Where's the Data?
by Brett Crotts
Last month I was very excited about a new report from the USDA that gave the daily imports of cattle from Canada. Unlike most USDA data it was current, which made it very useful. At the time, I wondered why they hadn't provided this information before and why we didn't have similar reports for cattle from Mexico or for any other product. I remember thinking that there must have been someone that put pressure on the right person to get this report out. Well, apparently there was someone else that put pressure on the right person because the USDA quit releasing the daily data. I find that very disappointing. We have the technology to make this information readily available, but apparently someone doesn't want us to have it.
One of the things that would be very interesting to study, if the daily data were available, would be the changes in market price day to day versus the number of cattle coming in from Canada. In the past Canada was a good source of captive supplies and it would be interesting to see if that is still the case. It would be interesting to see if volume from Canada increases as negotiated trade volume in the US decreases. Eventually I will be able to do this with weekly and monthly data, but right now there isn't enough weekly import data or monthly slaughter data to do much work. Daily data would still be better because you could see if there is a rush of cattle on Monday's or Friday's that the packers need to operate plants. I think that it would be much easier to explain some of the market activity that we see, if mandatory price reporting worked, and we were allow to see data like this.
This is just speculation, but I think one of the reasons that we don't get the daily data anymore has to do with the accuracy of the numbers. If we had daily data, I think we would see a lot of revisions. We have plenty of revisions with the weekly data, so even though I think we have the technology to make the information available, the USDA probably can't keep the numbers straight on a daily basis. I also read an article that claimed that Canadian export numbers and US import numbers didn't match. That is disturbing, although we do see this problem in the grains on a regular basis. The Census Bureau and the USDA frequently disagree on how much grain we export.
Anyway, according to the last report we have imported a total of 101,501 cattle from Canada. 53% of the cattle are slaughter steers or heifers and the most of the rest are feeder cattle. I don't know how they classified the 31-month-old cow that was mistakenly allowed into the US, or the 8 pregnant cows that were in the same load, they must be part of the 12 head now classified as "other."
For the 47 days that the border has been open, the daily average of imports is 2159. For the last reported week, the average was 2585. I still think that the daily average will move over 3000 head per day at some point, unless Canadian slaughter capacity has expanded more than I thought.
The market impact of the border opening doesn't seem to be too severe at first glance. We are making new contact highs in the feeder cattle futures after all. However, if you look at the data, you see a different picture. For the first 6 months of 2005, 750-800 lb. feeder steers were almost always priced higher than in 2004. Since the border with Canada opened, the price of the same cattle has been consistently under last year. There are other factors involved, namely feedlot profits, but it is certainly an interesting coincidence if that is all it is.
With the exception of the week of September 9th, the price of live cattle has also been lower than a year ago since the Canadian border was reopened. I think that would have been the case anyway since there are more cattle available to the market than last year even without the addition of the Canadian animals. The other reason that cattle prices are lower than a year ago is that boxed beef prices are lower and boxed beef prices are lower in part because of record beef imports from Canada. As I have said before, we will end up with the same amount of beef on the market has we had pre-BSE, but now more of it will be processed in Canada instead of the US.
The real market impact will start to show up about the end of November when the feeder cattle that we have imported start going to slaughter. Even at current import rates that means that everyday Canadian cattle will make up about 3% of the steers and heifers slaughtered everyday. This small increase in supply coupled with the larger supplies of domestic cattle that are being slaughtered at higher weights, along with record beef imports will make for some disappointing prices this winter.
One of the things that would be very interesting to study, if the daily data were available, would be the changes in market price day to day versus the number of cattle coming in from Canada. In the past Canada was a good source of captive supplies and it would be interesting to see if that is still the case. It would be interesting to see if volume from Canada increases as negotiated trade volume in the US decreases. Eventually I will be able to do this with weekly and monthly data, but right now there isn't enough weekly import data or monthly slaughter data to do much work. Daily data would still be better because you could see if there is a rush of cattle on Monday's or Friday's that the packers need to operate plants, but someone at the USDA doesn't want us to see it.BC
Schwieterman Marketing, L.L.C. specializes in risk management and cash grain and livestock marketing plans. For information on the markets or our marketing service you can contact Bret Crotts at 888-437-9131 or
[email protected].
