Canada, BSE and Cattle Inventory — Market Impact Minimal

During the Cattle Industry Summer Conference held July 26-30, the status of live cattle trade with Canada continued to be a major topic of discussion. The opening of the Canadian border creates some anxiety in the psychology of the U.S. cattle market, however, the real impact of reopening the border to live cattle should be very limited, according to Randy Blach, Cattle-Fax general manager.

“The important factor to remember is that the United States has been importing record-large amounts of Canadian boxed beef since March, so the border opening to live cattle is not as significant as some reports would have you believe,” Blach said.

Imports of Canadian boxed beef were already expected to be nearly 30 percent larger in 2005 than in 2004, so the net impact of lifting the live cattle ban should be minimal.

On a related issue, USDA announced on July 27 a nondefinitive BSE test result. But final test results indicated the cow did not have BSE.

“The market didn’t really show much impact from USDA’s original announcement,” Blach said.
Another topic of discussion was the rising U.S. cattle inventory. Total U.S. cattle inventory has increased by about one percent, or 900,000 head, compared to a year ago. This marks the first year-over-year increase since the cattle cycle peak of 1996.

Mike Miller of Cattle-Fax says it is very important to look at the specific components of the inventory increase. Beef replacement heifers grew by four percent compared to last year, with dairy replacement heifers also increasing slightly. So the fact that total inventory has increased will not necessarily translate into a corresponding increase in cattle for slaughter.

“The current trends in the female populations suggest that beef herd expansion is in full swing,” Miller said. “These trends are supported by smaller heifer feedlot placements, and by cow and heifer slaughter that remain well below last year’s levels.” ©