August 23, 2012

Canada's cattle decline slows to lowest over year reduction

Canada's cattle and calf herd's decline slows to its lowest over-year reduction in seven years as rising grain prices affect the profitability of ranchers.

Farmers had 13.5 million cattle and calves on their farms as of July 1, the fewest since 1994, and down 0.1% from a year earlier. The rate of decline is the smallest since 2005, when the country's herd last grew.

Cattle inventories were temporarily bloated after ranchers' selling options dwindled as a result of the discovery of BSE on a Canadian farm in 2003.

High grain prices, peaking in 2008, made feeding cattle more costly, and many ranchers responded by selling off their herds -- until recently, when stronger cattle prices offered some relief.

However, corn and wheat prices have soared again this year after devastating droughts shrivelled corn crops in the US Midwest and wheat production in the Black Sea region.

"If feed prices start climbing up again, there will be pressure on the producers," said Bishnu Saha, unit head of livestock estimations for Statistics Canada, the country's national statistical agency.

Canadian hog inventories rose 1.5% over year by July 1 to 12.9 million hogs, the second straight increase after five years of declines.