In 2005, beef exports are forecast to be a record 625,000 tons, in large part because of restrictions on cattle trade due to the discovery of BSE in Canada. In 2004, about 98 percent of Canada’s beef exports were to the United States and Mexico as most other countries banned Canadian beef. Beef has partially offset the lack of cattle exports to the United States and Canadian processors will continue to focus on exporting beef as long as the United States restricts Canadian cattle. Beef export opportunities to Mexico will remain strong as long as Canadian beef remains price competitive with U.S beef, which is likely to continue until U.S restrictions on the import of live Canadian cattle are eased and supplies of cattle less than 30 months decline. Two markets open to Canadian beef, but not U.S. beef, are Macao and Hong Kong. Though Canada did not export beef to Macao in 2002, Canadian beef exports to Macao were over 6,000 tons PWE in 2004. Hong Kong recently reopened to Canadian beef ahead of U.S. beef, which places Canadian exporters in a prime position to gain a stronghold in that market.
Canada’s cattle inventory reached a historical high of almost 15.1 million head at the beginning of 2005, representing a 3-percent increase over 2004. Cattle inventories increased following U.S. bans on Canadian cattle imports due to the detection of BSE in 2003. As a result of increased inventories and delays by the United States in allowing imports of live Canadian cattle, Canada increased its slaughter capacity and is forecast to export record levels of beef in 2005. In 2005, the number of cattle slaughtered is expected to be 6 percent higher than 2004, which was 13 percent higher than the previous high in 1999. Inventories are expected to begin declining in 2005 due to the increase in slaughter and the expected reopening of the U.S. border. Ending Canadian cattle inventory is forecast to be 3 percent less than 2004 ending inventory. The United States had planned to permit cattle imports from Canada beginning March 7, 2005 under its minimal risk rule. However, legal action has delayed reopening the border. The uncertainty surrounding the U.S. border reopening has prompted the Canadian government to fund activities designed to support increases in slaughter capacity and reduce dependency on the United States as an export market.
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