LIVESTOCK REPORT
By Glenn Grimes

CATTLE

In May, cow slaughter continued to run below year-earlier levels. For 2005, through the week ending May 14, total cow slaughter was 5.5 percent below 12 months earlier. Dairy cow slaughter was off 5 percent and beef cow slaughter was down 6.3 percent for the first 4 months of 2005 compared to 2004.

We are continuing to build the U.S. beef cow herd. Because of reduced cattle exports due to BSE, Canada has increased the breeding herd more than the United States in the last year.

Live fed cattle prices were up 9.3 percent for January to April of 2005 compared to 2004.

Retail beef prices for January to April were up 4.1 percent. All of the increase in retail price, plus some, was bid into live fed cattle prices. The total marketing margin for these 4 months was down 0.7 percent compared to this period last year.

Beef demand at the consumer level was down 1.4 percent for January to April compared to a year ago. A small decline in demand is not unusual following a big increase like we had in 2004. The good news is that the demand for live fed cattle was up 1.8 percent for January to April of 2005 compared to 2004.

In the first 3 months of 2005, U.S. beef exports were up 272 percent over these months last year, but they were still 78 percent short of the 2003 level.

Beef imports were down 4.8 percent for January to March this year compared to last year. Our imports were down sharply from Australia and down substantially from New Zealand. However, imports of beef were up from Canada, Brazil, Argentina and Uruguay.

Live feeder cattle imports from Mexico during January to March were up 8.4 percent compared to these months last year. It is still an unknown when our border with Canada will open to live cattle imports. With the courts involved, it is likely to be several months away.

Feeder cattle prices continued very strong. For the week ending May 27, 2005, 400 to 500 lb. steers at Oklahoma City sold for $137.50 to $155 per cwt.-up $15 to $20 per cwt. from 12 months earlier. The price of all cattle will be pushed lower when the Canadian border opens, but there is likely to be a bigger decline in feeder cattle prices than in fed cattle prices.

The number of cattle on feed May 1 in the United States in feedlots with a 1,000 head or more one-time capacity was up 3 percent from 12 months earlier. Placements of cattle on feed during April were up 4 percent from a year ago. Marketings of fed cattle during April were 5 percent below a year earlier and 9 percent below 2003. April's fed cattle marketings were the smallest in this data series which started in 1996 when USDA began reporting only feedlots with 1,000 head or more capacity.

Fed cattle prices are expected to be pushed lower into the $80's through the summer.

SWINE

Cash prices for slaughter hogs in January through April this year averaged nearly 15 percent higher than a year earlier. However, prices in late May were substantially below 12 months earlier. On Friday, May 27, weighted average carcass base prices were $6 to $7 per cwt. below a year earlier. This would be $4.50 to $5 per cwt. lower on a live weight basis.

Demand for pork at retail for January to April was down nearly 3 percent from this period in 2004. However, live hog demand for these 4 months was up over 3 percent from 2004. We are concerned about both retail pork and live hog demand for the remainder of the year. But, unless conditions become much worse than now indicated or we have a short feed grain crop, good hog producers are likely to show a profit all year.

Cash feeder pig prices continued very strong through May with 40 to 60 lb. pig prices at United Producers Tel-O-Auction up $20 to $30 per cwt. from a year earlier at $121 to $127 per cwt.

Our university data indicates some increase occurred in the breeding herd during spring.

A bright spot for the hog industry continues to be foreign trade. Live hog imports for January to March were down 15.1 percent from a year earlier. Slaughter hog imports for these 3 months were down 21 percent and feeder pig imports were down 12 percent in 2005 compared to 2004.

The odds now appear very strong for 2005 to be the 14th consecutive year with record high pork exports. Pork exports for January to March were up over 20 percent from a year earlier and imports were down nearly 11 percent. Net pork exports as a percent of total production for January to April were at 7.5 percent, up from 4.8 percent for the same months of 2004. This growth in net exports probably added about $18.23 to each hog slaughtered in the first 3 months of 2005, or a total of $465.4 million dollars to producers' gross income.

Since 1987, the United States has gone from a net importer of 7.6 percent of production to a net exporter of 7.5 percent of production in the first 3 months of 2005. For this 18-year period, the average increased return to hog producers through higher prices has been about $1.23 per cwt. or about $3.13 per hog. The total increase in gross income for producers has been nearly $5.5 billion. Pork Checkoff money spent during this period has totaled $54.7 million. The monetary gain from increased exports that can be attributed to Checkoff funds is probably 9 times more than the Checkoff dollars collected during these 18 years.