COLLEGE STATION Seasonal declines in the beef market have already absorbed some of the impact of a recent federal appeals’ court ruling, lifting the ban on Canadian cattle imported into the United States, a Texas Cooperative Extension economist said.
But there shouldn’t be a “flood of cattle” crossing the U.S. border as a result of the ruling, said Dr. David Anderson.
“Cattle prices will be pressured lower, but not a large impact should be expected,” he said.
Expansion in the Canadian packing industry will limit the number of cattle coming south.
“Most of the expansion that has already occurred was in the Canadian Cargill and Tyson plants in Alberta,” Anderson said. “We will see Canadian cattle prices move higher, closer to U.S. prices. More cattle may stay in Canada than before the ban due to the expanded capacity. Those that are exported to the U.S. will offset boxed beef that would have come down here otherwise, so the price impact will be less than expected earlier.”
The recent appeals’ court ruling overturned a Montana judge’s decision that kept the border closed. The United States banned Canadian cattle in May 2003 after Canada’s first case of mad cow disease. Those in opposition of the ban said it hurt the U.S. meat packing industry, which cost an estimated 8,000 jobs. More than 1 million head of Canadian cattle were shipped to the U.S. each year prior to the ban. Anderson said it’s important to note cattle prices were already declining prior to the ruling “and some of this decline is seasonal.
“Summer usually brings the lowest cattle prices of the year in the fed cattle market,” Anderson said. “Expectations were for third quarter beef production to be close to year-ago levels. More cattle from Canada will increase U.S. beef production and result in lower prices. As a result, we should expect beef production to increase more than 2 percent over a year ago in the third quarter.”
Feeder cattle have also seen large declines in recent days due to increases in corn, Anderson said.
“Corn prices continue to increase as the yield expectation of the crop declines due to dry conditions in parts of the Midwest,” he said. “Secondly, there is some rationalization of the spread between fed and feeder cattle with some red-ink beginning to flow for cattle feeders. The spread on the board widened as fed cattle prices declined and finally feeders declined also. More Canadian cattle should add some pressure to feeders as well.”
Anderson said supplies of Canadian feeder cattle will be “more than usual” because of large inventories.
“But given good grass conditions, they may not come south until later in the year. Recent threats of a labor strike at one of the Canadian packing plants would move more cattle south later in the year if they materialized.”
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