December 10, 2010

 

US beef supply wanes on delayed Canadian shipments

 

 

US livestock market analysts see a shortage of grinding beef in that country's future, due in part to significantly slower southbound shipments of Canadian slaughter cattle.

 

Analysts noted on Wednesday (Dec 8) that Canadian slaughter cow imports to the US in the last six reported weeks were 22,634 head, down 24% from the year-earlier period.

 

Shipments of Canadian slaughter cows in January and February 2010 were very strong, which helped offset the shortage of imported beef at that time, analysts said.

 

"If current trends continue, imported beef will continue to be very tight in the first quarter of 2011, and slaughter cow supplies, both US and Canadian, will likely be more limited," they said.

 

Such a notable reduction in southbound Canadian slaughter cows "is important as we see a developing shortage of grinding beef in the US due to very light shipments from Australia and New Zealand," the analysts said.

 

The USDA has also pegged imports of Canadian feeder cattle from October 11 to November 20 at 9,111 head, down about 46% from the year-earlier period and 82% below the 2008 level, the report's authors wrote.

 

"Canadian feeder cattle supplies are quite tight and given the strong currency and good demand from domestic feedlots, there is very little incentive to ship feeders into the US market," analysts said.

 

Generally, they noted, cattle and hog imports from Canada "have trended lower in recent years as a combination of a strong Canadian currency, declining livestock inventories and changes in US rules for handling imported livestock have negatively impacted trade flows."

 

The latter is a reference to mandatory US country-of-origin labelling (COOL), which requires US retailers to notify their customers through labelling of the sources of imported foods such as beef, pork, lamb, goat, fish, fruits, and vegetables.

 

Canadian livestock groups say the law, launched in 2008, has forced unnecessary costs on US meat processors, who now must either segregate Canadian animals and meat for labelling purposes, or curb their imports from Canada.

 

Oral hearings wrapped up last week on a challenge of US COOL from Canada and Mexico at the World Trade Organization.

 

Shipments south of Canadian feeder pigs also drifted lower in 2009 and so far in 2010, according to the CME report. In the same October 11-November 20 period, imports of Canadian feeder pigs were pegged at 516,667 head, down 4% from the year-earlier period and 26% beneath the 2008 level.