Cattle prices recover after XL’s reopening

Western Canadian prices for slaughter-ready cattle have recovered to hit the year’s high, after bottoming out this autumn when the discovery of tainted meat forced the temporary shutdown of the XL Foods beef-packing plant.

Canadian government authorities allowed the XL plant at Brooks, Alta. to reopen in late October. It was closed for about a month after some of its production tested positive for contamination with E. coli O157 bacteria.

At least 18 people were sickened in Canada and a resulting recall of beef products spread across Canada and most U.S. states.

The plant is one of the two biggest in Western Canada — alongside Cargill’s High River, Alta. plant — and slaughters about 40 per cent of all Canadian cattle. Its closure forced ranchers and feedlots to feed their animals longer and caused prices for slaughter-ready cattle to plummet.

But last week, prices of fed cattle reached about $118 per hundredweight, the year’s high price and just off the previous year’s top, said Brian Perillat, senior analyst at Calgary cattle analysis firm CanFax.

"Things have improved quite a lot, especially on the fed cattle side," he said, adding that prices in November are typically among the year’s highest. "It’s very encouraging to see how rapidly prices have recovered."

Canada is the world’s sixth largest exporter of beef and veal. Western Canada didn’t build up a large backlog of cattle during the XL plant’s closure as feared, because ranchers and feedlots exported many of the animals to U.S. packers, Perillat said.

Weekly exports of slaughter-ready Canadian cattle to the U.S. more than quadrupled from early September to over 17,000 steers and heifers shortly before the plant reopened in late October, he said.

Overall Canadian cattle exports to the United States totaled nearly 711,000 head year to date as of Nov. 17, according to the U.S. Department of Agriculture, up 15 per cent from the year-earlier period.

The XL plant, managed by JBS USA, is awaiting regulatory approval to resume shipments to the United States and Mexico, Canada’s top two beef export markets. A JBS USA spokesman did not respond to a request for comment.

Through September, Canadian beef and veal exports to the United States are down 12 per cent year to date, according to Statistics Canada.

Lower demand and shrinking Canadian supplies are two of the reasons for the decline earlier this year, but the drop accelerated in September after the U.S. stopped buying beef from the XL plant, said Ottawa livestock analyst Diane Kelly of Agriculture and Agri-Food Canada.

The U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) is reviewing an assessment by Canadian authorities before deciding whether to designate the XL plant eligible to export to the U.S., said Lisa Gauthier, spokeswoman for the Canadian Food Inspection Agency (CFIA).

"It’s in their hands and they could come back asking for more info or they could say it’s fine," she said.

FSIS did not respond to requests for comment.

— Rod Nickel writes for Reuters in Winnipeg.

Related stories:
JBS to manage XL beef plant, with option to buy, Oct. 18, 2012
XL’s Brooks beef plant reopens, Oct. 23, 2012



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