§  USDA has finalized it’s rule that will open trade with Canada to cattle born after March 1, 1999 and to beef from cattle of any age.  The rule will go into effect sometime around November 19.  The U.S. will likely see more imports of non-fed beef – rather than live cattle.  This will replace the lean beef we import from New Zealand and Australia.  It is not expected to significantly impact the U.S. market for the following reasons:

1.      Many older beef cows will not meet the age documentation requirements.

2.      Transportation expenses, the strong Canadian dollar and excess packing capacity in Canada will limit the number of cattle imported.

3.      Cull cow and bull slaughter has increased by 50% since 2004 – there aren’t a lot of cull cows that have not been able to be processed in Canada.

Analysts suggest that over the course of the next year, the U.S. cull cow price could be reduced by $1/cwt with the importation of an estimated 75,000 – 100,000 cows throughout 2008.

§  56 million pounds of Certified Angus Beef was shipped in June – the largest in history.  Close to the same amount was shipped in July and August.  International sales are expected to grow by 40% this year.

§  “25-by-25” - 25 billion gallons of ethanol by 2025 is being proposed; if this plan is enacted, the corn price in 2025 is expected to be at $6.50/bushel, according to the Department of Energy.

§  Beef product values typically rally about $5 from September to late October.

§  According to Cattle Buyers Weekly, negotiations continue with South Korea in order to resume bone-in beef imports.  Three key areas are to be agreed upon: whether Korea will accept all products from cattle of all ages, the definition of specified risk material and what happens to imports products that don’t conform to the new rules.

§  The U.S., Canada and Australia are currently in the red on their beef processing margins.  Analysts predict that the negative margins could remain throughout 2007 and even into 2008.  Packer margins were -$26.22/head last week according to HedgersEdge.com.

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