On Nov. 19, trade with Canada will be expanded to include the movement of cattle born after March 1, 1999, and beef from cattle of any age. With this expansion of trade, will there be a glut of cows moving into the U.S. market?
Probably not, according to Gregg Doud, NCBA chief economist. He and other economists don’t see this change as having a significant impact on the U.S slaughter-cow market. Some of the reasons include:
The age requirement in this rule will disqualify many older Canadian beef cows from importation due to lack of proper age documentation.
Transport expenses, the strength of the Canadian dollar and surplus of packing capacity in Canada are disincentives to live cattle imports.
This additional Canadian packing capacity boosted Canadian cull-cow and bull slaughter by 50 percent between 2004 and 2006, and has greatly reduced any backlog of cull cows in Canada.
Although the price of cull cows in Canada is currently about 20 percent less than in the United States, annual Canadian cull-cow slaughter is only 13 percent of that in the United States. As a result, it is widely expected that Canadian cull-cow prices will appreciate to U.S. levels almost immediately after this rule goes into effect.
Analysts expect U.S. cull-cow prices to dip but still stay above 2006 levels. It is expected that this rule could potentially result in a net U.S. cull-cow price reduction of approximately $1 per hundredweight over the next year.
In the Drovers’ auction market summary, prices for cows with large calves increased $13.75 per head, ending September at $992.92. Prices for cows with small calves, however, dropped $87.50 per head to average $832 for the month. Prices for small or aged cows with calves also declined, ending the month at $679 per pair.
Young and middle-aged, bred-female prices increased $20.42 per head, ending September at $804.17. Aged, bred-cow prices decreased $53.08 to average $572.92 per head. Bred-heifer volume continued to be light, and prices dropped $152.91 per head, ending the month at $730.84.
Receipts of open females remained light during September. Young and middle-aged, open-female prices increased 33 cents per hundredweight, averaging $65.63 per hundredweight for the month. Heiferette prices decreased $3.19 per hundredweight, averaging $65.50 per hundredweight. Prices for open, aged cows increased $5.75 per hundredweight to average $56 for September.
Slaughter-cow prices declined compared to the previous month but remain higher than the same time last year. Prices for utility and commercial cows dropped 97 cents per hundredweight, averaging $51.30 per hundredweight for the month. Prices for canner and cutter cows declined $1.54 to average $41.13 per hundredweight.