LIVESTOCK REPORT
By Glenn Grimes

CATTLE

The number of cattle of all types in the United States and Canada was up 1 percent on Jan. 1 compared to a year earlier. The number of cows and heifers that had calved was also up 1 percent.

The number of heifer replacements for the beef cow herd in Canada and the United States was up 2.9 percent on Jan. 1 compared to a year ago, with U.S. heifers accounting for all of the increase. The Canadian number had shown a large increase on Jan. 1, 2004, because of finding the cow with BSE in May 2003. By Jan. 1, 2005, the Canadian number was near normal. The number of cattle on feed Feb. 1 in U.S. feedlots with 1,000 head or more capacity was up 2 percent from a year earlier. Placements of cattle on feed during January 2005 were up 7 percent over January 2004. However, the number placed on feed during January 2005 was still 10 percent below January 2003. The smaller number placed in 2004 was a result of finding a cow with BSE in Washington state in December 2003.

The number of heifers on feed in the United States on Jan. 1, 2005, was down 7 percent from a year earlier. The total number of cattle on feed in the United States on January 1 was up almost one-half percent. This is another factor that supports the belief that the U.S. cow herd is growing.

Fed cattle prices from February to June are expected to decline substantially more than normal this year. The normal decline for these months during the 5-year period ending in 2003 was less than $2 per cwt. per month. In March the futures market was forecasting a substantially larger decline this year because of an anticipated opening of the Canadian border to imports of young live fed cattle.

Feeder cattle prices are also expected to show less seasonal price increase from February to May. The average seasonal price increase for February to May during the 5-year period ending in 2004 for 750 to 800 lb. steers at Oklahoma City was over $7 per cwt. This year June feeder cattle prices may actually be lower than February if the Canadian border opens.

Tight marketing margin, for packers at least, was due to the tight supply of fed cattle because the U.S./Canadian border was closed. Live cattle imports for 2004 were down nearly 12 percent from 2003. However, live feeder cattle imports from Mexico were up over 10 percent in 2004 from a year earlier.

SWINE

We believe U.S. producers increased the breeding herd from December to March by 1 percent compared to this period a year earlier. However, we believe the inventory on March 1 was larger, but by less than 1 percent compared to March 1, 2004. From December 2003 to March 2004 the breeding herd declined by about 1 percent.

This may be very bad news for hog producers. With nearly a 3 percent annual increase in productivity during the past 5 years, we do not need to increase the size of the U.S. herd to meet any likely demand growth. Demand growth for the past 50 years has averaged 1.5 percent per year.

When this article was prepared, there were some signs that pork demand could be weakening. We certainly will have larger competing supplies of both broilers and beef in 2005, unless the borders to several countries, including Japan, are opened to our beef in the next few months.

Retail pork prices in January were 1.7 percent above December and 5.2 percent above January 2004. All of the increase in retail prices was bid into live hog prices in January.

Pork exports for 2004 were up nearly 27 percent from a year earlier. This was the 13th consecutive year with record-high pork exports. We are starting 2005 with a good increase. For example, Japan’s purchases in December were 50 percent more than in December 2003, and total U.S. pork exports in December were up 29 percent compared to a year earlier. All the long-range forecasts we’ve seen are for pork exports in 2005 to be up a little from 2004.

If demand holds at year-earlier levels, slaughter hog prices will likely average the same to a couple of dollars less per cwt. in 2005 than in 2004.

Feeder pig prices are expected to stay strong into summer.