LIVESTOCK REPORT
By Glenn Grimes

SWINE

Our pork exports continue to increase at an unbelievable rate. For January to September 2005, they were up 25.9 percent compared to this period of 2004 and up 55.9 percent from the same period of 2003. Last year (2005) was the fourteenth consecutive year with record pork high exports. Why such a large amount of pork is being exported is not completely clear. Probably the beef embargo by Japan is partially responsible. However, our pork exports to Japan for January to September were up only 17.7 percent while exports to the rest of our customers were up 32 percent compared to a year ago.

Without this growth in pork exports, our demand index for live hogs would have been down about 3.5 percent instead of 0.3 percent. This was the good news. The demand index for pork at the consumer level was down nearly 5 percent for January to October 2005 compared to these months of 2004. We had been concerned about the loss of live hog demand for July-September 2005, but it rebounded in October. We now believe the probabilities are favorable for retaining at least half of the 2003-04 increase through 2006.

Based on estimates in the Sept. 1 Hogs and Pigs Report, 2006 pork production in the United States will continue for the 6th year at a record level.

During the last 5 years, hog production has not followed its normal 4-year cyclical pattern. It is interesting that hog prices have followed close to their normal cycle. The increases in the price cycle have been due to growth in demand, however, rather than decreases in production as was normal in the past. It now looks like the 4-year hog production cycle no longer exists, at least not with the regularity of 50 years ago.

With live hog demand and pork production at the levels anticipated above, we expect an average live hog price in 2006 for Iowa to southern Minnesota of $42 to $45 per cwt. Feeder pig prices are expected to continue very strong through spring.

With a normal size feed grain crop, the odds appear high for relatively good profits for the average-cost producer during the first 9 months of 2006. If so, it will be the longest profit period on record for the average-cost producer.

CATTLE

Beef demand through October 2005 was down 2.3 percent from a year ago. Following growth of about 7.5 percent in 2004, this is a very good performance in our opinion. The industry will probably do well if, by the end of 2006, it has lost no more than half of the 7.5 percent demand growth of 2004.

Even though Missouri was quite dry last summer, a significant portion of the western U.S. had relatively good weather. When I traveled to Colorado last August, western Kansas and eastern Colorado were about the greenest one could believe possible. These improved forage conditions along with record high feeder cattle prices are the motivating factors for herd growth.

Calf prices in late November were still near record highs. By the time you read this article the border to Japan will be open to U.S. beef. Even though they will probably allow only shipments of beef from cattle less than 20 months of age, the border opening will be helpful. However, our exports to them will be limited because only about 8 to 9 percent of our steer and heifer beef is from cattle less than 20 months old.

On the Canadian front, we imported 212,000 head of live cattle from July 18 through September 2005. In 2002, we imported about 117,000 head each month. Apparently Canada did not have a big backlog of cattle under 30 months of age to send us when the border opened in July to shipments of this type of animals.