March 8, 2010

Canada's cattle, hog herds to continue decline

Canada's cattle and swine herds are forecast to continue on a downward trend with the ongoing increased strength of the Canadian dollar dampening export potential, according to a USDA attache report.

Estimates contained in attache reports are not official USDA data. Below is an abstract of the attache report.

The Canadian beef cattle herd dropped to 11 million head, down 1.4% and the lowest in 15 years as of January 2010. Current indications are that a moderate expansion may begin in 2011 or 2012.

Canada's cattle exports totalled 1.067 million head in 2009, down 33% from the 1.6 million head exported in 2008. The forecast for 2010 is 1.15 million head, up slightly reflecting tightened supply in the US as well as some stability, if not softening, in the value of the Canadian dollar. Total 2009 beef imports, up 7% to 247, 032 million tonnes, did reflect the recessionary demand for an increase in lower priced cuts from New Zealand, Australia and Uruguay and increased buying power of the stronger Canadian dollar. Some rebound in the economy is expected to spur increased beef imports to 290,000 million tonnes in 2010.

Canadian beef exports fell 3% in 2009 to 480,294 million tonnes due to drop in shipments to the US. Although world demand is still recovering and fluctuations in the value of the Canadian dollar are negative strains on exports, overall exports are expected to expand to 490,000 tonnes in 2010. As of January 2010, the swine herd is pegged at 11.6 million head, the lowest in 12 years and down 4.5% from the year before. A further decline to about 12.7 million head is forecast by the end of 2010.

Exports of hogs totalled almost 6.4 million head in 2009, down 32% from 2008. The largest decline was in slaughter animals, totalling 1.1 million head compared to 2.3 million head in 2008. Due to the continued strong Canadian dollar the forecast for 2010 is 6.0 million head.

After totalling 1.12 million tonnes in 2009, pork export is forecast up slightly to 1.13 million tonnes reflecting the reopening of the Chinese market as well as overall expectations that world wide pork consumption will trend upward as recessionary pressures soften and consumers look for lower priced meats.

Details of the CAD75 million (US$73 million) Hog Farm Transition Programme (HFTP) were announced in December 2009 with the first three (of four) tranches resulting in a total reduction of 671,250 head of which 105,358 are sows. The aim of the programme is to reduce the herd by the equivalent of 250,000 sows. The highest proportional reductions are in the small producing provinces of British Columbia and the Atlantic region. The largest reduction, Ontario, represents about 3.6% of the provinces total 2009 production. The last tranche is in March 2010. These payments require vacating production facilities for three years.