March 29 2004

1.35 Million Cattle Backlog In Canada Since Start Of US Ban

No cattle have crossed the border from Canada into the U.S. since a ban was imposed on May 20, 2003 due to a case of bovine spongiform encephalopathy, or mad-cow disease, was discovered there, and that resulted in some 1.35 million head of cattle and calves being backlogged in Canada that otherwise would have come to the U.S.
 
Based on U.S. Department of Agriculture weekly livestock import reports, the U.S. imported approximately 486,850 head of cattle and calves from Canada last year, all of them coming in prior to the May 20 ban. That figure was down 1.076 million head, or nearly 69%, from the previous year.
 
As of the second week of March a year ago, the U.S. had imported 274,000 head and since the ban is still in place, that means a total of approximately 1.35 million head are still in Canada that otherwise likely would have been shipped into the U.S. either for placement into feedlots for finishing or going directly to beef packing plants in the case of fed steers and heifers or slaughter cows and bulls.
 
Bob Wilson, analyst with Hedgersedge.com/RJ O'Brien, said that in a recent report, members of his firm estimated that there are about 790,000 head of feeder cattle in Canada that are being held outside of feedyards that are available to be shipped to the U.S. That doesn't mean that all of them would be shipped should the border be opened - some would but probably not all of them, he said.
 
While under normal circumstances these animals would be shipped over a full year's time, Wilson said it is likely they would move across in about eight months instead, or at a rate of up to 38,170 per month.
 
However, there are still many issues yet to be resolved between the U.S. and Canadian governments along with input from the Japanese to suggest the border to be opened anytime soon, industry sources said. Some say it could happen within possibly two months on a select basis, likely only to cattle that are 30-months or less in age. But others see a longer period as Japan continues to demand that 100% of the cattle slaughtered be tested for BSE.
 
The balance, or difference between the 790,000 head of feeders outside of feedlots and the 1.350 million estimated total head backed up since May 20, 2003, would consist of some fed cattle and older cows and bulls.