October 27, 2003



Farm Prices for Canadian Beef Sustained Due To U.S. Demand


Strong demand for the limited types of beef Canada is allowed to export to the United States has buoyed prices and spirits in an industry devastated by a single case of mad cow disease, Neil Jahnke, president of the Canadian Cattlemen's Association said on Friday.


Exports of boneless beef from young cattle are now moving at the same pace as last year, and live cattle prices have rebounded to near break-even levels, Jahnke told Reuters.


"We don't know how long this is going to last, but at this time, as of the last few days, it does my heart good," he added.


Beef prices plunged on May 20 when Canada announced it had found a case of mad cow disease in Alberta. The United States and other importers stopped trade, leaving the Canadian industry, which normally exports 60 percent of its beef and cattle, swimming in livestock.


But the United States opened up some trade in early September after a rigorous search failed to turn up any more cases, and Canada changed some slaughter practices to take out brains, spines and other materials that could possibly harbor the brain-wasting disease.


Between then and Thursday, U.S. buyers bought 85.798 million pounds (38,609 tonnes) of Canadian beef from animals considered too young to develop the disease.


"There was light at the end of the tunnel when the market opened to boxed beef, and I think the light is getting a little brighter each week," Jahnke said.


Mexican buyers have bought 2.977 million pounds of Canadian beef since October, federal statistics show.


U.S. cattle prices have rose to record heights since May as packers lost the ability to import Canadian cattle, and found increased demand from former export customers of Canada.


Last week, fat cattle prices in Nebraska touched C$1.56 ($1.20) per pound.


In Alberta on Wednesday, prices for fat cattle reached 97 Canadian cents (74 cents) per pound, Jahnke said, up about 25 percent from the previous week, but still below levels around C$1.05 seen before the trade bans started.


Prices for feeder cattle reflected those gains, said Jahnke, who owns a ranch in Saskatchewan.


"We're certainly not going to make any money, but they won't lose their farms," said Jahnke, noting farmers are still wondering what to do with valueless older cull cattle.


Most feedlots can break even at prices of C$1.00 per pound, but values are not likely to rise until the United States opens trade to young, live cattle, said Ron Axelson, general manager of the Alberta Cattle Feeders' Association.


That is unlikely to happen until the first quarter of the new year, Canadian industry leaders have said.


In the meantime, feedlots have started taking "collective action" to monitor supply and demand, and market accordingly, helping boost prices, Axelson said.


"We've been able to put a tourniquet on the bleeding wound, but we haven't fixed the wound yet," Axelson said, noting feedlots had been losing up to $500 per animal sold before prices gained.


Axelson warned a backlog of cattle still remains on ranches, where a warm fall has helped farmers hold off on selling them to feedlots until November and December.


"We're walking on a real tightrope right now," Axelson said.
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