Livestock Angles: Steady to lower meats into ’08

January 11, 2008 02:53 pm

— The past few weeks in the livestock market have seen prices steady to lower for both cattle and hogs as the holiday-period approached. This trend will likely remain until we move into the new year.
The cattle market has been extremely sluggish with packers cutting back on the kill in an attempt to force the beef cutouts higher. This has weakened the cash prices throughout the Midwest over the past couple of weeks.
With the holidays upon us and no adverse weather conditions to create a bulge in the market, prices appear to remain flat to lower for the near term. Weights of animals remain high, so beef production exceeds last year’s levels and is providing ample supplies of beef to the market.
Beef cutouts have improved once again, but as the price has risen, the volume of beef traded has declined. This continues to reflect a resistance by the retailer to increase the price to the consumer — or the lack of the consumer to pay higher prices when competitive meats are less expensive per pound.
There has been no progress in the export arena regarding Japan and South Korea, which continues to hamper overall demand for beef. The next several months should see finished cattle numbers increase; without a weather disruption or other unforeseen event, prices are likely to remain defensive. Therefore, producers are urged to look at locking in winter and spring inventories on any strength in the market.
The hog market has seen a slight recovery in the past few weeks to rebound from the year’s lows. Slaughter remains heavy, indicating that the number of hogs still has not decreased significantly to be able to sustain a longer term rally at this time.
The good news is that demand has remained high, so there does not appear to be a back up of pork product in the coolers. The export market has been a real plus to the hog market this past year, and next year remains encouraging.
If hog numbers begin to decline and export business remains good, the possibility of a stronger cash price would be in the picture next year. At the current time, look for prices to remain steady to lower until inventories of hogs begin to decline.
Weather could bring some short-term strength to the market, but producers should use this strength to lock-in winter and spring inventories. The U.S. Department of Agriculture Quarterly Hogs and Pigs Report at the end of December should be an interesting report and set the tone for the price direction in 2008.

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