Volume 3 Issue 3 • July 19, 2010

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In This Issue ...


Rate Hike Expected; Global Weakness To Keep Parity at Bay

On Tuesday, the Bank of Canada (BoC) is widely expected to bump the overnight rate 25 basis points to 0.75 per cent. While a July 20 hike to the overnight rate will be positive for the currency, the race to parity won’t heat up until the second half of 2011 as global weakness and other factors weigh on the loonie.

Canfax Market BriefsThe near certainty of a July 20 rate hike stems from the BoC’s latest Business Outlook Survey. Released last week, the summer 2010 survey indicated that the economic recovery in Canada is progressing. In the survey, conducted from May 19 to June 15, many firms reported an improvement in their past sales activity for the first time in two years.

That being said, opinions on future sales growth and investment were lower than reported in the previous survey, and firms indicated that they are concerned about global uncertainties. Overall, however, respondents were positive about the outlook for business activity over the next 12 months.

In a research note, TD Financial Group wrote that the dip in the number of firms that anticipate future sales to rise was not unexpected, and underscores the belief that some fears over a U.S. double-dip recession have resurfaced. Nonetheless, the report was a positive one, noted TD, “and gives the Bank of Canada good reason to continue with a second rate hike of 25 basis points.”

Michael Gregory, senior economist with BMO Capital Markets, said there will be some modest support for the currency simply for the BoC tightening. For the most part, it is priced in.

“A lot will depend on the language that we get from the Bank of Canada to what extent it points to the potential for even further interest rate increases,” he told Action News.

Since June, the loonie has traded in a wide range between $0.94 and $0.99 US.

The BMO view has the currency drifting sideways a bit, reflecting the offsetting forces. A rate hike and the potential for another one by the BoC (perhaps in September) will be positive for the currency. Still, the negative overtones of global risks, particularly south of the border, and also the implications for commodity prices, will weigh on the currency, Gregory said.

The BMO outlook has the currency weakening in the fourth quarter as worries about the U.S. continue. However, the loonie will turn around in 2011 and continue to ratchet higher to again approach parity with the greenback within the next year. The U.S. Federal Reserve isn’t expected to raise rates until the third quarter of 2011.

The CCA President Travis Toews recently noted the strong Canadian dollar may somewhat temper anticipated price increases for Canadian producers. “It’s clear that we can no longer depend on a cheap currency to mask inefficiencies in our business and regulatory environment,” he said.


The CCA Helps Promote Canadian Beef to Media at Calgary Stampede

The CCA was on hand at a Government of Canada breakfast bash that tempted domestic and international media with sumptuous gourmet dishes prepared from the best Canadian ingredients.

More than 20 media outlets registered for the Savour Canada breakfast event hosted by Agriculture Minister Gerry Ritz July 14 at the Calgary Stampede.

The event, emceed by Canadian gastronomer and author Anita Stewart, showcased the safe, delicious and high-quality foods that Canada’s farmers produce coast to coast.

The dishes prepared by some of Canada’s top chefs were delectable, with Minister Ritz getting plenty of takers from the crowd for the slices of the perfectly cooked Rib-Eye he’d carved as part of a cooking demonstration with CCA President Travis Toews and Alberta Chef Michael Allemeier.

“We know Canadian farmers grow and produce the best food in the world and we’re not shy to say it,” said Minister Ritz.

Several industry leaders and Agriculture Parliamentary Secretary Pierre Lemieux also attended the event, which follows a similar event at the 2010 Vancouver Olympics aimed at expanding and re-invigorating international markets.

For photos of the Savour Canada event and a full list of industry participants, please visit www.eatCanadian.ca.


China Agrees to Formally Lift Ban on Canadian Boneless UTM Beef

In his latest trade mission to China, Agriculture Minister Gerry Ritz received agreement that China would formally lift the ban on Canadian boneless beef under thirty months (UTM) and tallow for industrial use, effective July 3.

China agreed to this vital regulatory step about one week following the breakthrough agreement for full staged Chinese market access for Canadian beef. The developments speak to the strong trade relationship Canada has with China, and that is good news for Canadian agriculture. With a growing population of 1.3 billion, China represents tremendous market potential for Canadian agriculture and food products.

As noted in the last issue of Action News, the CCA President Travis Toews was in Shanghai with Minister Ritz on Canada Day promoting Canadian beef at a special event. The cowboy hats went over just as well as the beef Toews helped the Minister serve to Chinese citizens, who were thrilled to see a real cowboy.


Federal Gov’t Delivers SRM Offset Program - CCA Requests Provinces to Pitch in

The CCA used the annual meeting of Federal and Provincial agriculture ministers to request provinces top up funding for provincial abattoirs, as a complement to the recently announced federal program to offset specified risk material (SRM) handling and disposal costs.

The Abattoir Competitiveness Program will help Canadian slaughterhouses maintain slaughter capacity in Canada for over-thirty-month (OTM) cattle. The CCA has already observed this program as having a positive impact in the Canadian cull cow market and commends the Federal Government for delivering this much needed assistance. However, the program’s limit of 58 kg of SRM per animal applying equally to federal and provincial abattoirs is an issue for the provincial abattoirs, where the volume of SRM material generated is easily double that of federal facilities. Without the presence of federal inspectors, renderers treat all waste from provincial facilities as SRM.

The CCA believes that the cost of topping up the amount for OTM animals slaughtered in provincial abattoirs would represent an extremely small amount for provincial governments, but would be particularly important to smaller rural communities that depend on a local facility to kill a handful of OTMs per week.


Cattlemen’s Young Leaders Development Program Launches Pilot in Alberta

The Cattlemen’s Young Leaders (CYL) Development Program is officially launched in Alberta. Application forms for phase one of the CYL program, recently announced by the Canadian Cattlemen’s Association (CCA), are now available online at the official CYL program website, www.cattlemensyoungleaders.com. The deadline for submissions for the Alberta pilot is July 30, 2010.

The CYL program provides producers between 18 and 35 years of age a combination of formal and informal mentorship opportunities to learn from leaders in the beef cattle industry as well as from other youth organizations with a focus on mentorship.


The Path of Least Resistance

Concerns about antimicrobial resistance are on the rise, particularly as it impacts the ability of the medical community to combat human diseases. Policy makers in the U.S. are becoming increasingly concerned that antimicrobial use in livestock medicine may contribute to this problem. Click here to cut through the clutter and learn more fascinating facts about antimicrobial resistance in cattle.

CCA Action News

Staff Contributors: John Masswohl, Jill Harvie, Reynold Bergen
Written, edited and compiled by: Gina Teel and Tracy Herbert

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