LIVESTOCK REPORT
By Glenn Grimes

CATTLE

The July 1 Cattle on Feed report was slightly bearish. Placements of cattle on feed during June were larger than expected and marketings during June were slightly smaller than expected. The number of cattle placed on feed during June was up 7 percent compared to June 2004. The average of the trade estimates was for placements to be up 5 percent. Fed- cattle marketings in June at 2.073 million head were down 0.6 percent from a year ago. The average of the trade estimates was for marketings to be down 0.1 percent.

The biggest increase in placements, 41.3 percent, was in the number of animals weighing 800 lbs. or more. The number weighing 700 to 799 lbs. was up 6 percent, but 600 to 699 lb. placements were down 3.3 percent On July 1, feedlots with a one-time capacity of 1,000 head or more had 10.4 million head on feed, up 3 percent from a year ago and 1 percent larger than trade expectations. However, the number on feed July 1 in all size lots was up only 2 percent compared to a year ago.

The retail price of choice beef was $4.18 per lb. in June, down 1.8 percent from May. This is a sign that demand at the consumer level is weakening. However, the average price for choice beef during the first 6 months of 2005 was up 3.6 percent compared to a year earlier. Our demand index for beef at the retail level was down 1.3 percent for the January to June period compared to the first 6 months of 2004. Even though there was some decline, this is probably still good performance since demand had grown 7.5 percent in 2004. For live fed cattle, January to June demand was basically the same as a year earlier.

USDA's July semi-annual cattle inventory report shows the U.S. cattle herd has continued to increase since January, ending an 8-year decline in numbers. The total number of cattle and calves in the United States on July 1, 2005, at 104.5 million head, was up a short 1 percent. The 2005 calf crop was estimated at 37.8 million head, up nearly 0.5 percent from July 2004.

The inventory report also indicates the U.S. herd is likely to continue to grow. The number of beef cows that have calved (33.75 million) was 0.7 percent larger than on the same date last year. The number of dairy cows that have calved (9.05 million) was 0.6 percent larger than a year ago. The number of beef replacement heifers was up as expected, and the growth in number of replacement dairy heifers continued. Beef replacement heifers at 5 million head were up 4 percent from a year ago, and dairy replacement heifers at 3.7 million head were up a short 3 percent from last year.

Beef production during the last half of 2005 is expected to be larger than this period a year ago, partially due to the opening of our border to live cattle from Canada under 30 months of age.

Fed-cattle prices in the third quarter of 2005 are likely to be at their low for the year with some seasonal increase in the fourth quarter. Feeder cattle prices were pushed lower following the opening of our border to young live cattle from Canada. However, feeder cattle prices are expected to remain strong.

SWINE

Farrowing intentions in the United States for both the third and fourth quarters were down slightly from a year ago, even though the breeding herd was up 0.7 percent. This suggests farrowings per animal in the breeding pen will decline about 1 percent in both of these quarters compared to a year ago. For the short-run, this would be good for the industry, but I am skeptical that it will occur.

Pork exports continue to be the bright spot in the hog industry. For the first 5 months of 2005, pork exports were up 25.3 percent compared to this period in 2004, following the annual increase of 27 percent in 2004 over 2003.

Pork imports were down 8.9 percent for January to May 2005 and live hog imports from Canada were down 11.6 percent. Feeder pig imports were down 9.9 percent and slaughter hog imports were down 15.2 percent for these 5 months compared to this period in 2004.

Our pork exports for January to May amounted to 13.3 percent of U.S. pork production, and net pork imports for these 5 months were 8.5 percent of production.

Even though retail pork prices for January to June were up 4.3 percent from a year ago, pork consumption was down enough to result in about a 3 percent decline in the demand index for pork at the consumer level. The good news is that live hog demand increased. In spite of the decline in consumer demand, the demand index for live hogs was up 1.7 percent in the first 6 months of 2005. The driving force for this growth was the 25 percent increase in exports. Without export growth, the live hog demand index would probably have been down 1 to 2 percent.

Live hog prices are expected to continue under pressure for most of the remainder of 2005. Feeder pig prices will be influenced by the size of the corn crop but are likely to continue strong relative to slaughter hog prices.