Iowa Public Television


Cattle Producers Hold Tight to Inventories

posted on October 22, 2004

The markets have been friendly to cattle producers in 2004, but many analysts are worried about the future. The two great unknowns right now are the Japanese ban on U.S. beef imports ... and the U.S. ban on live Canadian cattle. How much longer will they continue?

American and Japanese negotiators extended their talks in Tokyo this week in an effort to resolve differences over blanket testing for Mad Cow disease. Japan wants it ... the U.S. doesn't.

How those talks are resolved will have an impact on prices for beef, as well as for feed grain usage and production.

But overseas sales aren't the only price factor for beef. USDA on Friday provided its latest snapshot of domestic marketing and feeding trends.

Cattle Producers Hold Tight to Inventories According to USDA, cattle producers in September continued to hold large inventories. Analysts said the reluctance to move livestock was due to a shortage of yearling cattle and dicey profit margins.

USDA's October 1 inventory showed the number of cattle-on-feed at 103 percent compared to a year ago ... the number placed at 96 percent ... and the number marketed at just 89 percent.

Analysts noted prices for yearling cattle remain very high, while futures prices for those animals when market-ready currently stand below their purchase cost. As one trader put it, "It's difficult to make money when yearling prices are $30 a hundredweight higher than the projected slaughter cattle price."

The retention of large cattle inventories raises questions on whether the market is staying current. One estimate places the number of cattle in feedlots at 121 percent of the five-year average ... further evidence that producers may be moving livestock to market, just not as aggressively as they did in the past.

Tags: agriculture animals beef cattle livestock Mad Cow markets meat news USDA