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ICE raids carry lingering impact on livestock markets

Agriculture.com Staff 12/14/2006 @ 11:39am

Analysts see lingering market effects from the Immigration and Customs Enforcement (ICE) raids of Swift & Co.'s meatpacking plants on Tuesday.

On Thursday, the Chicago Mercantile Exchange hog futures were trading lower with Feb. hogs at $62.85. In general, hog prices traded steady to down across the country.

The lower trading is being blamed on a number of factors such as more marketings, seasonal downward pressure, and uncertainty of hog slaughter numbers from meatpacking raids, analysts said.

Morgan Paisley, senior agriculture risk manager for Alaron Trading Inc., said the raids are basically priced into the market, but the issue is still exists.

"When you consider more hogs are being marketed with this nice weather, and meatpacking companies have fewer workers to process the meat, that tends to exaggerate the downside of the market," Paisley said.

Paisley sees the ICE raids affecting the market psychology for a while. "It depends on how quickly the companies can get the personnel issues resolved. There are not a lot of people just waiting to work on a kill floor for minimum wage. That could take awhile to replace those people," he said.

Adam Frick, Allendale Inc. livestock analyst, said most meatpacking plants are running at near capacity, following the raids. The markets may be lower simply from little product moving at any great prices to end the year, he said.

"Typically, consumers have made purchases for Christmas already. If they had a good year, they tend to choose higher end cuts, maybe even beef," he said.

Meanwhile, from the feedlot and packer end of the industry, Frick doesn't see the raids as a big factor.

"I think feedlot operators are still thinking they have the upper hand, and if the packers need cattle, they are going to have to come to the feedlots to buy them," Frick said.

For the cattle market, Thursday morning CME futures prices were lower, with Dec. down $0.20, Feb. down $0.05. In general, the cattle market is priced appropriately at this time of the year, analysts said. The beef slaughter is feeling less pressure from the meatpacking raids, and more from weaker offerings on Wednesday.

"We've gotten cheap enough over the last three months to price in those extra cattle that went into the feedlot early during the drought in Texas and Oklahoma. It's now time to move that product out," Paisley said. "The market is moving in the right direction to fix that problem."

Analysts see lingering market effects from the Immigration and Customs Enforcement (ICE) raids of Swift & Co.'s meatpacking plants on Tuesday.

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