Beef Market Advisor

Monday, March 22, 2004

COW SLAUGHTER DOWN Source: Livestock Monitor, Livestock Market Information Project, Denver 22 Mar 04

For the first two months of 2004, weekly cattle slaughter has been smaller than a year ago and is expected to be down 5 to 6 percent for the first quarter. The slowdown in weekly cattle slaughter has been primarily driven by a smaller cow slaughter. Weekly cow slaughter has been well below 2003's, with reductions in dairy cow slaughter occurring in light of higher milk prices and beef cow slaughter reflecting the lack of supply of cull cows from Canada and a cyclically smaller U.S. herd.

In January and February, total Federally Inspected cow slaughter was 15 percent below a year ago, in contrast steer and heifer slaughter were each down only 9 and 8 percent respectively. Both beef and dairy cow slaughter have been below 2003, however beef cow slaughter was significantly down at 16 percent below last year, while dairy cow slaughter was only down around 13 percent from 2003's. Total cow slaughter is estimated to show a 12-13 percent decline in the first quarter.

Smaller weekly cow slaughter has been a key factor supporting cull cow prices this year. After the discovery of BSE in December, expectations were slaughter cow prices could fall drastically early in 2004. However, on a weekly average basis, 85-90 percent lean slaughter cow prices in January and February averaged 24 percent or $9.44 per cwt. above 2003's. Further, compared to the prior five-year average ($37.42 per cwt.), lean cow prices for the first two months of 2004 were up 29 percent. Lean slaughter cow prices should remain relatively strong in the coming months.

The major question is in coming months will be the timing and flow of Canadian cows into the U.S., which is now forecast to begin yet this calendar year.

posted by Dr. Harlan Hughes 9:02 PM [edit]

INTERNATIONAL TRADE HIGHLIGHTS -- Source Livestock Monitor, Livestock Market Information Center, Denver 22 Mar 04

In January, U.S. live cattle imports from Mexico were well below 2003's totaling 69,000 head, down almost 30 percent from a year earlier and 66 percent below December of 2003. So, January was the first time since March of last year to post a year-to-year decline in U.S. feeder cattle imports from Mexico. Lower feeder cattle imports from Mexico may be a trend that continues throughout much of 2004. The significantly smaller number of feeder cattle imports from Mexico coupled with the ban on Canadian cattle imports caused total U.S. live cattle imports for the month of January to be down 67 percent from a year ago.

The January international trade data for beef was about as expected. The exception was that U.S. beef imports from Canada were well below a year ago. U.S. beef exports were virtually zero due to the ban on U.S. beef products implemented by U.S. trading partners in response to the discovery of a single case of BSE in December. Imports of beef and veal totaled about 342 million pounds (carcass weight basis) in January, 7.5 percent above 2003's. Among the key trading partners, beef imports from Australia and Canada were down 11 and 19 percent, respectively. While New Zealand was up 70 percent and Mexico posted a 19 percent yearly increase.

As expected, U.S. exports of pork in January were well above a year ago, as foreign demand for U.S. pork products remained strong in light of reduced supplies of beef and poultry in the international protein market. U.S. pork sales in January totaled 154 million pounds, 15 percent larger than 2003's. That was the largest U.S. export figure ever reported for the month of January. On a per country basis, pork shipments to Canada and Mexico were up 39 and 78 percent, respectively, but exports to Japan were down about 2 percent from a year ago. However, compared to December, U.S. pork exports to Japan were up 18 percent, a trend likely to continue for at least several more months. And U.S. pork exports could be above current forecasts if recent news stories about problems with disease (hog cholera) prove to be true.

U.S. broiler exports were unexpectedly lower in January. Broiler exports totaled 362 million pounds on ready to cook basis, 14 percent or 56 million pounds less than 2003's. U.S. broiler exports to both Japan and Russia were well below a year ago. However, compared to a year ago, U.S. broiler exports to Canada and Mexico were up 17 and 14 percent, respectively.

posted by Dr. Harlan Hughes 9:00 PM [edit]

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