Livestock and Products Semi-annual

An Expert's View about Animal Husbandry and Support Services in Canada

Posted on: 23 Mar 2012

Cattle exports will remain dependant on feed price differential and sustained demand.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 03/02/2012 GAIN Report Number: CA12009 Canada Livestock and Products Semi-annual Stabilization in the Beef Sector and Modest Growth in Pork Approved By: Robin Gray Prepared By: Mihai Lupescu Report Highlights: There are no significant changes forecasted, with the first signs of stabilization in place for the cattle sector and an expected modest growth in the hog sector. Cattle exports will remain dependant on feed price differential and sustained demand. Pork exports are estimated at a higher level, given an increased pork supply due to a larger than anticipated slaughter volume and heavier carcasses. Canada Livestock Semi-Annual ? March 2012 CATTLE NOTE: "NEW Post" data reflects Post's assessments and are NOT official USDA data. CANADA 2010 2011 2012 Animal Numbers USDA NEW Post USDA NEW Post USDA NEW Post CATTLE ('000 head) Official Data Data Official Data Estimates Official Data Estimates Total Cattle Beg. Stks 12,905 12,905 12,457 12,457 12,615 12,515 Dairy Cows Beg. Stocks 981 981 983 983 980 985 Beef Cows Beg. Stocks 4,391 4,391 4,273 4,273 4,280 4,228 Production (Calf Crop) 4,835 4,835 4,700 4,662 4,800 4,710 Total Imports 56 56 60 73 60 60 Total Supply 17,796 17,796 17,217 17,192 17,475 17,285 Total Exports 1,065 1,065 650 696 600 700 Cow Slaughter 605 605 510 535 500 500 Calf Slaughter 303 303 290 290 300 300 Other Slaughter 2,838 2,838 2,600 2,640 2,725 2,705 Total Slaughter 3,746 3,746 3,400 3,465 3,525 3,505 Loss 528 528 552 516 560 525 Ending Inventories 12,457 12,457 12,615 12,515 12,790 12,555 Total Distribution 17,796 17,796 17,217 17,192 17,475 17,285 Cattle inventories published by Statistics Canada reported a lower than anticipated total count, confirming, however, the earlier forecast of stabilization in the sector by showing an annual increase for the first time in seven years. Surprising were the numbers published for the inventory of beef cows, given that 2011 saw a reduced cow cull, reduced cow exports and an increase in heifer retention. Post reviewed the calf production downward by 90,000 head compared to the earlier USDA estimate. Cattle exports will continue to be influenced by the availability of cheaper feeds, with recent months pointing towards a reduction in the cost advantage Canada has experienced over the recent period. The big un-known in this equation, in addition to the evolution of grain prices, is the transition from an export monopoly in wheat and barley to a free market system, scheduled to occur this summer with the elimination of the Canadian Wheat Board. At the same time, a mild winter in the Canadian West saw many herds out on the pasture much earlier than in normal conditions, which would point towards reduced export incentives. Nevertheless, demand in the United States remains extremely strong given the scarce supplies, which ultimately prompted Post to review upwards by 100,000 head the total number of cattle exports. With fewer cattle available domestically, Post also revised downwards the total slaughter figure, by 20,000 head. Beef caw slaughter is anticipated to continue to slow down though, as farmers make plans for a cautious expansion. 