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Livestock report By Glenn Grimes
Cattle
The number of cattle on feed Nov. 1, 2006, was up 4 percent from 2005 and was the largest on-feed number of record for November. The number of cattle placed on feed during October was down 13 percent from 12 months earlier. The smaller number was due in part to the large placements in recent months because of the drought in a significant part of cow/calf country.
Our index for U.S. consumer demand for beef in January to October 2006 was down 4.2 percent from this period of 2005. The good news continues to be the demand for live fed cattle. For the first 10 months of 2006, our demand index for live fed cattle was up 3.9 percent from a year earlier. The increase in beef exports, the decline in beef imports, and population growth were the major reasons for the increase in live fed cattle demand. These factors did not influence per capita consumer demand for beef.
The $3+ per bushel price for corn has been negative to feeder cattle prices. In late November, 400 to 500 pound steer calves at Oklahoma City were almost $20 per cwt. below a year ago. For the same week, 700 to 800 pound yearling steers were about $15 per cwt. below a year ago.
Total cow slaughter for 2006 through Nov. 11 was up 10.4 percent compared to this period of 2005. Dairy cow slaughter was up 3.8 percent and beef cow slaughter was up 17 percent. For the 4-week period ending Nov. 11, total cow slaughter was up 3 percent and beef cow slaughter was up 23.4 percent compared to this period of 2005. A significant portion of the increase in cow slaughter is believed to be due to short supplies of pasture and forages due to dry weather. The rate of increase in the cow herd has at least slowed and growth may have stopped completely.
Swine
There is evidence that lower energy prices, lower inflation rates and low unemployment rates are all positive for meat demand.
Even with this strong demand for live hogs, when the current cost of corn is completely bid into hog production costs, the average-cost producer will break even at best. Therefore, the odds are high that the hog herd in North America will need to be reduced to provide average profits for producers.
At the time this material was prepared, the good news was that data available during the past 4 weeks showed both sow and gilt slaughter were running at levels that had resulted in breeding herd reduction in the past. Let’s hope this is not a short-run fluctuation in our sample data for gilt slaughter.
Retail pork prices for January to October showed a loss of 0.9 percent from a year earlier. However, retail prices for August to October were up 1.9 percent in 2006 compared to 2005. With pork production running at record high levels, this is great news.
Pork exports for January through September were up 11.5 percent in 2006 compared to 2005. Pork imports for the same period were down 1.5 percent. Net pork exports as a percent of production were up about 1.5 percent for these same 9 months compared to a year earlier.
Our top customer continued to import less pork from us in 2006 than in 2005. For January to September Japan’s purchases from us were down 7.9 percent.
In late November, feeder pig prices at United Producers Tel-o-auction were about $20 per cwt. below November 2005 for 40 to 50 pound pigs and 60 to 70 pound pigs showed about the same loss. The $3+ per bushel corn prices will continue to be negative to feeder pig prices.
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