Canadian cattle herds trending lower since July 2005 are starting to turnaround as beef demand in other countries is motivating Canadian cattle producers to retain heifers and add numbers.

Export demand prompts rebuilding Canadian cattle herdHigh feed costs, changing weather patterns and international markets going cold on Canadian beef forced Canadian cattle producers to exit the business from 2006 to 2011, after the industry peaked in July 2005. Now high beef prices and increasing demand abroad is inspiring cattle producers to add animals to herds that are 20 percent lower than they were eight years ago, according to Businessweek.

Brenna Grant, research analyst at CanFax, expects Canadian cattle producers to boost cattle herds by two percent by 2015. Canada has 13.5 cattle on its ranches in July. The 0.1 percent increase marks the first year-over-year gain in eight years according to an August report.

Export demand has been fueled primarily by growing demand for beef in China and Japan. Desired products include beef cuts that are highly regarded in foreign markets, but less desirable in North America.

In order to increase future beef exports, short-term numbers will fall lower as producers hold on to heifers and increase production. Higher beef exports may not be observed until two or three years from now.

“The agriculture census showed us that close to 25 percent of producers left the beef industry from 2006 to 2011, it’s very substantial,” Grant told Businessweek. “We’re a much smaller, leaner industry than we were 10 years ago.”

Export demand and high cattle and beef prices have benefitted U.S. producers as well. Derrell Peel says a high rate of cow culling has resulted in net liquidation and reductions in the U.S. cattle herd inventory. Peel says cow-calf producers have an incentive to rebuild their herds and heifer retention will accelerate this fall.

According to Peel’s weekly cattle market analysis, beef cow herd growth of two percent is possible in 2014 with another 2-3 percent in 2015 as long as drought conditions continue to moderate.