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CME: USDA Reports Bring About a Busy Week

by 5m Editor
18 June 2008, at 1:54pm

US - CME's Daily Livestock Report for 17th June, 2008.

This is another busy week for USDA reports with the monthly Livestock Slaughter, Cold Storage and Cattle On Feed reports being released on Friday. Friday, June 27 will mark the release of the quarterly Hogs and Pigs Report and then on Monday, July 30 we will get the crucial reports on Acreage and Grain Stocks. We don’t recall a 10-day period in history that has seen estimates that could have a greater impact on U.S. grain and livestock markets.

E-Livestock Volume 6/17/08 6/16/08 6/10/08
LE (E-Live Cattle): 6,975 7,804 8,129
GF (E-Feeder Cattle): 424 598 431
HE (E-Lean Hogs): 15,950 14,765 23,963

Just in time for these important reports, Dr. Darrell Mark of the University of Nebraska-Lincoln has written interpretations for both the USDA Cattle On Feed and Hogs and Pigs Reports. We think many DLR reader will find them useful in placing context to the numbers that we see and use so much and to the less conspicuous numbers in these reports. These are very thorough, well-written guides that we think you will enjoy and use. Dr. Mark’s papers can be found at the following sites:
http://www.ianrpubs.unl.edu/sendIt/ec850.pdf
http://www.ianrpubs.unl.edu/sendIt/ec851.pdf.

Note that “sendIt” in this address is “send it” with a capitalized i. It doesn’t come across too well in our chosen font.

CANFAX’s monthly Cattle On Feed report for Alberta and Saskatchewan indicates that western Canada’s feedlot inventories stood at 853,900 head on June 1, 10.2% lower than one year ago. That continues a pattern of year-over-year declines that dates to last August. The May 1 inventory was 10% lower than last year. May 2008 placements were 7.1% lower than during May 2007 and marketings were 4.2% lower. May saw more light-weight cattle placed than was the case last year with placements of cattle weighing under 700 pounds up 14.6% while those weight over 700 pounds were 11.5% lower. But one must be careful with those comparisons — last year’s May placements were heavily skewed toward heavy cattle primarily due to much higher feed costs. These lower feedlot inventories should be fully expected since we continue to import far more feeder cattle from Canada than we did one year ago. May in-shipments were 69% larger.

USDA, in its monthly Livestock, Dairy and Poultry Outlook, lowered forecasted pork production for 2008 and 2009, citing lowerthan- expected imports from Canada and lower market weights. Market hog imports, still 4.1% higher YTD, have been 36-46% lower the past 4 weeks. Feeder pig imports are still +20% YTD but the week of June 7 was the first week since mid-August and only the 8th since January 2007 in which feeder pig imports were lower than one year earlier. We expect that trend to continue given smaller Canadian pig crops and a declining breeding herd. USDA’s point about market weights is a bit shakier. Logic says that weights should be lower but reality is obstinately refusing to follow theory. Average hog weights have dropped below year-ago levels recently but are still +0.2% YTD. USDA’s forecasted 2008 pork production is still record- large at 23.4 billion pounds, 6.6% larger than last year. They expect 2009 production to fall by 2.9% to 22.7 billion pounds. We’ll see.

5m Editor