LIVESTOCK REPORT
By Glenn Grimes

CATTLE

The total cattle herd and the total cow herd are expected to be larger on Jan. 1, 2006, than last January. Remember, the number of heifers being held for beef cow replacements was up 4 percent and dairy heifers being held for replacements was up percent on July 1, 2005, compared to a year earlier.

The 2005 corn crop—the second largest on record—helped to keep feeder cattle prices near record highs. In mid-October, 400 to 500 pound steer calves were selling for $131 to $158 per cwt. at Oklahoma City.

This compares with $129 to $152 in the same week of 2004. In mid-October, 700 to 800 pound steers at Oklahoma City sold for $112 to $124 per cwt. compared to $113 to $118 a year earlier.

Fed cattle prices have rallied substantially from the lows in late summer. In mid-October they were in the upper $80s. In the same week of 2004 they were in the low $80s. In mid-October 2005, wholesale choice beef was selling for $143 per cwt. compared to $136 a year earlier. However, cattle feeders were losing money because of the prices they paid for feeder cattle.

In our opinion, beef demand performed very well during the first 8 months of 2005 considering its almost unbelievable growth in 2004. In January to August 2005, demand for live cattle was near the 2004 level, but on the minus side. Demand for all meat except broilers was down compared to the first 8 months of 2004. Turkey performed the worst, with a demand index 9 percent lower than a year earlier.

Only about 95,000 head of live cattle were imported from Canada from July 18 (when the border opened) through August 2005. It is now obvious that there was not a big backlog of live cattle waiting to be sent across the border. Remember, only Canadian cattle under 30 months of age are eligible to come into the United States.

SWINE

Pork exports continue to grow at an unbelievable rate. For January to August, U.S. pork exports were up 26.5 percent compared to this period of 2004. Remember, in 2004 there was a 27 percent increase over 2003. Comparing our pork exports for the first 8 months of 2005 to 2004 by countries, they increased by 16.8 percent to Japan, 37.3 percent to Canada, 3.7 percent to Mexico, 114 percent to Russia, 177 percent to South Korea, 59.6 percent to mainland China, nearly 70 percent to the Caribbean, and over 138 percent to "other" countries.

Growth in pork exports for January to August added about 3.3 percent to our demand index for live hogs compared to what it would have been with the export/import levels of 2004.

Our demand index for pork for January to August was down about 3 percent compared to this period in 2004. Demand for all meats except broilers was also down. The good news continues to be live hog demand which was up slightly in the first 8 months of 2005. However, when data becomes available, we believe our October demand index for live hogs will be down a little compared to last year and will result in a lower average for the January to October period.

We expect hog slaughter in 2006 will be a little more than 1 percent above 2005, mostly due to productivity growth.

With the second largest corn crop of record in 2005, feed costs for the average producer are expected to be about $1 per cwt. below last year through the first 6 months of 2006. We expect slaughter hog prices to average in the mid to upper $40s for the first 9 months of 2006 if live hog demand doesn't lose more than half of its 2003-04 increase. Hog prices in the fourth quarter of 2006 are expected to be near breakeven for average cost producers.

Feeder pig prices are expected to continue strong through this winter.