Livestock report
By Glenn Grimes

Cattle
In late February, USDA published a report of cattle inventories in both the United States and Canada. Remember, the total U.S. cattle herd was up 0.3 percent on Jan. 1, 2007 compared to a year ago. This report shows the combined U.S. and Canadian inventory of cattle and calves was down 0.2 percent. The number of cows and heifers that had calved in the United States was down 0.1 percent. The combined number was down 0.6 percent, with the Canadian number down 4.2 percent. The number of heifers being held for beef cow replacements in the United States was down 0.5 percent on Jan. 1 compared to a year earlier. The number of Canadian heifers being held for beef cow replacements was down 5.4 percent. The U.S.-Canadian combined number was down 1 percent.

The inventory data suggest the U.S-Canadian calf crop will be a little smaller in 2007 than in 2006.

U.S. beef exports in December 2006 were up 40.6 percent compared to December 2005. Total beef exports for all of 2006 were up 65.3 percent compared to 2005. However, they were still about 54 percent below 2003, the year before the cow with BSE was found in the state of Washington.

By country of destination, U.S. beef exports in 2006 were up 125 percent to Canada, 44 percent to Mexico, 59.7 percent to the Caribbean, 200 percent to Taiwan, and 39.6 percent to other countries. U.S. beef imports during 2006 were down 14.3 percent from 2005.

The U.S. net beef import as a percent of U.S. production declined from 11.76 percent in 2005 to 7.41 percent in 2006. This is the major reason why our demand index for live fed cattle was up 2.9 percent from 2005 while our demand index for beef at the U.S. consumer level was down 4.4 percent based on preliminary data.

Feeder cattle imports from Mexico were basically the same in 2006 as in 2005. However, live cattle imports from Canada were up 84.5 percent. Remember no live cattle were imported from Canada during the first 6 months of 2005 because of BSE. Total live cattle imports from Mexico and Canada were up 26 percent in 2006 compared to 2005.

Retail choice beef prices in January 2007 were up 1.5 percent from December 2006 but were down 2.2 percent compared to January 2006.

In January 2007, the total marketing margin increased 5.4 percent compared to January 2006, the wholesale-to-retail margin increased 1 percent, and the packer-processor margin increased 26.7 percent. Margins for beef packers have not been good for the last 3 years so they deserve this wider margin.

Fed cattle prices for January 2007 were down 7.7 percent from a year ago due to the lower retail beef prices and wider marketing margins.

Feeder cattle prices in early March 2007 showed 400 to 500 lb. steers were down $13 to $15 per cwt. and 700 to 800 lb. yearling steers were down $5 to $6 per cwt. compared to March 2006. These lower feeder cattle prices were due mostly to the sharply higher corn prices in March 2007 than in 2006.

Swine
Farrowing intentions in the U.S. and Canada indicate a slightly larger pig crop in 2007 than last year. This points to an increase in hog slaughter in 2007. Our current estimate is for a 1 to 2 percent increase in slaughter over 2006. If this occurs, 2007 will be the seventh consecutive year with an increase in pork production and the sixth consecutive year with record high production.

Where is the 3 to 5 year production cycle of the past? It appears the production cycle will not be as predictable in the future as it was in the past, even if it still exists.

The average price of live hogs in January 2007 was up 6.4 percent from a year ago. Pork production also increased 4.3 percent in January compared to a year ago. The only way this increase in both prices and production could occur was if demand for live hogs also increased. Our demand index for live hogs has shown increases for the past 7 months compared to a year ago. We cannot explain all of the increase in live hog demand, but a major factor was increased pork exports.

U.S. pork exports were up 12.4 percent in 2006 over 2005. By country of destination, exports were down 3 percent to Japan, up 7.5 percent to Canada, up 13.2 percent to Mexico, up 122.7 percent to Russia, up 54.4 percent to South Korea, up 11.5 percent to mainland China and Hong Kong, down 5.4 percent to Taiwan, up 53.9 percent to the Caribbean, and up 6.2 percent to “other.”

In December 2006, pork exports were up 15.2 percent over December 2005. Exports to Japan increased 22.7 percent in December, one of only a few months in 2006 when exports to Japan increased.

U.S. pork imports in 2006 were down 3.3 percent from 2005. Larger exports and smaller imports resulted in a 9.56 percent net export as a percent of production, up from 7.94 percent in 2005.

USDA forecasts a 5 to 6 percent increase in pork exports in 2007 over 2006. With the record high pork production expected in 2007, we will need the positive impact of exports on live hog prices.

Even with the sharply higher corn prices of early 2007, feeder pig prices in late February were slightly higher than a year ago.

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