The situation in 2008 is very different: By January 1, 2006, total U.S. cutout values for Choice beef had already declined 24 percent from their October weekly peak of about $194 per cwt. cattle and beef prices peaked and began to decline. By the end of October 2003, Canadian-bolstered beef supplies had reached a level sufficient to blunt further price increases, and U.S. On August 8, 2003, the United States relaxed its ban on imports of Canadian beef, and trade, limited to boneless meat from animals less than 30 months of age, slowly resumed between the 2 countries. These shortages exacerbated an ongoing price run-up for U.S. As a result, the May 2003 BSE-motivated ban on cattle and beef imports from Canada instantly reduced U.S. These live-cattle imports from Canada entered the United States as cows to be slaughtered mainly for hamburger, as fed cattle for quality beef, and as feeder cattle of various weights that would eventually find their way to U.S. In 2003, during the latter stages of what was then an extended liquidation phase, U.S. Drought also extended the liquidation phase that followed the 1996 peak until it reached a low in 2004. In 1996, contrary to 2008, energy prices were low, the dollar was strong and increasing in strength, and feeder cattle prices were low enough that cattle feeding was profitable, despite the temporarily high grain prices. By late summer/early fall 1996, grain prices were dropping. If the 29- year cycle from 1867 through 1895 is excluded, the average duration of the remaining 9 cycles is 12.1 years.ĭrought often triggers the liquidation phase of a cattle cycle, as happened at the cyclical peak in 1996, which was also the last time corn/feed prices set record highs. The average duration of the 10 completed cycles is 13.8 years. The longest liquidation, 1919 through 1928, 10 years, during which inventories declined by 27.4 percent. Through 2004, the shortest liquidation was from 1966 through 1967, 2 years, during which inventories declined by 0.2 percent. The shortest expansion phase in any cycle was from 1980 through 1982, 3 years, during which inventories increased 3.8 percent from low to peak inventory. The first recorded cycle lasted 29 years, with a 24-year expansion phase followed by a 5-year liquidation phase. Only 4 of these cycles have lasted the ofttouted 10-12 year average during which inventories increase from an inventory low in an expansion phase, then decline in a liquidation phase to the next low. A short review of historical cattle cycles demonstrates the complex nature of cattle cycles and the difficulty of characterizing a “normal” cycle, and raises the possibility that the 1996-2004 liquidation phase is continuing rather than being part of a new cycle.Ĭattle inventory dynamics have been dominated by cycles, 10 of them since 1867 when cattle inventory records began. The cyclical character of inventory dynamics characterizing the cattle industry from 2005 to 2007 is difficult to explain, but some industry analysts think it may be a continuation of the previous liquidation phase, despite an inventory increase of 1.6 percent between January 1, 2005, and January 1, 2007. Cattle Cattle Industry Adapts to High Feed and Energy Prices However, domestic use could climb next year as exports decline from 2008 levels and lower prices stimulate use. Strong export sales, a weak dollar and a softening domestic economy combine to limit rises in domestic use in 2008. Lower forecast prices and lower forecast feed prices combine to maintain dairy herds and hold production relatively steady. Cattle imports from Canada are well above last year’s levels, while imports from Mexico are well below.ĭairy: Milk production increases, both this year and next, will be slight. In contrast, beef exports increased 31 percent. In early July, weekly fed cattle prices and beef cutout values had moved counter-cyclically higher to levels not seen since October 2003, while first-half beef supplies were near-record.īeef/Cattle Trade: Beef imports fell 21 percent according to official trade numbers updated with figures from the first half of the year. Cattle: Daily live cow prices in July remain at relatively high levels despite heavy commercial cow slaughter that continues to be supported by dry conditions, high supplemental feed costs, and imported cows from Canada.
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