2 | P a g e Canada Livestock Semi-Annual ? March 2012 BEEF NOTE: "NEW Post" data reflects Post's assessments and are NOT official USDA data. CANADA 2010 2011 2012 Meat USDA NEW Post USDA NEW Post USDA NEW Post BEEF and VEAL Official Data Data Official Data Estimates Official Data Estimates Slaughter (Reference) 3,746 3,746 3,400 3,465 3,525 3,505 Beginning Stocks 37 37 30 30 30 35 Production 1,272 1,272 1,155 1,170 1,200 1,200 Total Imports 243 243 275 282 270 280 Total Supply 1,552 1,552 1,460 1,482 1,500 1,515 Total Exports 523 523 415 426 450 460 Total Dom. Consumption 999 999 1,015 1,021 1,020 1,020 Ending Stocks 30 30 30 35 30 35 Total Distribution 1,552 1,552 1,460 1,482 1,500 1,515 All data in 1,000 metric tons, carcass weight equivalent, except slaughter in 1,000 head Despite lower slaughter numbers, beef production is not expected to decrease due to heavier carcasses. As demand for beef remains stable in the domestic market and sustained in export markets, finishers will deal with reduced animal supplies by adding more weight to each carcass. In a scarce market, both import and export numbers have been adjusted upwards to reflect the movement in various cuts, necessary to balance the market. The strong Canadian dollar will continue to fuel imports, while the demand on international markets will facilitate increased exports. CANADA: Total Beef Imports (Quantity in metric tons, CWE*) 1995 2000 2005 2008 2009 2010 2011 World 268,309 290,280 151,000 230,009 247,032 243,443 281,924 United States 146,221 128,553 60,360 171,226 163,796 175,237 220,434 New Zealand 60,192 29,602 42,265 30,866 42,146 31,576 34,351 Uruguay 157 34,493 27,144 6,832 16,803 15,734 8,492 Australia 56,038 55,268 11,395 13,173 16,955 11,794 13,608 Brazil 2,085 4,125 7,383 5,764 5,663 7,415 4,195 Argentina 3,439 38,168 2,315 2,061 1,603 1,625 824 All other countries 177 71 138 87 66 62 20 Import Market Shares United States 54.5% 44.3% 40.0% 74.4% 66.3% 72.0% 78.2% New Zealand 22.4% 10.2% 28.0% 13.4% 17.1% 13.0% 12.2% Uruguay 0.1% 11.9% 18.0% 3.0% 6.8% 6.5% 3.0% Australia 20.9% 19.0% 7.5% 5.7% 6.9% 4.8% 4.8% Brazil 0.8% 1.4% 4.9% 2.5% 2.3% 3.0% 1.5% Source: Global Trade Atlas / *Conversion to carcass weight equivalent (CWE) at 1.4 for fresh, chilled and frozen meat, and at 1.79 for salted and processed meat 3 | P a g e Canada Livestock Semi-Annual ? March 2012 CANADA: Total Beef Exports (Quantity in metric tons, CWE*) 1995 2000 2005 2008 2009 2010 2011 World 263,682 563,090 596,307 493,819 480,321 523,073 425,991 United States 248,232 469,043 515,797 402,459 389,564 414,678 329,934 Mexico 197 43,712 57,125 48,489 48,063 49,437 34,572 Hong Kong 116 919 13,035 10,048 12,663 21,125 29,103 Japan 8,871 22,155 7 6,905 11,313 17,932 13,153 Russia 84 0 0 513 1,084 5,859 5,507 Taiwan 743 2,335 0 1,907 3,926 3,239 1,497 All other countries 5,439 24,926 10,343 23,498 13,708 10,803 12,225 Export Market Shares United States 94.1% 83.3% 86.5% 81.5% 81.1% 79.3% 77.5% M exico 0.1% 7.8% 9.6% 9.8% 10.0% 9.5% 8.1% Hong Kong 0.0% 0.2% 2.2% 2.0% 2.6% 4.0% 6.8% Japan 3.4% 3.9% 0.0% 1.4% 2.4% 3.4% 3.1% Russia 0.0% 0.0% 0.0% 0.1% 0.2% 1.1% 1.3% Source: Global Trade Atlas / *Conversion to carcass weight equivalent at 1.4 HOGS NOTE: "NEW Post" data reflects Post's assessments and are NOT official USDA data. CANADA 2010 2011 2012 Animal Numbers USDA NEW Post USDA NEW Post USDA NEW Post SWINE ('000 head) Official Data Data Official Data Estimates Official Data Estimates Total Beginning Stocks 11,835 11,835 11,895 11,895 11,905 12,020 Sow Beginning Stocks 1,310 1,310 1,295 1,294 1,300 1,293 Production (Pig Crop) 28,498 28,509 28,240 28,638 28,450 28,800 Total Imports 3 3 3 3 2 2 Total Supply 40,336 40,347 40,138 40,536 40,357 40,822 Total Exports 5,761 5,761 5,730 5,821 5,740 5,800 Total Slaughter 21,285 21,296 21,120 21,269 21,290 21,300 Loss 1,395 1,395 1,383 1,426 1,400 1,400 Ending Inventories 11,895 11,895 11,905 12,020 11,927 12,322 Total Distribution 40,336 40,347 40,138 40,536 40,357 40,822 Data released by Statistics Canada showed a larger than anticipated total hog inventory, reconfirming our forecast of recovery and modest growth. Sow inventories are lower than expected, especially given a reduced sow slaughter in 2011. Based on indications of increased productivity and improved farrowing intentions for the first half of 2012, Post revised upwards pig production for the year by 350,000 head. Minor increases were brought to exports and total slaughter numbers. Producers remain cautious with respect to a quick expansion given the difficulties experienced over the past several years. A very moderate growth seems to be their best strategy for the moment. 