

"With the final 2015 trade data in hand, it is possible to look back and summarize 2015 North American cattle trade. Limited cattle inventories, market conditions and exchange rates all played a part in 2015 cattle trade between the U.S. and Canada and suggest what might be expected in 2016.

"Total imports of Canadian cattle were down 33.2 percent year over year in 2015 with decreases across the board for all cattle types. This follows three years of year over year increases in imports of Canadian cattle with the 2015 total dropping back near the 2012 level. This reflects small Canadian cattle inventories that have not yet begun to rebuild. Total fed steer and heifer imports were down 42.3 percent, with fed steers down 40.6 percent and fed heifers down 44.6 percent. Average Canadian feedlot placements in 2015 reached the lowest levels in data going back to 2000. Though year over year feedlot placements in Canada have increased the past three months, it is likely that feedlot production in Canada will remain low as there is no indication that cattle inventories have increased yet in Canada. Herd rebuilding may begin in 2016 but dry conditions remain in western Canada (though less severe compared to several months ago) and may limit herd expansion in 2016 as it did in 2015.

"Imports of Canadian feeder cattle dropped sharply year over year after spiking up in 2014. Imports of feeder steers were down 7.9 percent from 2014 levels while feeder heifers were down 41.6 percent from the previous year. The drop in feeder heifer imports could imply heifer retention in Canada but the 2015 level of heifer imports is actually close to the average of recent years and is down only relative to the sharp jump in feeder heifers imported from Canada in 2014. Imports of Canadian cull cows were down 25.9 percent year over year, with imports of cull bulls down a similar amount. As with feeder cattle, the decrease in imports of Canadian cows and bulls could be indicative of herd rebuilding in Canada but actually represent a return to more typical levels after sharply higher imports of cows and bulls the previous two years.

"Smaller imports of Canadian cattle in 2015 occurred despite strong U.S. cattle prices through most of the year and the continued erosion of the Canadian dollar to the U.S. dollar, which makes exporting cattle to the U.S. even more attractive. This is an indication of the tightness of Canadian cattle supplies and suggests that cattle imports from Canada will continue at reduced levels, though 2016 imports may be closer to already reduced 2015 levels. The sharp adjustment down in U.S. cattle prices in 2016, compared to most of 2015, will additionally limit incentives for cattle movement from Canada into the U.S. A very limited attempt at herd expansion in Canada in 2013 has been followed by more erosion of cattle inventories in 2014 and 2015. Should herd expansion begin significantly in 2016, supplies of feeder heifers and cull cows would likely be further squeezed. In any event, imports of Canadian cattle are likely to remain near or below 2015 levels in 2016 and below the average of recent years."



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