Livestock report By Glenn Grimes
Cattle
Consumer demand for beef for the January to July period of 2007 was up by 0.8 percent from a year ago. Our demand index for live fed cattle showed good growth with a midpoint estimate of +3.9 percent for the first 7 months of 2007 compared to a year earlier. The stronger demand for live fed cattle than the U.S. consumer demand for beef is due at least in part to increased exports.
Beef exports for January to June of this year were up 19.2 percent from these months last year. Net beef imports as a percent of production declined from 8.2 percent in January to June 2006 to 7.9 percent in these months of 2007.
The total cattle herd in the U.S. and Canada combined was down 0.4 percent on July 1 compared to a year ago. The combined cow herd was also down 0.4 percent and the number of beef heifers being held for herd replacements was down 6 percent.
The 2007 U.S. calf crop is expected to be slightly smaller than last year. Placements of cattle on feed during July were down 17 percent in 2007 compared to 2006. This is the smallest placement on record for July since the current record series was started in 1996. A smaller calf crop, along with 5 percent fewer cattle on feed in the U.S. on Aug. 1 than a year ago, points to a reduction in beef production in late 2007 compared to 2006 and less beef production in 2008 than in 2007.
Total cow slaughter for 2007 through the week ending Aug. 11 was up 9.3 percent from this period a year ago with dairy cow slaughter up 9.2 percent and beef cow slaughter up
9.4 percent. However, for the four weeks ending Aug. 11, total cow slaughter was down 5.1 percent from a year ago with dairy cow slaughter down 0.5 percent and beef cow slaughter down 8.5 percent compared to this period in 2006. Slaughter had increased in August last year as a result of dry weather in Texas, Oklahoma, Missouri, and some western states.
The probabilities are quite high that the cattle herd is still shrinking at a slow pace, even though feeder cattle prices are holding quite strong considering the higher feed prices.
Late August prices reported for feeder cattle showed 400 to 500 lb. steers were selling for about $10 per cwt. below a year earlier but 700 to 800 lb. yearling steers were $4 to $5 per cwt. higher than a year earlier. Higher feed prices usually increase the price of heavier weight feeder cattle relative to lighter weight feeders. In August 2006, corn prices on the futures market for the 2006/07 marketing year were $2.20 to $2.75 per bushel. In late August this year, corn futures prices for 2007/08 were $3.30 to $3.80 per bushel.
Swine
On July 1, the hog breeding herd in Canada was 1.1 percent below a year ago; the total Canadian hog herd was down 2.5 percent, and their market herd was down 2.6 percent. The increased strength of the Canadian dollar relative to the U.S. dollar makes it difficult for Canadian hog producers to compete with U.S. producers. If U.S. currency does not strengthen relative to Canadian, we expect the Canadian hog industry to continue to decline at a slow rate.
U.S. slaughter data since the first of July indicates the size of the hog herd may have been under-estimated at mid-year. For July through the week ending August 25, U.S. Federally Inspected slaughter was up 2.7 percent. For the 4 weeks ending August 25 it was up 3.8 percent. Industry analysts expect slaughter to continue to be up 3 to 4 percent into the fourth quarter of 2007.
Smithfield Packing Company has announced it has made a 60 million pound sale of pork to mainland China. There are rumors that China will probably be in the market for more pork because of large death losses from disease in its hog herd.
With the prospects of a 13+ billion bushel corn crop, it now looks like corn prices should be close to a year earlier through the remainder of 2007 and the first half of 2008. If so, and live hog demand holds at the current level, hogs will likely make a little money for the average cost producer.
Smaller hog producers in the U.S. still have quite diversified farming operations and are not likely to be as adversely affected by higher corn prices as larger producers. Based on a study of the structure of the U.S. hog industry just completed by the University of Missouri and Iowa State University with financial assistance from National Pork Board, Pig Improvement Company, and Pork magazine, 91 percent of producers marketing less than 50,000 hogs annually also produce corn. 
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