Mexican feeder cattle imports to show steep decline in 2013

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Over the last 30 years, Mexico has become an aggressive exporter of feeder cattle to the United States. The U.S. has relied so heavily on these imports to supplement supply that experts are now calling the levels of imported Mexican feeder cattle unsustainable.

According to a new report from the Rabobank Food & Agribusiness Research and Advisory (FAR) group, the availability of cattle for shipment is expected to post a steep decline in 2013, leaving the U.S. cattle feeding industry searching for ways to make up for this sharply reduced supply.

“Record high feeder and calf prices in the U.S., as well as a favorable exchange rate, were factors in a surge of exports to the U.S. over the last two to three years,” notes report author Don Close, Vice President, Food and Agribusiness Research & Advisory, Animal Protein. “However, it was really the severe drought in 2011 that prompted such a notable increase in exports to the U.S. so that the levels became unsustainably high.”

A critical result of the drought-induced surge in feeder cattle imports from Mexico over the past two and a half years has been a substantial increase in the shipment of heifers. When U.S.-Mexican feeder trade began to gain steam, 90 percent of the cattle exported by Mexico were steers. By September 2012, spayed heifers accounted for more than a quarter of all shipments. Such an escalation in heifer shipments signals a depletion of total Mexican cattle supplies.

“We’re going to see a depleted inventory, of course, but more importantly,there is going to be a sharply reduced retention of potential replacement heifers,” says Close. “We’ll undoubtedly see lower shipments of feeder cattle into the U.S. for the next two to three years, as well as challenges for the Mexican cattle industry related to rebuilding a supply that will bring exports to the U.S. on par with historical levels.”

Because the shipments of Mexican cattle have reached an unsustainable level and will inevitably decline, the critical question now is how will the U.S. cattle feeding industry make up for a reduced supply of feeder cattle from Mexico.

“Cattle feeders are going to need to change several aspects of how they procure cattle, starting with becoming more dependent on feeders from the southeast cow/calf complex,” says Close.

As a result, southern U.S. cattle feeders will be forced to look further north and be more price-competitive in the central and western U.S., in spite of the freight disadvantage. With the U.S. cow/calf herd already at a 50-year low, such new competition is likely to force feeders with weaker supply sources or weaker operating finances out of the market.

Finally, it can be expected that the U.S. cattle feeders will be required to return to Canada for available feeder cattle numbers.

Historically, the Mexican cattle feeder exports into the U.S. show a five- to six-year cycle of spikes and drop-offs. However, experts anticipate the current decline may require additional time to rebuild due to the increased heifer exports, which will make rebuilding herds a slower process.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Pyramid® 5 + Presponse® SQ

Pyramid® 5 + Presponse® SQ helps protect calves against both viral and bacterial respiratory challenges, all with the convenience of ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Leads to Insight