LIVESTOCK REPORT
By Glenn Grimes

CATTLE

The number of cattle on feed Nov. 1 was up 2.7 percent from a year ago. The number of cattle placed on feed during October was down 2.9 percent from 2003. This is the second lowest October placement since the series began in 1996. Fed cattle marketings during October were down 3.1 percent from 2003 and 9 percent below 2002.

For the second consecutive month, the reduction in placements of cattle on feed was in the lighter weight cattle. The number of cattle placed on feed in October weighing less than 600 pounds was down 10.9 percent, and the number placed on feed during October weighing 600 to 699 pounds was down 4 percent. But, the number placed on feed weighing 700 to 799 pounds was up 4.1 percent, and the number placed on feed weighing over 800 pounds was up 9.3 percent.

Somewhat of a mystery is where these heavier weight feeders are coming from. Possibly the good forage conditions of 2004 have contributed to faster rates of gain for feeder cattle and consequently heavier fall weights.

For the 3 weeks ending Nov. 27, the Oklahoma City auction did not have enough cattle weighing above 800 pounds for a good market test.

Demand for beef in the United States continues to be unbelievably strong. For January through October, demand for beef at the retail level is estimated to be up 7.5 percent compared to the same months in 2003. However, live cattle demand for the first 10 months of 2004 was down 7.5 percent from a year ago. The weaker demand for live cattle is due to a drop of about 80 percent in beef exports in 2004 compared to 2003.

Retail beef prices in October were down 1.3 percent from September but up 2.2 percent compared to October 2003. Retail beef prices for January through October were up 11.7 percent in 2004 compared to last year.

Our estimate of beef consumed per capita for January to October is a plus 0.4 percent compared to this period in 2003. Growth in consumption per person of nearly a half percent at a time when retail beef prices increased almost 12 percent is very unusual. In fact, to my knowledge, this is the first time in over 53 years when consumption and price both increased this much at the same time.

The beef industry breathed easier after USDA announced the animal that had tested inconclusive for BSE on Nov. 18 turned out to be negative. If given the opportunity, I would vote not to report the inconclusive test results to the public unless the second and more accurate test was positive.

Fed cattle prices were pushed back to the upper $80s and low $90s in late November and early December.

Cow slaughter through November continued to run below year-earlier levels. The number of steers and steer calves on feed Oct. 1 was up 4 percent from a year earlier but the number of heifers on feed was up only 1 percent.

SWINE

We believe cow-calf producers have at least stopped reducing the beef cow herd.

The demand for live hogs for January to October was up nearly 12 percent compared to this period a year ago, and the demand for pork at the consumer level was up 2.5 percent for these 10 months compared to 2003. We believe both the consumer price and retail weight are underestimated by USDA, so demand growth is probably more than 2.5 percent at the consumer level.

The growth in demand for pork is fueled by increases in both exports and domestic use, with domestic use accounting for 80 to 85 percent of the January to October growth.

U.S. pork exports were up nearly 24 percent for January to September compared to these months in 2003, and imports were down 6.6 percent. In January to September 2004, our exports to Japan were up 9.1 percent; to Canada up 26.3 percent; to Mexico up 66.3 percent; to Russia up 166.3 percent; to mainland China up 71.6 percent; to Taiwan up 72.1 percent; and to the Caribbean up 53.1 percent. But, exports were down 27.2 percent to South Korea and down 10.2 percent to Hong Kong.

We continued to import a large number of live hogs from Canada in the first 9 months of 2004.

In January to September we imported almost 22 percent more live hogs from Canada than during the same months of 2003, 19 percent more feeder pigs and 28 percent more slaughter hogs. However, the approximately 14 percent duty placed on Canadian hog imports into the United States because of a possible trade agreement violation is expected to reduce our Canadian live hog imports in October and future months.

U.S. feeder pig prices in late November and early December were very strong. For the week ending Dec. 4, United Producers Tel-O-Auction had some 50-to-60 pound pigs that sold for $135 per cwt.

How long this unbelievable demand for pork and live hogs will last is not predictable. However, we believe U.S. pork production in 2005 will increase 2 to 3 percent from 2004 with hog prices in 2005 the same to a little lower on average than in 2004. As of early December 2004, we had seen no increase in the U.S. breeding herd from September. But productivity growth is alive and well and averaged over 3 percent per year over the last 5 years. Therefore, hog producers need to reduce their breeding herds by 1 to 2 percent to keep the supply of pork manageable.