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Market forces at work

Agriculture.com Staff 03/09/2009 @ 3:40pm

A recent study published in the CME Group Daily Livestock Report indicated that, year over year, growth in U.S. cow slaughter is rising and well above year-ago levels.

As one might expect, declining live cattle and milk prices, along with high feed costs the last year, have taken their toll on both the beef and milk markets. In both sectors, cow slaughter is on the rise significantly from year-ago levels.

Total cow slaughter through February 14 totaled 128,100 head, or 13.7% higher than a year ago. The report also indicated a significant increase in dairy cow slaughter with year-to-date figures 25% higher than a year ago. Beef cow slaughter year-to-date is running less than 5% higher, but bear in mind that numbers were up last year. The report also indicated that Canadian cow slaughter numbers in the U.S. are up 34% from a year ago, but the overall impact accounts for just an 8% increase in overall U.S. cow slaughter.

As with any market, when bottom line ink turns red, adjustments are made. Sometimes not initially, but over time market participants will gravitate toward the basic laws of economics. From a long term impact, even with less cows now, it will likely be 6-8 months before we see higher feeder cattle prices. Unfortunately, the market needs to go through a transitional rough period before things get better. That is the stage we are currently in for this year's livestock markets, especially cattle. Better days lie ahead.

If you have questions or comments, contact Bryan Doherty at Top Farmer, 1-800-TOP-FARM ext. 129.

A recent study published in the CME Group Daily Livestock Report indicated that, year over year, growth in U.S. cow slaughter is rising and well above year-ago levels.

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