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Corn In Tug-O-War Between Industries

published: December 18th 2010
source: WLTribune.com

Sometimes you get what you ask for, and I’m not talking about what you want for Christmas, or whether you’ve been bad or good, for goodness sake!

Some U.S. cattle producers wished for some protectionism from the border-sharing/Canadian cattle industry so they pressed their government to enact country-of-origin labelling in the belief (I’m sure) that no loyal American (shopper) would buy Canadian beef (in a U.S. supermarket) given any other (labelled) viable alternative.

Fast forward to today; the U.S. is experiencing a shortage of grinding beef. The problem can be traced to several coinciding factors: a strong Canadian dollar, a decline in imports (Canadian feeder cattle/pigs), shrinking livestock supplies and (surprise) country-of-origin labelling laws.

Imports of Canadian feeder cattle (Oct. 11 to Nov. 2, 2010) dropped 46 per cent from the same period in 2009, and were a whopping 82 per cent lower than 2008 (according to livestock analysts, Steve Mayer and Len Steiner).

Top menu trends for 2011 continue to see emphasis (by consumers) on locally sourced meats, and restaurant visits are on the rise again as many consumers don’t like to cook. A startling statistic shows that 40 per cent of Americans (Canadians, too?) do not know at 4 p.m. what they will be having for dinner. Wow — it’s not like mother used to do it!

The per capita net beef supply is at the lowest level in almost two decades. With supplies down and demand growing, many market analyses forecast record-high feeder cattle prices in 2011.

Before you get too giddy at that news, remember that there is a wild card in the deck that can throw the market into a tailspin. What is it? Corn (feed grains) and the cost of it — livestock eat it, ethanol production devours it, putting it squarely in the centre of a tug-o-war between the two industries. Food or fuel, at what cost?