Grimes & Plain Cattle Outlook
US Weekly Cattle Outlook, 17th November 2006 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.Ron Plain
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Beef exports for January-September were up 80.3% from 12 months earlier, but still 56.5% below the same months in 2003 before the cow was found with BSE in Washington state.
Beef imports for the first nine moths of 2006 were down 15.7% from a year earlier. The major reduction in beef imports were: Australia down 5%, New Zealand down 5.1%, Canada down 27.2% and Uruguay down 43%.
The export growths by country were: Canada up 178.1%, Mexico up 63.5%, Caribbean up 68.3%, Taiwan up 24.2% and other up 30.9%.
Net beef imports as a percent of production declined from 12.8% in the January-September period in 2005 to 7.8% in 2006. This, along with population growth, is the main reason for the strong demand for live cattle in 2006 compared to 2005.
Feeder cattle imports from Mexico were up 6.4% in the first nine months of 2006 compared to a year earlier. Total live cattle imports for these nine months were up 55.5% from 12 months earlier. The big growth is due to the border to Canada being closed to live cattle until July of 2005 because of BSE.
Feeder cattle and calves over 500 pounds were $2.00 per cwt lower, and calves under 500 pounds were steady to $3.00 per cwt higher this week at Oklahoma City compared to 7 days earlier.
The prices by weight groups of medium to large frame number one steers at Oklahoma City this week were: 450-500 pounds $119-133 per cwt, 500-600 pounds $105-119 per cwt, 600-700 pound calves $97.50-103.00 per cwt, 700-800 pound calves $91.25-99.50 per cwt, 600-700 pound yearlings $103.00-107.25 per cwt, 700-800 pound yearlings $97.00-102.75 per cwt and 800-1,000 pounds $95-102 per cwt.
The Center for Agriculture and Rural Development (CARD) at Iowa State University did a study that indicates with expected oil prices, tax credits and distiller grains when combined with plant costs indicates ethanol plants will be built until corn costs are pushed up to $4.05 per bushel.
It is not completely clear on what this means for the cattle industry because of the cattle industry's ability to use substantial quantities of distillers dried grains in the cattle rations. For hogs, it means a 10-15% decrease in production and the poultry industry would also be in for substantial downsizing. These higher feed prices will reduce feeder cattle prices and probably mean some reduction in the cow herd from current levels. Therefore, rather than starting to build the cow herd again when we get rain over much of beef cow country we would need to reduce the herd some.
Packers were not able to push fed cattle price a lower this week to improve margins.
The average weighted live fed cattle price for the five-market area through Thursday was $86.37 per cwt, up $0.68 per cwt from a week earlier. The five-market average weighted carcass price was down $0.40 per cwt at $134.00 per cwt compared to 7 days earlier.
Wholesale beef prices this Friday morning showed Choice beef at $140.66 per cwt, down $3.00 per cwt from last week. Select beef was down $3.67 per cwt at $127.95 per cwt.
Slaughter this week at 655 thousand head was up 9.3% from a year earlier.
There will be no letter next week due to the Thanksgiving holiday. Have a nice one.
TheBeefSite.com News Desk