Beef export market volatility a key driver of cattle markets in the year ahead

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The Canadian cattle industry and the U.S. cattle industry are intertwined, perhaps unlike any other agriculture commodity in North America. Calves, cattle, and beef all move south — and north — depending on economics, demand, and the weather.

For this reason, what happens in the U.S. beef market has a major impact on the Canadian market too.

Don Close, chief research and analytics officer with Terrain, sat down with Shaun Haney at the National Cattleman’s Beef Association’s #CattleCon this week, to get some insight on global beef buyers, beef movement in certain markets, the quality question and niche markets, and the looming 10 per cent tariff on all imported goods, promised by Donald Trump on the campaign trail.

Close says that changing beef trade flows have had an impact on U.S. export volume, but that doesn’t spell doom and gloom for the sector. Trade volume of protein going to Mexico has been very strong he says, and there is still real momentum to Central and South America. While these aren’t the massive Chinese market — Australia and New Zealand have been leveraging their freight advantage there — they are still valuable. (More below)

Slightly lagging exports are one thing to watch, but so is the trend for the cattle herd. The Canadian cow herd is shrinking fast, and Close says that everyone is watching U.S. cattle inventory numbers. Much of the cow herd shrinking is due to falling heifer retention.

“We’ll continue to watch just what weather conditions are by region, and what that will enable us to stabilize and even start to look at rebuilding some female numbers. The January cattle on feed report had heifers on feed as the fourth largest we’ve had under the current cattle on feed series. So I think that by itself tells a very compelling story that we’re not retaining heifers as of yet, because we couldn’t have that many on feed,” he says.

While Close sees strong numbers for cattle producers in the year ahead, the high interest rate environment, volatile export markets, and continued drought all create risk that producers will have to try and manage.

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