Beef Market Advisor

Saturday, November 08, 2003

USDA AMS Week In Review 11-07-03

Compared to last week, limited supplies of yearling feeder steers and
heifers sold steady to firm. Calves dominated receipts and sold unevenly
steady with most areas reporting prices that were within 1.00-2.00 higher or
lower than last week. Direct trade continues to be very slow and the most
active trading was reported in auction markets with heavy receipts like Oklahoma City,
OK and Ogallala, NE; where buyers could bid on large strings and put numbers together.

Demand was especially strong for calves that were weaned and pre-conditioned. This was
evident at Thursday's Wean-Vac Special at the Joplin Regional Stockyards, where program
cattle sold at premiums that were as much as $10.00 higher than Monday's regular sale.

Midwestern farmer-feeder demand for calves is growing, but interest from winter wheat
regions is slowing as dry conditions have dirimed a once-bright wheat pasture outlook.
The season's first blast of cold weather hit the nation's mid-section this
week, (which will also stunt wheat growth) and the Northern Plains saw their
first snowstorm. However, the calf market's near-term future still looks
bullish as prices remain pale in comparison to yearlings which have become
extremely hard to find.

Backgrounders and cattle feeders who have reaped huge profits from record-high yearling
and fed cattle markets may be looking for anything with four legs to rebuild their inventories
before the end of the year. Santa's sleigh will be weighted down with new pickups and
trailers and anything else that can be written-off this year. Feedlots added
to their tax burden again this week as they sold showlists 1.00-4.00 higher
from 102.00-106.00 live and 5.00 higher dressed from 165.00-167.00.

Despite higher prices and tight supplies, there were still over 180,000 head of
slaughter steers and heifers sold out of the five major feeding areas and CME
Live Cattle futures went limit-up late in the week to keep up with the cash.

Packers slowed chain speeds to a creep this week and estimated slaughter fell
below 600,000 head for the first week since late March of 1994. Lighter
slaughter helped hold Choice cut-out levels at the 170.00 level as the record
dressed beef prices of the last couple months have just now trickled down to
the retail counter, giving housewives "sticker shock". This week's reported
auction volume included 28 percent over 600 lbs and 44 percent heifers.

Auction Receipts: 370,000 Last Week: 405,200 Last Year: 277,300

posted by Dr. Harlan Hughes 8:32 AM [edit]

Friday, November 07, 2003

Beef Demand Rises Again by James Mintert, KSU Economist 11-05-03

Retail demand for Choice beef was stronger this past summer than in 2002, but the apparent increase in beef demand was not as large as some industry observers expected. During the July-September quarter, U.S. per capita consumption of beef totaled 16.9 pounds (preliminary estimate by LMIC, subject to revision). This summer’s beef supply was nearly 3% smaller than in 2002 and was the smallest summer quarter beef supply faced by U.S. consumers since 1996. Inflation adjusted retail Choice beef prices during July-September rose 9.4%, compared to summer 2002, far less than the 27% and 28% price increases observed in the live cattle and wholesale beef markets. As a result, the retail Choice beef demand index indicates that U.S. consumer demand for beef this past summer was about 6% stronger than in 2002. This is the third quarter in a row that U.S. retail beef demand has strengthened.

The modest increase in the beef demand index occurred in part because retailers this past summer only passed on a portion of the big increase in wholesale beef prices to consumers. Retail price changes typically lag changes in wholesale and live cattle prices. Potential consumer resistance to much higher retail beef prices this fall and winter could have a big impact on wholesale and live weight prices in the months ahead.

Retail Beef Demand Chart

posted by Dr. Harlan Hughes 3:29 PM [edit]

U.S. Net Carcass Beef Exporter by James Mintert, KSU Economist 11-05-03

U.S net carcass weight beef exports exceeded imports for the third month in a row during August. The shift from a net carcass weight importer of beef to a net exporter occurred primarily because beef imports fell below a year ago this summer. In addition to the suspension of beef trade with Canada, imports from Australia also fell below a year ago. During July-August, beef imports from Australia were 14% smaller than in 2002. In total, beef imports from all countries (including Canada) were 33% below a year ago during July-August.

U.S. beef exports benefited somewhat from Canada’s absence in the world trade arena. U.S. beef exports during July rose 8% above a year ago and were 3% larger than last year during August.

posted by Dr. Harlan Hughes 2:50 PM [edit]

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