AFF Sentinel Vol.3 #10

I've often said R-CALF people are not chess players -- they either can't or won't see what happens two or three moves down the line from their ranch gate. But if chess isn't their favorite game, I think I have figured out what is: Twister the parlor game where everyone twists themselves into knots. The twists and turns their tortured imaginations make in trying to explain their conspiracy theories could only be appreciated by a contortionist -- or a Twister fan.

Their latest theory has to do with the real reason the Japanese market was re-closed to American beef, and why fed cattle prices are down.

Chuck Kiker, R-CALF's president, recently gave a sarcastic summary of the events leading up to the re- closing of the Japanese market.

"What a coincidence, a box labeled bone-in veal loins makes it all the way to Japan" ... "the company said they didn't realize" ... "It's only been publicized in every trade publication" ... "Who would have ever thought a USDA trained inspector would miss boxes with ?bone-in beef' written on the side" and "These coincidental events..." he recounted. These phrases all show the tone of the R-CALF president's opinion of events leading to the re-closing. Kiker strongly hints he finds it hard to believe all these events were unhappy accidents.

Why? Kiker claims the big three packers could care less. They have other ways of profiting from the seemingly unfortunate situation. He notes that Tyson and Excel subsidiaries can export beef to Japan from Canada. (Of course, one reason they can is because there is no R-CALF in Canada ... but that's another story.) Swift can export beef to Japan from Australian subsidiaries. Excel can export to Japan from South America, he said.

"These coincidental events have resulted in the packers being able to take advantage of imported supplies of foreign [sic] cattle and beef and leverage down U.S. cattle prices," Kiker claims. "The big three still have the Japanese market and they broke back the U.S. market ... When Japan shut-off [sic] U.S. exports, the fat cattle market started an unprecedented slide downward and it hasn't stopped."

Well, as we said in our previous Sentinel, regarding the same column by Kiker in the Southeast Texas Independent Cattlemen's Association newsletter, demagogues don't let data get in their way.

Let's look at the data, as of late April:

• Cattle-Fax said the last data available shows Canadian packers have shipped a whopping 80,000 lbs. of beef to Japan this year, i.e. a trailer load or so. Do you think that fixed all the packer's hurts?
• Beef from South America and most of the beef from Australia is not high quality fed beef that substitutes well for American grain-fed beef. Ask the Japanese beef bowl chains that struggled mightily without their supply of U.S. beef. It's not a major factor.
• As for bringing in Canadian beef to break our market, so far this year, imports of Canadian beef were down 10-15 percent from last year's trend. Cattle-Fax has adjusted their estimate for the year down to 900 million lbs. That's about three percent of 27 billion lbs. of total U.S. production. This is gross, not net. We export beef to Canada, although not as much now because of their increased packing capacity. Again, facts not there.
• Imports of Canadian fed cattle to break the market: Didn't happen in '05 (280,000 head or so -- a few days' supply). Projection for '06 -- 750,000 head (a little over a week's worth and no data so far to change that estimate). At this point in time, numbers are in line with the ?98-'03 average of 723,000. Now Canadian packers have enough capacity to slaughter most of their fed needs plus cows, too. Again, facts lacking.
• As for BSE and the loss of the Japanese market triggering the U.S. fed market slide, fed prices set records in 2003, shrugged off BSE, and then set more new records in 2004 and yet again in 2005. It was not until mid-February of 2006, over two years after Kiker claims, that cattle prices began trending downward. Where does he get his data?
• Cattle-Fax said the last data available shows Canadian packers have shipped a whopping 80,000 lbs. of beef to Japan this year, i.e. a trailer load or so. Do you think that fixed all the packer's hurts?
• Beef from South America and most of the beef from Australia is not high quality fed beef that substitutes well for American grain-fed beef. Ask the Japanese beef bowl chains that struggled mightily without their supply of U.S. beef. It's not a major factor.
• As for bringing in Canadian beef to break our market, so far this year, imports of Canadian beef were down 10-15 percent from last year's trend. Cattle-Fax has adjusted their estimate for the year down to 900 million lbs. That's about three percent of 27 billion lbs. of total U.S. production. This is gross, not net. We export beef to Canada, although not as much now because of their increased packing capacity. Again, facts not there.
• Imports of Canadian fed cattle to break the market: Didn't happen in '05 (280,000 head or so -- a few days' supply). Projection for '06 -- 750,000 head (a little over a week's worth and no data so far to change that estimate). At this point in time, numbers are in line with the ?98-'03 average of 723,000. Now Canadian packers have enough capacity to slaughter most of their fed needs plus cows, too. Again, facts lacking.
• As for BSE and the loss of the Japanese market triggering the U.S. fed market slide, fed prices set records in 2003, shrugged off BSE, and then set more new records in 2004 and yet again in 2005. It was not until mid-February of 2006, over two years after Kiker claims, that cattle prices began trending downward. Where does he get his data?