Export and slaughter numbers tell the COOL tale

Tuesday, March 3, 2009

Beef slaughter numbers in Western Canada were up a whopping 18 per cent in the last week of January compared to the same week a year before. While slaughter was down in Eastern Canada, the overall change across Canada was still 12.4 per cent. The increase in slaughter numbers is matched by an 18.9 per cent decline in live cattle exports.

Market watchers agree that Country-of-Origin Labelling (COOL) in the United States is the reason. Paul Stiles, assistant manager, Ontario Cattlemen's Association, says that Western Canadian plants were working under capacity previously. Operators of the Better Beef plant in Guelph, Eastern Canada's largest, can't get enough cattle to go to a double shift even when they buy from Quebec.

The shift away from live slaughter exports is driven by real uncertainty over the COOL Final Rule, which was to take effect Mar. 15, says market watcher Charlie Gracey. President Barack Obama has since put the Final Rule, (an interim version of the law and regulation has been in effect since September) on hold. Gracey says that, before the Final Rule was announced, American packers were discounting Canadian cattle by $16 per hundredweight after dealing with exchange rate differences.

Cow and bull exports are up 36 per cent over a year earlier. They get slaughtered in the United States.
It's a sign of the dreary outlook for the industry, Gracey says. BF