June 30, 2008


Lower feed costs in Canada to mean fewer feeder cattle imports for US


Lower feed costs in Canada now makes it likely that fewer feeder cattle would be shipped to the US, a market analyst said.


Troy Vetterkind, director of livestock analysis and trading at Vetterkind Cattle Brokerage, said feed barley prices in Canada have declined over the last couple of weeks and cost of weight gain is slightly less in Canada than in the US


Vetterkind referred to calculations from a cattle feeder in Canada who said the cost of gain at his feedyard is roughly 93 to 95 cents a pound, compared to a cost of gain in the US of US$1 to US$1.05 and moving higher with rising corn costs.


Relative costs at other feedlots could be different depending on corn or barley positions.


Up until the decline in barley prices the situation had been just the opposite and despite US$7 corn, it was cheaper to feed cattle in the US than in Canada.


Lower US feed costs had prompted cattle imports from Canada to rise to record levels for the year, and the number of fed cattle destined for immediate slaughter in Canada had declined.


In its latest report, the USDA reported that through June 19, the US had imported 340,909 feeder steers and heifers, up from 198,281 in the same period a year earlier.


Jim Robb, agricultural economist for the Livestock Marketing Information Centre offered another reason for the recent rise in imports of Canadian feeder cattle. If cattle are in the US by July 15, the beef does not have to be labeled as of Canadian origin under the US's soon-to-be implemented Country Of Origin Labeling rules.


Vetterkind said that some may see the US stamp as an advantage, thus prompting more imports before the deadline.


Robb said he expected imports to remain "above trend" for the time being. Imports could decline after July 15, but the cost of gain likely will be an unsettling issue until after the barley harvest is complete. The harvest runs from late August to the end of September.


Meanwhile, in the US, imports of slaughter-ready animals are down as Canadian farmers are feeding fewer on their own. May placements of cattle into feedlots, for instance, were down 7 percent from a year earlier, he said.


Mad cow disease has limited Canadian export options. However, the US can continue to import Canadian cattle as these supplies could be diverted to the domestic market, thus freeing up more US beef to be exported to overseas market more stringent on mad cow disease rules, he said.


For the time being however, Robb said the high costs and lack of markets in Canada are pushing ranchers there to liquidate herds. Herds are being reduced in the US as well, but Canadian producers are more aggressive than their US counterparts, he said.

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