Drought in Mexico Pulls Cattle North; Canadian Cattle Imports 40 Percent Lower
Drought conditions in Mexico have increased the incentive for many producers to export cattle to the United States. The principal forage-producing states of Mexico are facing extreme drought conditions that could endanger animals, particularly if critical rainfall is not received in June and July—the rainy season for major cattle and forage-producing states in Mexico.
Given feeder cattle demand in the United States, these lightweight cattle have largely been placed directly into feedlots during the past few months--atypically, as they normally would have grazed forage in the United States before being placed. Large portions of Texas and New Mexico, however, are also experiencing drought conditions. Monthly cattle imports from Mexico through April were 28 percent higher than year-earlier levels according to U.S. Census data.
These higher imports have been maintained in recent weeks, as weekly AMS data reports through the first week of June also show cattle imports from Mexico 27 percent higher year-over-year. Weather conditions in Mexico in the summer months will determine the degree of seasonal spike in cattle imports this fall.
Monthly Canadian cattle imports through April were 38 percent below year-earlier levels. Weekly AMS reports show year-over-year Canadian cattle imports declining further into June—nearly 40 percent lower. Thus far in the year, the U.S.-Canadian slaughter cattle price differential has remained well below levels posted in the last 3 years. In April, this differential only began to cross into the range posted in 2009;since May, it has averaged $3.80/cwt lower than 2010 levels.
Source: Economic Research Service, USDA