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Border Opening Will Cost $240 Per Head

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Anonymous

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Today 2/22/2005 2:26:42 PM


BSE Cattle Update: OCM Says Canada Border Opening Could Cost $240 Per Head



Lincoln, NE ~ The Organization for Competitive Markets (OCM) today urged Congress to overrule the U.S. Department of Agriculture’s intention to resume imports of live Canadian cattle and expanded boxed beef products from Canada on March 7. Congress is on recess this week but will reconvene on Monday, February 28. Industry experts say producers face a potential $20 per hundredweight price decline or $240 per head.



"U.S. borders are scheduled to reopen in two weeks," noted Keith Mudd, OCM president. "USDA has not indicated any willingness to withdraw its final rule, even in light of the increasingly dismal economic forecasts if it proceeds to do so. It is time now for Congress to step in and take decisive action that will protect U.S. producers from irreparable harm."



Schwieterman Marketing, LLC, a firm specializing in risk management and cash grain and livestock marketing plans estimates that a minimum of 100,000 cattle per month will pour over U.S. borders if USDA’s rule is implemented, increasing weekly slaughter by four to five percent. In typically normal livestock markets, a one percent change in supply results in a two percent change in price. With Asian export markets still closed, the firm is forecasting a 10% break in August live cattle prices that could easily grow to 20% unless export markets are opened.



Brett Crotts, a risk manager with Schwieterman Marketing said, "Currently the August live cattle are between $80 and $81. By the time we reach August, the fundamentals of the cattle market will be similar to 2002 and 2003. It’s important to note that we had Asian export markets at that time. It’s entirely possible to have a $20 break in price if the border reopens and Asian markets remain closed."



A recently released Grimes and Plains Report says cattle prices "will come under sustainable pressure" if U.S. borders reopen on March 7. "We have been expecting more stockpiling of feeder cattle in Canada than fed cattle," noted the analysts. "If so, feeder cattle prices are likely to be impacted more negatively than now indicated."



Estimates of Canadian cattle available to cross U.S. borders range from one million to two million head.



"Canada has not yet demonstrated that it has control of its bovine spongiform encephalopathy (BSE) crisis. Canada’s testing program falls far short of the BSE surveillance program underway in the U.S. A recently released report from the Office of the Inspector General shows that not a single Canadian processing facility meets the minimum requirements of product segregation, meaning those processors still haven’t properly implemented methods to appropriately segregate meat derived from younger and older animals. There simply are too many unanswered questions for Congress to allow the borders to reopen," said Mudd.



"Before borders are reopened we must have mandatory country of origin labeling in place, Asian export markets must be re-established at previous export levels, and all Canadian cattle already residing in the U.S. must be located and permanently marked in order for appropriate segregation from both the human food supply and the animal feed supply chain," stated Mudd.



The Organization for Competitive Markets (OCM) is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities. OCM helps lead the Cattlemen’s Competitive Market Project which is a voluntary contribution program funding the effort to increase demand for U.S. cattle and beef in open and competitive markets.
 

Mike

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Let's see..............NCBA said we lost $175.00 per head last year from exports being closed down. Add that to $240.00=$415.00.
Lot's of money left on the table. Good thing I don't have a thousand head of cattle!
 

Northern Rancher

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It's gonna be interesting watching these cattle 'pour' over the border-they sure won't if they have to be trucked as there are none left. I'm sure the border vets will do their best to slow things as much as they can. I don't think the market will adjust all that much once the r-calf''the sky is gonna fall b.s. runs it course'.
 
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Anonymous

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Mike said:
Let's see..............NCBA said we lost $175.00 per head last year from exports being closed down. Add that to $240.00=$415.00.
Lot's of money left on the table. Good thing I don't have a thousand head of cattle!

Look at the bright side- by not having a 1000 head you just made $415,000 -spend it wisely :lol:
 
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Anonymous

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Anonymous said:
Today 2/22/2005 2:26:42 PM


BSE Cattle Update: OCM Says Canada Border Opening Could Cost $240 Per Head



Lincoln, NE ~ The Organization for Competitive Markets (OCM) today urged Congress to overrule the U.S. Department of Agriculture’s intention to resume imports of live Canadian cattle and expanded boxed beef products from Canada on March 7. Congress is on recess this week but will reconvene on Monday, February 28. Industry experts say producers face a potential $20 per hundredweight price decline or $240 per head.


