Livestock Outlook
by Glenn Grimes

Swine

Today’s Farmer market analyst Glenn Grimes explains why pork producers won’t have happy returns in the short run.  “Even with the robust demand for live hogs, hog producers began losing money big time in October 2007, mainly because of high feed prices. They are likely to continue losing money through much of 2008. High feed prices had pushed the cost of producing hogs into the range of $51 to $54 per hundred pounds live weight in February 2008.”

Cattle
Looking forward, looking down

Beef demand at the consumer level in 2007 was up 0.5 percent from a year earlier. However, for the 3-month period of November 2007 to January 2008, our beef demand index was down 1.8 percent from these months a year ago. The weak economy, high fuel price and large supplies of competing meats are probable causes.

The good news for producers is that demand for live fed cattle continues strong. Our demand index shows live fed cattle demand was up 3.5 percent in 2007 from 2006. For the 3-month period of November 2007 to January 2008, it was up 2.6 percent from this period a year earlier.

Even though inflation-adjusted retail beef prices were up slightly for the November 2007 to January 2008 period compared to a year earlier, they were not up as much as expected given the 2.1 percent decline in per capita supplies.

The Jan. 1, 2008, U.S. inventory of all cattle and calves was down 0.3 percent from a year earlier. The Jan. 1 inventory of all cows and heifers that had calved was down 0.6 percent, the number of beef cows and heifers that had calved was down 1 percent, and the number of dairy cows and heifers that had calved was up 1 percent from a year earlier. The number of beef heifers being held for breeding herd replacements was down 3.5 percent. With the continued drought in the southeast United States and high forage and grain prices, the U.S. cow herd is expected to continue to decline through 2008.

USDA estimated the 2007 calf crop was down 0.4 percent from 2006. The number of young cattle outside feedlots not being held for herd replacements was down 0.2 percent on Jan. 1, 2008, compared to a year ago.

In the United States, cow slaughter in 2008 through the week ending Feb. 9 was up 8.9 percent from these weeks in 2007 and up 16.6 percent from these weeks in 2006. These cow slaughter numbers support the belief that the cattle herd will likely continue to decline through 2008.

The price of feeder cattle at Oklahoma City in mid-February showed 400 to 500 lb. steer calves were up about $5 per cwt. and 700 to 800 lb. yearling steers were about $6 to $7 per cwt. above the year earlier. 

Glenn Grimes is a MU professor emeritus and long-time market analyst. 
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