LIVESTOCK REPORT
By Glen Grimes

As expected, the U.S. cattle herd grew during 2005. The January inventory of all cattle and calves in the United States was up 1.7 percent from 12 months earlier. The number of all cows and heifers that had calved was up 0.9 percent.

The number of beef cows that had calved was up 1 percent, and the number of dairy cows and heifers that had calved was up 0.6 percent from a year earlier. The number of beef heifers being held for herd replacements was up 3.8 percent and the number of dairy herd replacements was up 3.9 percent from a year earlier. The 2005 calf crop was up 0.7 percent from 2004. The number of young cattle outside feedlots not held for herd replacement was up 1.7 percent from last year.

Missouri’s cattle herd is growing faster than the U.S. herd. It increasing 3.4 percent between Jan. 1, 2005, and Jan. 1, 2006. Missouri’s cow herd is also increasing at a faster rate than the U.S. herd.

The number of all Missouri cows and heifers that had calved was up 4.9 percent, beef cows and heifers that had calved was up 5.4 percent, but dairy cows and heifers that had calved was down 4.2 percent. Missouri’s 2005 calf crop was 2 percent larger than 2004’s. We continue to rank second in the nation in number of beef cows.

With normal forage production, the U.S. cattle herd is expected to continue to grow for at least a few years.

U.S. beef exports continue to increase. Total beef exports for January through November were up 50 percent compared to the same period in 2004. However, they were still 74 percent below the first 11 months of 2003.

By country of destination, our 2005 exports to Canada were up 94.2 percent; to Mexico up 35.5 percent; to the Caribbean down 0.6 percent; and to other countries up 180.6 percent. Mexico was our largest beef customer, purchasing almost two-thirds of our beef exported during January through November 2005. Japan halted the import of U.S. beef in late January after animal spines were found in three boxes of frozen beef at Tokyo International Airport. It is not known how long the ban will last. There appeared to be little reaction to the ban in the U.S. beef market.

The number of feeder cattle imported from Mexico during January to November 2005 was down 9.8 percent compared to this period in 2004. However, our total live cattle imports for this period were up over 28 percent because in mid-year our border was opened to imports of Canadian cattle less than 30 months of age.

The domestic demand for beef in 2005 was down 3 percent from a year ago based on the preliminary data used to calculate our demand index. The good news is that the demand index for live fed cattle was up 0.8 percent in 2005 compared to 2004.

The fourth quarter of 2005 showed a similar trend. Our consumer demand index for beef was down 4.3 percent compared to this quarter of 2004 while demand for live fed cattle increased 3.2 percent.

The prices for choice beef at the retail level were up 0.6 percent in 2005 compared to 2004. The total marketing margin for beef in 2005 was down 2.5 percent from a year ago, with the processor, packer, and retailer each having smaller marketing margins than 2004. All of the increase in retail prices plus the amount of the reduction in the marketing margins went to the cattle feeders.

Live fed cattle prices were at a record high in nominal dollars in 2005. In fact, they set a new record high in 2003, 2004 and 2005.

Feeder cattle prices continue at a very strong level and are expected to continue strong for all of 2006 if we have normal crop production.

SWINE

Pork exports in 2005 continued to run well above 2004. For January to November, they were 22.4 percent above this period of 2004. In fact, January to November 2005 tonnage was 11 percent more than the annual total for 2004.

Our 2005 consumer demand index for pork was 4 percent below the 2004 level. However, during the fourth quarter of 2005, consumer demand was down only 3.3 percent compared to the 4.2 percent average loss for the year.

The good news is that our 2005 demand index for live hogs was only 1 percent below 2004. However, October through December it was down 3.3 percent compared to October to December 2004.

We are concerned about demand for pork and live hogs in 2006. In January, signs indicated weakness in demand for pork. At least a portion of this weakness may be due to large supplies of meat and lower chicken prices. Much of the weakness in chicken prices is associated with Avian flu and the impact it is having on demand for chicken around the world.

Hog weights continue to contribute to the growth in pork production. Live weights for barrows and gilts in Iowa-Southern Minnesota set new record highs for the three weeks ending Jan. 21. Barrow and gilt carcass weights averaged 202 lbs. for the weeks ending Jan. 7 and 14.

The odds appear quite high that pork production will set new record highs in both 2006 and 2007. With this level of production and productivity growth, we do not need to increase the breeding herd.

 We are hear about some pig disease contributing to death loss in North Carolina. Whether these losses will be enough to impact summer marketings is quite speculative; but unless they do, slaughter hog prices in 2006 may not be much above the breakeven price for average cost producers.