4 | P a g e Canada Livestock Semi-Annual ? March 2012 PORK NOTE: "NEW Post" data reflects Post's assessments and are NOT official USDA data. CANADA 2010 2011 2012 Meat USDA NEW Post USDA NEW Post USDA NEW Post SWINE Official Data Data Official Data Estimates Official Data Estimates Slaughter (Reference) 21,285 21,296 21,120 21,269 21,290 21,300 Beginning Stocks 51 51 45 45 40 40 Production 1,772 1,772 1,753 1,770 1,765 1,775 Total Imports 183 183 195 204 190 190 Total Supply 2,006 2,006 1,993 2,019 1,995 2,005 Total Exports 1,159 1,159 1,160 1,197 1,160 1,175 Total Dom. Consumption 802 802 793 782 795 790 Ending Stocks 45 45 40 40 40 40 Total Distribution 2,006 2,006 1,993 2,019 1,995 2,005 All data in 1,000 metric tons, carcass weight equivalent, except slaughter in 1,000 head On modestly higher slaughter numbers and increased carcass weights, Post adjusted upwards by 10,000 metric tons the pork production volume. Imports are not expected to change, however, sustained international demand, flat domestic consumption and increased meat supplies prompted Post to review upwards by 15,000 metric tons the total export volumes. It will remain interesting to observe how the various export markets will evolve for Canada in 2012. While the overall volume is estimated to increase compared to the earlier USDA forecast, there are shifts to be expected among some of the principal markets. In the case of Korea, a free trade agreement with the United States will provide a tariff preference to American pork and may squeeze some of Canadian pork out of that market. At the same time, with changes in the import quota system, the Russian market will now see all exporters competing for one single quota volume. In addition, Brazil, which has been excluded from that market for lack of plant approval for most of 2011, will now be back among the principal exporters, as Brazilian packers are now gradually regaining their approval from Russian authorities. CANADA: Total Pork Imports (Quantity in metric tons, CWE*) 1995 2000 2005 2008 2009 2010 20101 World 31,119 67,759 139,445 193,976 179,850 183,331 203,983 United States 26,320 61,883 129,818 186,380 173,488 177,449 195,749 Chile 0 0 1,027 2,510 3,039 2,262 2,696 Denmark 4,443 4,809 6,814 3,008 1,347 1,332 2,668 All other countries 356 1,067 1,786 2,078 1,976 2,288 2,870 Import Market Shares United States 85% 91% 93% 96% 96% 97% 96% Chile 0% 0% 1% 1% 2% 1% 1% Denmark 14% 7% 5% 2% 1% 1% 1% Source: Global Trade Atlas / *Conversion to carcass weight equivalent at 1.3 5 | P a g e Canada Livestock Semi-Annual ? March 2012 CANADA: Total Pork Exports (Quantity in metric tons, CWE*) 1995 2000 2005 2008 2009 2010 2011 World 366,189 659,814 1,083,686 1,128,621 1,123,043 1,159,196 1,197,302 United States 257,416 420,854 477,899 362,890 382,969 395,559 364,714 Japan 51,434 125,661 304,063 262,298 259,273 259,966 255,689 Russia 8,819 8,110 25,499 142,790 63,281 99,563 167,245 Korea South 5,211 14,181 57,708 64,887 67,937 56,065 100,751 China 299 1,929 18,045 23,142 22,687 38,998 78,829 Philippines 311 4,714 10,105 32,358 45,312 48,634 40,467 Australia 3,973 13,496 44,304 45,959 61,651 50,595 36,575 Mexico 1,894 17,049 45,565 29,549 29,097 61,858 35,420 Taiwan 996 6,254 12,262 17,138 34,639 27,120 27,828 Hong Kong 4,717 5,947 4,015 58,837 46,636 31,439 13,925 New Zealand 2,813 10,836 8,688 9,979 12,832 10,861 11,473 All other countries 28,306 30,783 75,533 78,794 96,729 78,538 64,386 Export Market Shares United States 70.3% 63.8% 44.1% 32.2% 34.1% 34.1% 30.5% Japan 14.0% 19.0% 28.1% 23.2% 23.1% 22.4% 21.4% Russia 2.4% 1.2% 2.4% 12.7% 5.6% 8.6% 14.0% Mexico 0.5% 2.6% 4.2% 2.6% 2.6% 5.3% 3.0% Korea South 1.4% 2.1% 5.3% 5.7% 6.0% 4.8% 8.4% Australia 1.1% 2.0% 4.1% 4.1% 5.5% 4.4% 3.1% Source: Global Trade Atlas / *Conversion to carcass weight equivalent at 1.3 6 | P a g e
Posted: 23 March 2012

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