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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.
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.
