CATTLE

CANADAAnimal Numbers CATTLE ('000 head)

2013

2014

2015

USDA Official Data

NEW Post Data

USDA Official Data

NEW Post Estimates

USDA Official Data

NEW Post Forecast

Total Cattle Beg. Stks

12,305

12,305

12,220

12,220

11,950

11,840

Dairy Cows Beg. Stocks

961

961

959

959

959

959

Beef Cows Beg. Stocks

3,935

3,935

3,905

3,905

3,900

3,900

Production (Calf Crop)

4,516

4,516

4,480

4,480

4,440

4,440

Total Imports

48

48

45

45

45

45

Total Supply

16,869

16,869

16,745

16,745

16,435

16,325

Total Exports

1,044

1,044

1,135

1,245

1,050

1,100

Cow Slaughter

490

490

475

450

450

425

Calf Slaughter

269

269

250

245

250

240

Other Slaughter

2,307

2,307

2,425

2,455

2,300

2,285

Total Slaughter

3,066

3,066

3,150

3,150

3,000

2,950

Loss

539

539

510

510

525

525

Ending Inventories

12,220

12,220

11,950

11,840

11,860

11,750

Total Distribution

16,869

16,869

16,745

16,745

16,435

16,325

The cattle herd is expected to show a larger than anticipated contraction, as cow slaughter only dropped by about 9 percent in 2014, while heifer slaughter increased by 9 percent. Cattle prices continued to climb throughout the year, prompting many producers to either liquidate inventories or postpone retention. Canada's relative feed cost disadvantage compared to the United States has narrowed in the second half of 2014, and is expected to remain so into 2015. This translates into fewer exports of slaughter cattle, as well as into heavier animals leaving the feedlots, as they are kept longer on feed. Packers, on their side, see no need to rush slaughter though, given the overall tight animal supplies and reportedly negative margins.

Post estimates cattle exports 50,000 head above the current forecast, as overall volumes will be driven by exports of feeder cattle, supported by prices and a very favorable exchange rate, as the Canadian dollar is expected to stay at around 80 cents per U.S. dollar for the entire year. Exports of both cows and slaughter cattle are expected to significantly decline in 2015. On one side, cow inventories have already been reduced by the previous years' liquidation and, on the other side, producers are expected to look into rebuilding their herds. As explained earlier, slaughter cattle are more likely to supply domestic packers, rather than be exported. That being said, Post estimates that overall slaughter in 2015 will be 50,000 head below the current forecast, primarily reflective of a tight animal supply.

BEEF

CANADA Meat BEEF and VEAL

2013

2014

2015

USDA Official Data

NEW Post Data

USDA Official Data

NEW Post Estimates

USDA Official Data

NEW Post Forecast

Slaughter (Reference)

3,066

3,066

3,150

3,150

3,000

2,950

Beginning Stocks

38

38

34

34

20

30

Production

1,049

1,049

1,050

1,075

1,010

1,015

Total Imports

296

296

280

284

285

275

Total Supply

1,383

1,383

1,364

1,393

1,315

1,320

Total Exports

333

332

365

378

355

375

Total Dom. Consumption

1,016

1,017

979

985

940

925

Ending Stocks

34

34

20

30

20

20

Total Distribution

1,383

1,383

1,364

1,393

1,315

1,320

Data in '000 metric tons, except for "slaughter" which is in '000 head

Despite a small reduction in cattle slaughter, Post increased the 2015 beef production estimate by 5,000 metric tons compared to the existing USDA official forecast, given the expected evolution in carcass weights. Carcass weights showed a significant swing in mid-2014. Average steer weights rose by nearly 10 percent between June and November of 2014, as a narrowing in Canada's relative feed cost disadvantage, combined with slower marketings prompted feedlots to keep the animals on feed for a longer period of time. These higher carcass weights are expected to be maintained throughout 2015, resulting in average annual weights higher than in 2014.

A weaker Canadian dollar is going to be very supportive of beef exports, while discouraging imports. Post estimates 2015 exports 20,000 metric tons above the current forecast, while imports are now estimated 10,000 metric tons below the present forecast. The new case of BSE discovered in early February in Alberta is not likely to have a major impact on Canadian beef exports. While some markets are temporarily closed to Canadian beef (of which the most significant is Korea), the industry is expected to have no trouble in finding alternative destinations, the most likely one being the United States. Domestic beef consumption is expected to further decline in 2015, possibly reaching the lowest per capita level on record.

CANADA: Total Beef Imports (Quantity in metric tons, CWE*)

1995

2000

2005

2010

2012

2013

2014

World

268,309

290,280

151,000

243,443

301,236

295,717

284,136

United States

146,221

128,553

60,360

175,237

228,526

226,926

179,616

Australia

56,038

55,268

11,395

11,794

21,422

24,301

48,238

New Zealand

60,192

29,602

42,265

31,576

29,514

21,543

23,138

Uruguay

157

34,493

27,144

15,734

15,677

17,466

26,015

Brazil

2,085

4,125

7,383

7,415

4,702

4,196

5,661

Argentina

3,439

38,168

2,315

1,625

1,309

899

220

All other countries

177

71

138

62

86

386

1,248

Import Market Shares

United States

54.5%

44.3%

40.0%

72.0%

75.9%

76.7%

63.2%

Australia

20.9%

19.0%

7.5%

4.8%

7.1%

8.2%

17.0%

New Zealand

22.4%

10.2%

28.0%

13.0%

9.8%

7.3%

8.1%

Uruguay

0.1%

11.9%

18.0%

6.5%

5.2%

5.9%

9.2%

Brazil

0.8%

1.4%

4.9%

3.0%

1.6%

1.4%

2.0%

Source: Global Trade Atlas / *Conversion to carcass weight equivalent (CWE) at 1.4 for fresh, chilled and frozen meat, and at 1.79 for salted and processed meat

CANADA: Total Beef Exports (Quantity in metric tons, CWE*)

1995

2000

2005

2010

2012

2013

2014

World

263,682

563,090

596,307

523,073

335,243

332,491

378,286

United States

248,232

469,043

515,797

414,678

257,297

255,740

286,184

Hong Kong

116

919

13,035

21,125

24,093

26,234

27,428

Mexico

197

43,712

57,125

49,437

23,233

16,030

22,259

Japan

8,871

22,155

7

17,932

14,370

14,950

20,831

China

47

85

0

5

1,906

7,869

9,137

Korea South

3,024

22,386

25

6

3,028

1,448

4,224

All other countries

3,195

4,790

10,318

19,890

11,316

10,220

8,223

Export Market Shares

United States

94.1%

83.3%

86.5%

79.3%

76.7%

76.9%

75.7%

Hong Kong

0.0%

0.2%

2.2%

4.0%

7.2%

7.9%

7.3%

Mexico

0.1%

7.8%

9.6%

9.5%

6.9%

4.8%

5.9%

Japan

3.4%

3.9%

0.0%

3.4%

4.3%

4.5%

5.5%

Source: Global Trade Atlas / *Conversion to carcass weight equivalent at 1.4