Hopes for an expansion in the Canadian cattle inventory may be coming to fruition, as Statistics Canada reports the first year over year increase in cattle herds since 2012.

According to Thursday's livestock estimates report, Canadian farmers had 13.2 million head of cattle on their farms as of July 1 this year, which is 1.3 per cent higher than the same time last year.

Canfax manager of research services Brenna Grant says it's a pretty minor increase, indicating Canada's beef industry remains in a consolidation phase, though she thinks the report contains some other interesting numbers, with the biggest increases coming from beef heifers held for breeding, up 4.5 per cent, and calf inventories, which were up 3.9 per cent from last year.

"Those two are actually the really key pieces in this report because it really shows even though we had drought last summer and things were really tough, producers were about to manage their feed-stores well and retain heifers," Grant says.

While these numbers have a positive shine, Grant says it's not too positive, as the numbers on heifers remain two per cent below the 10-year average, and 15 per cent below the 20-year average. In addition, the incentive to expand inventories further may be reduced, as Grant notes feeder calf prices have come down, meaning producers may decide to sell more than originally planned this fall.

"Yeah, it's an early sign that we've got producers interested in expansion, but we also have to remember that this beef heifer retention number is a soft number, these are breeding intentions for producers," she says.

On top of this, Grant notes the U.S. has already been in an expansion phase with increased beef production, which has been pushing North American cattle prices down. She thinks specific regions in Canada may expand faster than others, where grass and profits are available.

Provincially, Stats Can says Manitoba saw the second highest year-over-year increase in cattle inventories, reporting a 3.7 per cent rise from last year. Both Grant and Manitoba Beef Producers president Heinz Reimer thinks this comes partly from land which has recovered from past floods, therefore increasing forage and pasture land in Manitoba.

"I don't think there's anybody really making a big increase, but if we're looking at individual producers having a five to 10 per cent increase in their herd, they also have to justify being able having enough feed and land available to carry those additional animals," Reimer says.

He also hopes the numbers in the Stats Can report are a good indication for the Canadian beef industry, noting recent gains in market access for beef have also been a plus for producers.

"I mean, you need to have a plan to move forward. How much can we increase our herd that makes sense in this province?" says Reimer. "As a producer board, we are looking into that. What is the number that we need to work with? We've had discussions with our ag minister and we're hoping to continue those talks and see where we go from there."

According to the report, Manitoban farmers had 1.25 million head of cattle on their farms as of July 1.

The full livestock estimates report is available on the Stats Can website.