click image to zoom Part of the annual balance sheets for cattle and hogs, basically an accounting of the expected supply and use for livestock, is the number of animals that flow in/out via trade. Almost exclusively this trade involves our neighbors to the north and south. In the case of cattle, Mexico is by far our largest trading partner, accounting for about 68% of the live cattle coming into the US. Almost all US hog imports, on the other hand, come from Canada. Most of them come in the form of feeder pigs but there is a small number of slaughter hogs that are shipped to US slaughter facilities as well. So where do we stand with regards to livestock imports and how will this impact US supplies for the balance of the year? Let’s look at them separately:
Cattle: US imports of feeder cattle from Mexico have been firm through early September. Tight feed supplies, weaker Mexico domestic demand, a weaker peso and high prices in the US market all have combined to push more Mexican feeder cattle to the US market. This appears to be a continuation of the trend that started in 2008. Back then, Mexican feeder shipments to the US were around 700,000 head. This year, we expect feeder imports from Mexico to be near 1.6 million head, some 13% higher than a year ago and about 125% higher than what they were five years ago. The increase in Mexican feeder imports has bolstered the US domestic cattle supply, particularly in the Southern US where most of these animals are finished. The increase in feeder cattle supplies from Mexico has offset the dramatic reduction in feeder cattle imports from Canada. Canadian producers aggressively liquidated their beef cow herd in the mid 2000, which resulted in a smaller calf crop in the following years. More recently, Canadian producers appear to be intent on stabilizing and in some cases rebuilding their inventory. This has meant a sharp reduction in cow slaughter and higher rates of heifer retention. We currently estimate feeder cattle imports from Canada in 2012 will be around 110-115,000 head, compared to half a million or so that were imported in 2007 and 2008. We expect total Canadian cattle imports to the US, which includes slaughter fed cattle and slaughter cows, to total around 680,000 head in 2012. Combined Mexican cattle imports (1.6 MM) and Canadian imports (0.68 MM) should add about 2.280 million head of cattle to the annual US cattle balance sheet, an 8% increase from 2011 levels.
Hogs: Canadian hogs used to account for a much larger share of the US hog slaughter in previous years. But as Canadian producers removed about a quarter of their breeding stock between 2008 and 2011, Canadian swine going into US operations have been reduced by more than 40%. In 2007, the US imported about 10 million swine while last year, swine imports were down to 5.8 million head. The chart above puts this reduction in the context of US weekly hog slaughter. In the last two years, Canadian hogs (both feeder pigs finished in the US and slaughter hogs) have accounted for anywhere between 100,000 to 120,000 hogs coming to slaughter each week. For the year, imports of live hogs will likely be around 5.8 million head, close to year ago levels. A strong Canadian dollar, high feed costs and weak hog prices in the US will likely limit swine imports in 2013 as well.