November 20, 2007

 

Cattle analysts see little US maket effect from Canadian cows 
 

 

US Department of Agriculture officials said Monday (November 19, 2007) they are proceeding with the opening of the border to Canadian cattle over 30 months of age, but market analysts say they expect little effect on US cattle markets.

 

No order has been filed with the clerk's office of the US District Court in Aberdeen, S.D., regarding R-CALF United Stockgrowers of America's Friday request for a temporary restraining order to prevent the older cattle from entering the US, a spokeswoman at the clerk's office said Monday.

 

She said the motion still could be granted or denied.

 

R-CALF filed for the restraining order late Friday afternoon because the USDA was set to implement on Monday its final rule on countries that are rated by the World Animal Health Organization as being "controlled risk" countries for bovine spongiform encephalopathy, or mad-cow disease. So far, Canada, is the only country in this category approved by the USDA to export older cattle to the US

 

Don Close, independent market analyst and trader, said it is conceivable that the presence of dairy and breeding cattle that were born and raised in Canada could be a problem politically as the US tries to reopen markets for US beef. But he has seen no evidence that this is happening yet.

 

The US lost virtually all of its beef export markets within days in December 2003 when BSE was detected in a Canadian-born dairy cow in Washingtonne state. Analysts estimate the US has since regained about 60 percent of those markets after extensive testing of the most at-risk cattle for BSE turned up only two more atypical BSE cases in the country.

 

The most noted holdouts for completely open markets are Japan and South Korea. Both are implementing significant restrictions on age or bone tolerances that make it difficult or impossible for the US to return to its previous position in the countries' beef markets.

 

Eventually, Pacific Rim countries will have to be more open-minded and accepting of World Animal Health Organization standards for trade, Close said.

 

But the operative word is "eventually," he said, as there's no way of telling how long that will be.

 

Richard Nelson, livestock market analyst at Allendale Inc., said US requirements for age and source verification make it unlikely the US will import very many cattle over 30 months of age, which is the age at which veterinary experts feel BSE has the best chance of being expressed. The process is exacting and could deter import desires, he said.

 

Both analysts thought implementing this rule two years ago could have brought in large numbers of older cull cows for slaughter in the US because the industry there was behind on its slaughter needs. They got behind when the US cut off all imports when BSE was discovered in May 20003.

 

However, in the last two years, the US has been able to import cattle that are younger than 30 months of age either for immediate slaughter or for feeding at one feedlot and then directly to slaughter. This has allowed the industry there to ship feeder and slaughter cattle to the US, and free up slaughter space in Canada so the industry could get caught up, they said.

 

Feeder cattle exports to the US from Canada during that time have grown more active with the weakening US dollar and the removal of grain transportation subsidies in Canada, market analysts said. In many cases, the feeder cattle being sent to the US are not sold by their Canadian owners until they are sold for slaughter.

 

Close said the amount of fed beef the US exports back to Canada is close to a wash with the younger cattle coming in anyway. So there might not be much of an effect from older cull cattle coming in for slaughter, he said.

 

Nelson said since 2003, the US has closed some cow-slaughter facilities that mean cows would have to be transported for longer distances for slaughter. With cull cows in Ontario being worth $32 per hundredweight in US dollars and cull cows in the US being worth $50 to $53, it might be worth calculating to see if the shipping costs can be overcome, but it'll be another year or two before plant owners will decide whether to expand cow kill capacity in the US, he said.