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CANADIAN BORDER

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canadian border being closed is contributing to record US cattle prices

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HAY MAKER

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Is the canadian border being closed having any effect on the US cattle market?
 

Andy

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Of course the boarder being closed is haveing an affect on the cattle market, but it is defenintly not the main driver. It is helping hold higher prices now, but if it stays closed much longer it will have a bigger effect, it will drive the market down.
 

frenchie

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Analyst: Trade needed despite good market
May 2, 2005
The market situation, international trade, animal ID, beef and other products, demand, and what’s going on in the wholesale and retail sectors are all subjects on the forefront of producers’ minds these days.
Jim Robb, center director for Livestock Marketing Information Center (LMIC), recently spoke to producers and other beef industry members about these topics at the recent Livestock and Nutrition Forum in Bozeman, MT. LMIC represents 25 land-grant universities from Washington to Georgia. LMIC works with five USDA agencies and the major livestock commodity groups.
Robb immediately grabbed producers’ attention by talking about the calf market being at a cyclical high and how long that may last. “We’re probably at the highest calf prices for this cattle cycle today as we look ahead for the next 10 or 11 years,” said Robb. “We do think prices are going to erode over the next five years. But, this coming fall, good quality five-weight steer calves in Montana will still probably be over a dollar a pound.”
In terms of fed cattle, Robb told attendees that prices peaked in 2003. However, he thinks that the market could see one more run at 95 cents this year.
Overall, the market situation and outlook is in the “good times” right now, according to Robb, especially for cow/calf producers. But, as many producers are aware, there are some other factors that tie into long-term market perspective.
Robb asked attendees if they think the reason they have record-high calf prices compared to last year is because the border has been closed to Canadian cattle. Compared to last year, Robb indicates that the market situation is pretty much the same. “I would challenge you, year-to-year over the five-year average, is the $10 to $20 per hundred weight higher on some of these calf prices in recent weeks due to the Canadian border being closed?” asked Robb. “Not according to the head count.”
International trade is a factor that is especially prominent in the market outlook right now. With the recent cases of BSE found in North America, international trade relationships have been skewered. Robb explained that these interrelationships are very complex. “If you go buy a bull in South Dakota, would you expect South Dakota to buy that much hay from Montana?” Robb asked. He explained that it is very difficult to sort out from a beef industry perspective where the U.S. sits with international trade because there is a history of transactions internationally tying into other commodities.
“Certainly we have learned that international markets take a long time to develop, and they can be lost very quickly,” said Robb.
Robb indicated that last year the U.S. exported less than two percent of beef production—just beef, not other products. This year, economists are still only expecting a slight rebound since international trade partners have been slow to resume trade.
In 2006, Robb and his colleagues are forecasting that beef production exports will be about half of where the U.S. was in 2003 figures.
Who has been benefitting from the U.S. and Canada not being able to export beef? Many producers would answer that question with Australia, New Zealand and South America. But, Robb commented that producers may be overlooking the fact that the U.S. pork industry is one of the true benefactors of the border closing. Pork has had record-high exports and in 2004 hog prices in the fourth quarter were record high—a quarter in which prices are typically the lowest. “That is part of who the beef industry will have to compete against and regain market share when the border reopens,” said Robb.
Surprising to most producers was the fact that the U.S. is still exporting meat to Canada. Robb attributed this to international trade agreements. “We’re still exporting very expensive middle meats, as well as hot dogs,” said Robb. “But, it’s not because we trade beef across borders, it’s because we trade products.”
Robb also touched on the strategy that Canada is adapting to deal with the border closure. Canada is building more slaughtering facilities to handle more cattle, beef demand is increasing and producers are looking for alternative markets. “Canada got a lemon in this BSE thing, but they are turning lemons into lemonade,” said Robb. “What you will learn is that you can’t turn lemonade back into lemons. Once Canada makes this change, it is a permanent change.”
As previously reported by WLJ, a record amount of beef was imported into the U.S. Most of this is related to hamburger and lean beef imported from Uruguay to compensate for record low cow slaughter in the U.S., according to Robb. Analysts predict it will be up more this year and surge again in 2006 because of increased slaughter capacity to Canada and the end of the drought cycle in Australia and New Zealand. Robb predicts in 2006, the U.S. could import as much as one billion pounds of beef on a quarterly basis.
Another issue that plays into the market outlook is animal identification and disease response. Robb explained that all of Europe, all of Canada, all of Australia and all of Japan are ahead of the U.S. in national ID. He added that countries implementing national ID, or approaches ahead of the U.S., are Brazil, Argentina, Uruguay and Mexico.
In relationship to the market situation, Robb emphasized to producers that there is a push from the retail segment to have a national ID system and full traceback to the farm. “We already have the technology to identify animals,” said Robb. “But, the gap in traceability comes at the fabrication floor.” Overall Robb feels that not all existing systems are sufficient, technology will have to be upgraded and producers paid a premium for national ID to move forward.
A big market debate is demand. “Demand is complex,” said Robb. “Demand is both price and quantity relationship at the same time. I can sell a lot of beef if I give it away, but that is not very good demand.”
Over a 20-year period, Robb said demand declined. The first 10-year decline was due to increased chicken sales. The second half of the period’s decline was due to the beef industry’s lack of providing consistent, consumer-friendly products. However, in the past few years there has been a dramatic change in demand, which Robb says has added a $5-$7 premium to calf prices. Robb warned that boiler and pork production are continuing to expand and consumers are purchasing more and more competing meats. Continued demand or lack there of for beef will impact the long-term market situation.
When looking at the long-term market situation, Robb wants producers to realize that consumers matter, the biggest benefactor of international trade is consumers, and consumers are the driving force behind international trade and traceability. — Sarah L. Swenson, WLJ Associate Editor
 

Tam

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Haymaker we all know the border has a small effect on the prices so to say no is a lie. Why didn't you ask "Is the Border the only thing effecting the cattle prices" See what answers to get when you ask a fair question. Or will that not show you the picture you want to see. Kind of like R-CALF taking the highest months numbers in Canada's testing history and then saying Canada decided to reduce testing by 28% because we didn''t hit that test number the next month. This poll is a joke just like the organization to support. You are asking half a question and trying to make it look as if the results will prove something. :x
 

HAY MAKER

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Tam said:
Haymaker we all know the border has a small effect on the prices so to say no is a lie. Why didn't you ask "Is the Border the only thing effecting the cattle prices" See what answers to get when you ask a fair question. Or will that not show you the picture you want to see. Kind of like R-CALF taking the highest months numbers in Canada's testing history and then saying Canada decided to reduce testing by 28% because we didn''t hit that test number the next month. This poll is a joke just like the organization to support. You are asking half a question and trying to make it look as if the results will prove something. :x

Still better than your ole slanted polls............good luck PS Ill argue with you later ,right now I have to charcoal some Ribeye,&have a lil whiskey
 

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