Lower live-cattle imports due to soft U.S. prices
November 20, 2009
by Erica Shaffer
WASHINGTON — In 2009, the U.S. is expected to import 1.9 million head of cattle — the lowest import total since bovine spongiform encephalopathy-related bans on Canadian cattle were in place in 2005, according to the most recent Livestock, Dairy and Poultry Outlook from the Economic Research Service, U.S. Department of Agriculture.
Canadian and Mexican imports have been below recent year-to-date averages. Low prices for feeder and fed cattle, caused by lower demand for beef and unfavorable currency exchange rates, have diminished the incentive for foreign cattle producers to market their livestock in the U.S.
However, in 2010, imports are expected to increase to 2.1 million head as improved U.S. prices should encourage the shipment of Mexican and Canadian cattle to the U.S. for further feeding or slaughter.
Mexican cattle imported into the U.S. consist of almost all cattle that have been fed on pasture and are being sold for further feeding, either in backgrounding operations or feedlots. Although year-to-date figures are above last year’s exceptionally low import levels, they are well below the five-year historical average, the study reveals.
In Mexico, recent pasture conditions have been mixed. Certain areas near the Texas border have been experiencing the same dry conditions that have occurred in Southern Texas, while other areas further west and south have had better precipitation. Mexican imports have been lagging behind historical levels, as feeder cattle prices in the Southern Plains remain low, partially as a result of drought conditions in Southern Texas.
Year-to-date Canadian cattle imports have also been dramatically lower. According to A.M.S. weekly reports, year-to-date feeder cattle imports have been down more than 50% and slaughter steers and heifers nearly 20%. Price differentials between U.S. and Canadian cattle markets have been lower than in 2008 and 2007 adjusted for the exchange rate. Both U.S. and Canadian cattle prices have been lower than last year in U.S. dollar terms. But with a lower price premium than is typical in the U.S. for Canadian producers, there is less incentive for Canadian cattle producers to market animals in the U.S.