September 6, 2004

US Wholesale Beef Prices Slide Down 4.5% From Last Week

U.S. wholesale choice-grade beef prices this week declined about 4.5% while select values fell 3.3%, which was opposite the trend from the same week a year ago when prices gained approximately 4.5% in choice and 1.6% for select.
 
The fed cattle and wholesale beef markets at this time a year ago were surging due to short supplies following the May 20 ban on imports of Canadian cattle and beef. The ban on Canadian beef lasted throughout the summer and was eased in August when the U.S. announced it would begin accepting certain boneless cuts. However, the beef imports didn't get under way until September, too late for the Labor Day holiday.
 
Lagging retail-price gains compared with the wholesale advance at this time a year ago also contributed to the tight beef supplies as consumers were somewhat insulated from the price increases that came later at the retail counter.
 
Higher retail price points for beef and less featuring by grocers as a result, along with record high gasoline prices this summer and back to school expenses over the past few weeks, has resulted in slowed sales.
 
University of Missouri agriculture economists Ron Plain and Glenn Grimes in their weekly cattle outlook report released Friday said "fed cattle marketings are not current based on choice beef prices." They also said that "at this time, we have no evidence that the beef demand at the consumer level is not holding strong. Beef exports in total keep moving up some but are still quite small. Our beef exports in June were up 15% from May but were still down 82% from June 2003."
 
Concerning the U.S. beef export markets and ban on imports of Canadian cattle, the University of Missouri economists said: "Very little information is being publicized about Japan opening their borders to beef imports from the U.S. and Canada. We expect our border with Canada being opened quite quickly after Japan starts importing beef from the U.S. When this happens, it will be positive to fed cattle prices but negative to feeder cattle prices in the U.S."
 
Plain and Grimes also said "if beef demand does not weaken materially, there is reason for hope that cattle prices will be generally strong for several years."
 
THIS WEEK'S ESTIMATED SLAUGHTERS, COMBINED MEAT PRODUCTION
 
This week's cattle slaughter was estimated at 640,000 head, compared with 623,000 a week ago and 648,000 a year ago. Slaughter this week a year ago was reduced due to the Labor Day holiday falling within the week. Year-to-date cattle slaughter is estimated at 22.047 million head, down 10.0% from a year ago.
 
Federally inspected hog slaughter for the week was estimated at 2.037 million head, compared with 1.996 million a week ago and 1.747 million a year ago. Year-to-date hog slaughter stands at 67.633 million, up 3.1%.
 
This week's combined meat production - for beef and veal, pork and lamb/mutton - was estimated at 893.3 million pounds, versus 870.3 million last week and 829.1 million a year-ago. Combined meat output for the year is down 4.2% from a year ago.
 
Broiler slaughter this week was estimated at 166.229 million head, compared with 164.670 million a week ago and 137.041 million a year ago.