Response: Who are the so called experts that they cite? If the 2.0 million head were imported in a twelve month time span that would add 1.5 billion pounds of beef to U.S. production. That level of increased beef production would cause annual average fed cattle price to decline by approximately $6.00/cwt or $72 per head. That is far short of the OCM's claim of $240 per head.

The USDA has revised downward their estimate of imports to 1.3 million head which is the total we forecast at the beginning of this process. That level of imports would increase annual beef production by 975 million pounds. Scuh an increase in beef production would negatively impact fed cattle prices by $4.00/cwt or approximately $48 per head versus the sensationalist, fear mongering and I might add wrong view being put forth by the OCM.

Regarding their comments concerning feeders and calves. It is likely that imports from Mexico will decline this year sufficiently to offset at least one-half the total feeder and calf imports from Canada.

Additionally one should note that the cattle slaughtered in the U.S. will likely reduce the amount of beef product imported from Canada. This will offset some of the negative impact of live cattle imports. No one wants any losses so let's all work together to re-establish our export trade as rapidly as possible.

The bigger problem facing the U.S. beef market is the continued erosion in domestic beef demand. That ongoing decline in demand can easily outweigh the impact of cattle imports. Adverse winter feeding conditions has masked the ongoing buildup in domestic fed cattle supplies while the resultant lower levels of weekly beef production has masked the erosion in domestic consumer beef demand. Have a great day.
 
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Anonymous

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Quote: "Industry experts say producers face a potential $20 per hundredweight price decline or $240 per head."


How many of you guys actually believe this garbage???

Typical OCM bullsh*t!



~SH~
 

Maple Leaf Angus

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My previous post was made in reference to the OCM piece of crap at the head of this thread.

You are correct, guest. But it is much easier to "blame Canada" for a price drop than it is to face the reality of declining demand. A decline, I might add, that might have been stopped before it started if the price of beef had not gotten so high to the American consumer because of the short supply caused by the lack of Canadian product.

So, all you US producers, when your butcher cattle drop to 65 cents I hope you saved some of your profits from the last 2 years 'cuz you might need to draw on them.

By the way, how WILL your fats pencil out at 65 cents? :shock:
 

Maple Leaf Angus

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And another thing, why the hell is the word "competitive" in their name? That's a funny word to have in the name of an org. that's afraid of competition. :?
 

agman

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Maple Leaf Angus said:
My previous post was made in reference to the OCM piece of crap at the head of this thread.

You are correct, guest. But it is much easier to "blame Canada" for a price drop than it is to face the reality of declining demand. A decline, I might add, that might have been stopped before it started if the price of beef had not gotten so high to the American consumer because of the short supply caused by the lack of Canadian product.


Response...The reality is that the record prices received in 2003 were much more the result of a record increase in domestic beef demand and an extremely tight domestic front-ed fed cattle supply. Canada was a factor in the higher U.S. price but it was not the dominant factor. That trophy went to the growth in domestic consumer beef demand. The consumer giveth and the consumer taketh away. Have a great day. agman
 

Maple Leaf Angus

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I agree with all of your comments, Agman. It would be more accurate for me to have said "contributed to" rather than "caused by". However, in this case, I think that there was an exponential effect on the market when the CDN. supply was shut off dead for a period of time.


I am quite angry with those who do not share your balanced view and look for scapegoats. And the problem with scapegoating is that the blame often falls on the guy that is least deserving of it. I guess that's life.
 

rkaiser

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Had to laugh when I though about this $240.00 loss that American producers can expect when the flood of cattle boils down from Canada.

Those who consider this to be plausible are the same ones who consider the profits of ,what, about $240.00 for cattle in the US since the border was closed.

If this is the case, who gained? Rcalf's lawyers? Seems to me that if these numbers are your reality, Nafta should have been adhered to and everyone would be in the same postion,,,,,,, except the lawyers.


Do DO DO do
 

mwj

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Do there figures include the 5,706 metric tons coming in last week as fresh boxed beef from Canada now? If all those fats come acrost the border live, won't that cut the boxed fresh back by an equal amount? Most groups ignore anything they need to to make there figures look good on the surface. Most people don't take the time to look for facts.
 

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