September 28, 2012

Canadian farmers aim to rebuild cow breeding inventory

After several years of herd liquidation, Canadian farmers are now aiming to rebuild their breeding inventory, causing domestic cow meat supplies to decline significantly in recent weeks.

Canadian cow-calf producers typically sell empty females coming into the winter months to reduce the costly and labour intensive exercise of winter feeding.

For the week ending September 8, cow slaughter in Canada was back 36% on-year, totalling 6,084 head (Steiner Canada Meat Market Report). Underpinning the sharp contraction in numbers has been the desire to retain females - assisted by improved pasture conditions, strong forward cattle prices and the expectation for very strong North American cattle prices in 2013 and 2014.

Consequentially, very tight supplies of grinding beef in Canada are expected to increase the demand for imported beef. After three consecutive quarters of lower on-year imports (issued between Australia, New Zealand and Uruguay), Canada is now favouring imported grinding beef, as it offers significant advantage over domestic product. Interestingly, Canadian beef imports from Australia so far in 2012 have reached 5,141 tonnes swt - 113% higher on-year.

Grinding beef imports from New Zealand, on the other hand, are down 39% on-year, with New Zealand packers reportedly servicing more customers in the US market.