Why were cattle prices so low?
With the border closed, Canadian farmers have lost access to U.S. beef packers, who would normally compete in the purchase of Canadian cattle. As a result, Canadian cattle supply has greatly outweighed Canadian slaughter capacity and this placed significant and continuing downward pressure on cattle prices. This situation will continue until the Canada/U.S. border reopens or until cattle supply and slaughter capacity in Canada are balanced. Prior to BSE, cattle prices in Canada were determined by cattle prices in the U.S. In fact, trade of live cattle and beef products occurred on a North American basis. Expert reports and industry participants confirm this relationship. Mr. Grier reports that over 70% of beef exports were destined for the U.S., and Canada typically exported approximately 1.1 million head of cattle to the U.S. each year. Similarly, Dr. Bessler’s time series analysis shows that Canadian cattle and consumer beef prices are strongly led by cattle futures contracts from th
