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CME: Government Shutdown Leaves Question Mark Over Cattle Slaughter

15 October 2013

US - We start another week with no USDA price and slaughter reporting. This means we could not update the regular weekly summary table that accompanies every Monday report, write Steve Meter and Len Steiner.

While there continue to be attempts on the part of market participants to replace some of the information provided by the regular USDA report, the information so far, in our view, is vastly insufficient given the size of the market and the value of product traded.

On the supply side, it is difficult to get a good idea as to the number of cattle and hogs that are coming to market each day. So far, the only thing to go on are estimates from private analysts but that is no substitute for the actual FSIS inspector reports reviewed and reported by USDA.

Urner Barry provided some estimates on both cattle and hog slaughter based on their discussions with two private analysts. Their guess is that cattle slaughter for the week was around 623,000 head, about 0.8 per cent lower than the previous week and 1.6 per cent lower than a year ago. With no USDA data for confirmation, these numbers provide a rather broad guidance.

There is no indication as to how many cows are coming to market. Judging from the lean 90CL grinding beef prices reported, however, cow meat supplies are more than adequate at this point. We have been asking analysts around the industry whether they think USDA will issue a Cattle on Feed report this month.

All analysts we have contacted have indicated they expect no report will be published, removing a key piece of information with regard to cattle supplies in Q1 of 2014. We have no idea how USDA will handle the missing data, but it appears likely to us that we could have a missing data point in the series. We should get an update from USDA soon confirming the status of the upcoming cattle on feed and cold storage reports.



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