West Canada ranchers wait out beef recall, exports growing to U.S

Wed Oct 10, 2012 4:33pm EDT
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By Rod Nickel and Theopolis Waters

(Reuters) - Western Canadian ranchers and feed lots are holding slaughter-ready cattle back from market longer than usual, absorbing extra costs as they try to wait out the closure of one of the region's biggest processing plants due to a massive recall of tainted beef.

But as the closure of the XL Foods Lakeside plant at Brooks, Alberta nears the two-week point, the industry will soon have to consider sharply increasing exports of slaughter-ready cattle to U.S. packing plants, said Brian Perillat, senior analyst at CanFax.

"On the fed cattle side, things are going to get tougher before they get better," he said. "It has been muted in the short term (as) we've been able to hang on and limit the number of marketings to keep the price up. But at some point we're going to get squeezed."

Holding back cattle from the market comes at a cost of about C$4 per head per day, said Bryan Walton, CEO of the Alberta Cattle Feeders Association.

A recalls of steaks, ground beef and other meats from XL Foods, totaling more than 1,800 products, began in mid-September, and the Canadian Food Inspection Agency (CFIA) closed the plant on September 27.

Western Canadian fed cattle exports to the United States are approaching 10,000 head per week, nearly double the number in early September but similar to a year ago. If the plant remains closed more than another week, cattle will need to move in droves of about 20,000 head weekly to the United States, Perillat said.

The exported Canadian cattle are mainly headed to three U.S. plants, Tyson Inc facilities at Pasco, Washington, and Lexington, Nebraska, and a JBS USA Holdings Inc plant at Hyrum, Utah.

A CFIA spokesman said Wednesday that inspectors have reviewed the XL Foods plant and submitted a report to senior officials. The plant's operating license remains suspended.   Continued...

Cattle graze in a field near the XL Foods plant that sits idle in Brooks, Alberta, October 10, 2012. REUTERS/Todd Korol