LIVESTOCK REPORT
By Glenn Grimes
Cattle slaughter in March 2006 was up over 4 percent from a year ago. For the first 2 weeks of April, it was up over 8 percent. Slaughter weights also increased sufficiently to add another 2 to 3 percent to beef production.
Our consumer demand index for beef for the December 2005 through February 2006 period was down 4 percent from this period a year ago. The total supply of meat available to the U.S. consumer is at a record high level. The larger supplies of pork and poultry were probably part of the reason for this drop in beef demand.
The good news for this 3-month period was that the demand index for live fed cattle was up 4.6 percent from a year earlier.
Cash feeder cattle prices have declined from their high last year but continue at a very attractive level. In early April, 400 to 500 lb. steers were down $10 to $15 per cwt. from a year earlier and 700 to 800 lb. steers were also down $10 to $15. Prices for both fed cattle and feeder cattle have probably passed their highs for this production cycle. However, they are expected to hold relatively strong for some time.
Cow slaughter, especially beef cows, in late February was
above a year ago. This larger cow slaughter was associated with the dry weather
and range fires in the Southwest U.S.
According to planting intentions released by USDA in late March, producers plan to plant 3.78 million acres less corn than in 2005 but 4.8 million acres more soybeans. If producers follow through with these intentions, corn prices will be higher and protein prices lower in the 2006-07 marketing year than last year.
There are estimates that corn prices could average as much as $2.75 per bushel in the 2006-07 marketing year. In early April, the midpoint estimate for corn prices for the 2005-06 marketing year was $2.00 per bushel. A $0.75 per bushel increase in corn price would reduce 400 to 500 lb. calf prices by $7 to $10 per cwt. and 600 to 700 lb. yearling prices by $4 to $5 per cwt.
Beef and veal exports continue to grow but they have a long way to go to get back to 2003 levels. January to February beef and veal exports were up 63.3 percent from this period in 2005 but were still 63.3 percent lower than 2003.
Feeder cattle imports from Mexico were up 8.5 percent during
the first 2 months of 2006 compared to 2005. Total live cattle imports for
January to February were up 109 percent from 12 months earlier because in
mid-2005 our border was opened to Canadian cattle less than 30 months of age.