Livestock Monitor
A Newsletter for Extension Staff
Livestock Marketing Information Center
State Extension Services in Cooperation with the USDA
Market Indicators . . . November 30, 2007
Production Prices
Week Ending 12/1/2007 Last Year Ago Weekly Weighted Avg. Last Week Ago Year Ago
FI Cattle Slaughter (Thou Hd) 669 630 Live Steer 95.03 95.09 85.92
FI Hog Slaughter (Thou Hd) 2397 2159 Dressed Steer 150.04 149.85 135.22
FI Sheep Slaughter (Thou Hd) 53 48
Live Y. Chick Sl. (Mil Hd) 129.5 120.5 Beef Cutout (Choice 600-750) 150.65 147.63 140.97
USDA Hide/Offal ($/Cwt) 10.10 10.16 9.21
Slaughter Cattle Live Weight 1305 1295 GA Auction Fdr. Str. (6-7 Cwt.) 93.68 93.68 86.29
Slaughter Hog Live Weight 273 274
Slaughter Lamb/Sheep Live Wt. 137 140 Iowa/S. Minn. Base Hog (Wtd. Avg) 49.98 48.18 61.17
Natl. Net Hog Carcass (Wtd. Avg) 54.30 53.25 61.83
Week Ending 12/1/2007 Feeder Pigs (40-50 Lbs) 39.83 40.59 53.21
Beef Production (Mil Pounds) 533.4 493.3 Pork Cutout (185 Lbs) 59.52 58.17 66.04
Pork Production (Mil Pounds) 487.3 438.3
Lamb, Mutton Prod. (Mil Lbs.) 3.6 3.3 Lamb Cutout ($/Cwt) 231.97 233.20 222.48
Previous 6 Wk. Moving Avg. Corn, Omaha ($/Bu) 3.74 3.77 3.49
Total Beef (Mil Lbs) 509.6 500.5 Wheat, Portland ($/Bu) 10.98 NQ 4.99
Total Pork (Mil Lbs) 466.4 430.7 Wheat, Kansas City ($/Bu) 8.77 8.24 5.11
Total Lamb, Mutton (Mil Lbs) 3.5 3.4 Soybeans, S. Iowa ($/Bu) 10.52 10.67 6.59
Trends . . . PORK PACKER MARGINS INCREASE
Very strong byproduct prices and surging numbers of slaughter ready hogs have bolstered
pork packer gross margins (live-to-cutout price spread). The live-to-cutout price spread is the
difference between the purchase price of a hog and the value of the wholesale meat cuts
(cutout) plus the by-product value (non-meat items like skin, lard, etc.). On a monthly basis, the
pork live-to-cutout price spread was estimated at nearly $21.00 per hog in November, the
largest since December 2001.
From January through October of this year the estimated pork packer gross margin ranged
between about $13.50 (August) and $17.25 (March) per hog slaughtered. On an annual basis
for the five-year period from 2002 through 2006, the estimated gross margin was about $14.50
per hog. In recent months, two to three dollars of the year-to-year increase in pork packer gross
margin has been attributed to higher
byproduct values. In August, the
LIVE TO CUTOUT PORK PRICE SPREAD estimated pork byproduct value was at
Monthly a new record high. High byproduct
$ Per Head values are due to strong export
24
Avg. markets for some items and strong oil
22 2001-05 related markets have sent tallow and
20
grease prices skyrocketing.
18
2006 Seasonally, pork packer margins
16
are largest during the fall due to
14
increased hog slaughter. Recently,
12 2007 besides strong byproduct values the
10 availability of more hogs than
8 seasonally anticipated has also
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
supported packer margins. Still,
packer margins are nowhere close to the average 11 to 12 percent above 2006’s, but
levels that resulted when the number of below the 2005 record. Unless a significant
slaughter hogs overran slaughter capacity slow-down happens in the U.S. economy,
(beginning in the fall of 1998). On a per hog slaughter lamb prices in 2008 should be a little
basis, the record estimated monthly packer higher than 2007’s.
gross margin was nearly $42.00 per head in Feeder lamb prices so far this year have
December 2008. been down from last year with the strongest
prices posted in the first half of the year. At
SHEEP & LAMB OUTLOOK Texas auctions, weekly feeder lamb prices
U.S. sheep and lamb numbers this year peaked in April at $111.50 per cwt. On an
were reported as slightly lower than last year annual basis, feeder lamb prices for 2007 are
which has been reflected in below year ago projected to be down two percent from a year
lamb slaughter thus far this year. The smaller ago. In 2008, feeder lamb prices may decline
number of lambs this year has supported slightly due mostly to higher feedstuff costs.
slaughter lamb prices compared to 2006.
However, feeder lamb prices have not fared NEW FACT SHEETS
quite as well this year due to much higher In response to concerns regarding
corn and hay prices. Looking ahead into packers’ livestock purchasing practices, in
2008, generally similar supply conditions and 2003 Congress requested a study of
price patterns are expected. marketing arrangements that are utilized as
Competing meat and poultry supplies may alternatives to the cash market (AMA’s). A
influence lamb prices in 2008. U.S. beef specific concern of that study was marketing
production will decline next year, but pork and arrangements that gave packers control over
poultry production will increase. Overall, U.S. livestock more than 14 days prior to slaughter,
red meat and poultry supplies are forecast to commonly known as “captive supply”.
increase on a per person basis in 2008. This study was entrusted to USDA’s Grain
Additionally, overall U.S. economic conditions Inspection, Packers and Stockyards
(e.g. economic growth and consumer Administration (GIPSA) and the result was the
spending) could influence lamb markets in Livestock Marketing Study completed in early
2008 more so than in prior years. 2007. Due to the length and complexity of the
Federally Inspected (FI) sheep and lamb study, fact sheets were written by researchers
slaughter from January through October involved in the USDA-GIPSA study to help
totaled 2.1 million head, 1.4 percent or 29.5 summarize and explain key study results.
thousand head less than the respective period Experts representing twelve LMIC member
in 2006 and 11 percent less than the prior institutions (Land Grant University, USDA, and
five-year average. Based on weekly data, Associate) provided independent peer review
November slaughter should be slightly below of the fact sheets.
a year ago while forecasts suggest larger The first four fact sheets on economic
numbers in December. Thus, for the year, aspects of AMAs for livestock and meat are
sheep and lamb slaughter should be down now available on the LMIC website
about one percent from last year with lamb (www.lmic.info). The new fact sheets are: (1)
production down nearly two percent due to Background on Proposed Livestock Marketing
lighter dressed weights this calendar year. Arrangements Legislation; (2) Alternative
Looking ahead, sheep and lamb slaughter is Marketing Arrangements in the Beef Industry:
expected to post slight year-to-year declines Definition, Use, and Motives; (3) Downstream
in 2008 and into 2009. Meat Marketing Practices: Lessons Learned
At the onset of the year, weekly slaughter from the Livestock and Meat Marketing Study;
lamb prices were in the $180 per cwt. range and (4) Alternative Marketing Arrangements in
(carcass basis), by mid-year prices surpassed the Lamb Industry: Definition, Use and
the $200 per cwt. and peaked in late Motives. More fact sheets are in process.
September at about $212 per cwt. Although The direct hot link to the webpage is:
prices weakened some in the fourth quarter, http://lmic.info/memberspublic/LMMA/LMMAfr
for the year slaughter lamb prices in 2007 will ame.html