Open border likely to push U.S. prices lower

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WASHINGTON – USDA officials say the border’s opening may cause a decline in cattle and beef prices.
USDA chief economist Keith Collins estimates the United States will import 2 million head of cattle in the 12 months following the resumption of trade. From 1998 to 2003, average imports from Canada were 1.25 million head per year, he said.
The higher import numbers, Collins said, is likely because of a build-up of inventories in Canada.
He’s also predicting “a slight decline in cattle prices and in beef prices.”
Resuming trade may also cause fewer exports to the United States.
“As Canada begins to slaughter more cows, cows yield less beef than steers and heifers, so they’ll have smaller exportable supplies,” Collins said.
Excess capacity. Collins also noted U.S. slaughtering is down substantially because of reductions in the cattle cycle every year since 1996.
Figures for 2004 showed slaughter around 32.5 million head, down from 35-36 million head in the years just prior, he said.
“We have excess slaughter capacity in the United States and a number of animals available in Canada to come across the border can be accommodated,” he said.

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