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Livestock market starting on a weak tone for 2006

The National Agricultural Statistics Service (NASS) released figures on its Livestock Slaughter report last week.

The report indicated commercial red meat production for the United States totaled 389 billion pounds during January, or up 7% from a year ago. Pork production for January was estimated at a record high 8.12 billion pounds, also up 7% up from a year ago. Hog slaughter was up 5%, and weights were up 3 pounds per average hog at 273 pounds. Beef production was up 7% from January 2005 at 2.04 billion pounds. Slaughter at 2.64 million head was up 5%. Average weight per marketed animal was up 19 pounds at 1281 pounds.

Obviously, January was a big month for livestock production. We have been anticipating expansion in the cattle, hog and dairy industries. Strong profits and cheap grain have helped to fuel increases of livestock production. In addition, consumer demand may have waned a little, as higher energy costs and Christmas credit card bills came due.

In turn, both the hog and cattle markets dropped significantly. Dairy futures held up exceptionally well through fall, but finally came under pressure as well, losing ground so far in 2006.

So what does it all mean? Obviously, herd expansion for livestock has been underway for some time, and now the market is beginning to see some of its effect. It also indicated that, for the most part, January's weather was excellent for beef cattle since poundage was up and feedlots remained mostly current. Bottom line: The strong livestock bull markets of the past couple seasons will not likely return for some time.

For corn producers, this means a stronger demand base, and weather issues this summer could send prices significantly higher. For corn buyers, this means you should either have corn on hand or be prepared to book long term needs. A weather market could drive prices dramatically higher, with corn making a push well over $3 and likely up to $4 or $5 if the market perceives production less than 10 billion bushels.

If you have questions or comments, please contact us at 1-800-TOP-FARM, ext. 129.

The National Agricultural Statistics Service (NASS) released figures on its Livestock Slaughter report last week.

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