WHILE Canada's cattle and hog inventories have fallen dramatically over the past decade, the latest data from the country's chief statistical agency points to a possible leveling out.
In its July 1 livestock inventory released last week, Statistics Canada reported a 0.1% increase in the Canadian cattle inventory and a 0.6% increase in the hog inventory.
"The Canadian livestock industry has undergone a significant transformation in the past decade, impacted by a sharp rise in feed costs and a steep increase in the value of the Canadian currency," economists Steve Meyer and Len Steiner wrote in the "Daily Livestock Report." "This is important as Canada is a significant supplier of feeder pigs to the U.S. market, and imports of feeder cattle and slaughter cows make up a notable portion of the beef supply in some areas of the U.S."
Statistics Canada reported a July cattle inventory of 13.54 million head, slightly larger than last year but 19.8% smaller than the peak inventory reported in 2005. The small uptick marked the first year-over-year increase since 2005, in fact, and followed seven years of declining inventories.
Meyer and Steiner noted that heifer retention increased in both 2011 and 2012 but were too small to offset increases in overall cow slaughter and larger numbers of beef cows going into the U.S. The beef cow inventory as of July 1 was pegged at 3.939 million head, 27.5% below its 2005 peak (Figure 1).
The number of beef cows on Canadian farms has been declining since 2006 and was down 0.3% year over year as of July 1. Beef heifer retention did increase slightly, up 0.7% (dairy cow numbers were up 0.1%).
What's interesting, however, is that the cow inventory has held relatively steady since 2011, at least compared to the half-decade of declines seen up to that point. While a bottom may be forming, calf supplies will remain tight for the foreseeable future.
"The combined U.S. and Canadian calf crop — using Livestock Marketing Information Center estimates — would come in at around 38 million head, about 800,000 head, or 2%, lower than a year ago," Meyer and Steiner wrote. "The contraction in cattle supplies becomes even more acute when considering the liquidation in the beef cow herd in Mexico as drought devastated producers there during 2011 and 2012."
One source recently described the situation as a "North American problem," given the interconnectedness of the livestock markets among the three major trading partners.
Canadian cattle slaughter fell 9.5% to 1.5 million head in the first half of the year. While cattle and calf exports were up 41.5% during the first six months of the year, they remain 36.4% off their 2008 peak.
Looking at hog inventories, the Statistics Canada report shows that sow and gilt numbers remained steady, at 1.216 million head. As with the cow inventory, the breeding herd is significantly smaller than it was in 2005, down 25.5% (Figure 2).
Domestic hog slaughter fell 1.2% for the first half of the year, tallying fewer than 10.4 million head. Canada exported 2.6 million hogs in the first half of 2013, down 9.2% from 2012 and 48% below the record set in 2008.
Meanwhile, farrowing intentions for the second half fell 2.1%, meaning fewer hogs coming to market next year, which will likely extend the trend for another year.