September 4, 2020

US and Canada's cattle slaughter see recovery even as backlogs remain

COVID-19 disruptions have created backlogs for US and Canadian cattle slaughter sector even as these sectors appear to regaining back momentum, according to the United Kingdom's Agriculture and Horticulture Development Board (AHDB).

The weekly cattle slaughter capacity in the US has mostly returned to pre-pandemic levels, said Hannah Clarke, AHDB's livestock analyst, referring to industry reports.

"Data from the USDA shows that weekly beef production in the US seems to have recovered quickly from the lows seen in May, and is now running at around 2% above last year's levels. Production has been bolstered by heavier carcase weights, as those cattle that were waiting on feed due to processing capacity issues are now coming forwards. Cattle slaughter for the year to the end of August was down nearly 5% year-on-year at 21 million head," she added.

US wholesale prices are back to normal levels as the weekly comprehensive boxed beef cut-out price returns to around US$210/cwt (£2.80/kg) in the week ending 31 August.

"Weekly farmgate steer prices rebounded in June but fell again in July to below US$100/cwt. They have since risen to be in-line with last year's price; however, this is below the five-year average. Reports suggest that uncertainty over demand during the autumn is weighing on futures," Clarke said.

Turning to the Canadian sector, she highlighted the strong recovery of slaughter, "but there remains a backlog of cattle to clear."

Clarke added: "According to Statistics Canada, total cattle slaughter for the first six months of 2020 was back 9% on the same period in 2020.

"As with the US, the recovery of slaughter capacity has supported cattle prices, but prices still face pressure from lower foodservice demand and the plentiful supplies of cattle in the system."

For the first six months of 2020, US beef exports (including offal) dropped 9% from last year at 564,900 tonnes.

"Shipments have been struggling particularly during May-June, reflecting coronavirus-induced disruption of meat production, foodservice, and the economies of major importers," Clarke said. "During the period, volumes fell to most key markets, but were higher year-on-year to Canada, China and South Africa. Industry reports suggest that a cheapening of the US dollar will have provided some support to exports."

As for Canada, its beef exports (including offal) fell 13% during January to June year-on-year at 188,800 tonnes, "mainly due to lower trade into the US and China," Clarke said.

She added: "Exports of live cattle and calves into the US were also down 10% during the period, due in part to coronavirus disruption at US plants, causing backlogs and reducing demand for Canadian imports. Exports of beef recovered somewhat in June, helped by increased shipments to the US, however volumes were still down in relation to last year."

- AHDB