August 14, 2009

Canada's beef cow herd will shrink by 2010 to its smallest size in nine years as farmers cash out of an industry hurting from drought and recession, according to the Canadian Cattlemen's Association (CCA) on Wednesday (Aug 12).

Following the implementation of the Country-of-Origin Labelling (COOL) law in the US, exports of Canadian live cattle there have dropped while drought in Western Canada has made feeding cattle expensive.

The recession and high supply of cheap pork on the market has further kicked down beef prices this year.

Aggressive culling of the herd should prepare the industry for better prices next year, once global economic conditions improve and pork levels return to normal, said Andrea Brocklebank, research manager of Canfax, a division of the CCA.

She said fewer cows will support prices as a result of lower supply and higher demand.

Cattle prices are flat or slightly higher from a year ago, but they face pressure in the fall as money-losing feedlots pay less, Brocklebank said.

Prices should improve in 2010 as the industry feels the impact of a smaller herd, she said.

Cattle production is not expected to increase until late 2011 or 2012 at the earliest.

Cow numbers may fall faster than the two- to three-percent drop Canfax is forecasting by 2010, if winter feed is not readily available this autumn, she said.

Canfax would not give a projected size of the beef cow herd next year, but a 2.5-percent drop from January 1 would leave it around 4.5 million head.

The shrinking cattle herd will be offset by projected significant drops in exports of fed cattle and feeders, which will decline 23 percent and 48 percent respectively.