CME: Disappearance is 'Consumption'

US - CME's Daily Livestock Report for 29th May 2008.
calendar icon 30 May 2008
clock icon 3 minute read

ERRATA: Yesterday’s DLR stated that Canadian sow/boar slaughterers had processed 9,097 more animals in 2008, year-to-date. That should have read “9,097 FEWER” animals. The figures for U.S. slaughter of Canadian sows/boars and the net increase in the slaughter of Canadian sows/boars are correct.

A few readers have asked about the term “disappearance” in Tuesday’s DLR. “Disappearance” is the technically-correct term for a period’s production whose usage during the period or whereabouts at the end of the period cannot be precisely determined. Disappearance is determined by:

Beginning inventory + Production + Import - Exports - Ending inventory = Disappearance

All we know is that the residual of that equation is gone. We usually call it “consumption” but we really don’t know how it got consumed. USDA adjusts carcass weight disappearance to retail weight disappearance using a factor that accounts for cutting loss and alternative uses such as rendering, pet foods, etc. USDA also adjusts retail weight disappearance to boneless weight disappearance using a factor that accounts for the bone percentage inherent to the species (eg. there is a higher percentage of bone in chicken than in pork or beef). Retail disappearance is an effort to measure how much people buy while boneless disappearance tries to measure how much people eat. All of the disappearance numbers are eventually called “consumption” even though we don’t know how much of the retail or boneless weight that consumers take home gets eaten, thrown away, fed to the dog, etc. Perhaps a distinction without a difference but both terms are used. Disappearance is more correct while consumption probably has more meaning. The choice is yours.

E-Livestock Volume 5/29/08 5/28/08 5/22/08
LE (E-Live Cattle): 9,292 10,596 6301
GF (E-Feeder Cattle): 207 345 351
HE (E-Lean Hogs): 15,810 7,316 6502

South Korea announced today that imports of U.S. beef would resume next week. Meat and Poultry magazine quoted South Korean Minister of Agriculture Chun Woon Chun as saying it would “probably occur June 3.” The South Korean government is still taking plenty of heat over the decision to drop virtually all restrictions on U.S. beef entering the country. The government has been caught squarely between protesters at home that want to keep U.S. beef out and the reality that the South Korean Free Trade Agreement with the U.S. is dead if U.S. beef is not re-admitted. The government did wrangle a major concession in the process, though, when the U.S. agreed that Korea could re-impose the ban if another case of BSE was found in the U.S. That caveat strikes us as a matter of “when” it happens and not “if” but the resumption of trade at least gives U.S. beef producers a chance to maintain a market — something they have no chance of doing as of today.

To give an idea of the importance of re-opening South Korea, we show the two graphs at right. Korea is represented by the red line in both. Note that pre-BSE monthly shipments to Korea varied seasonally between 40 and 60 mil. lbs. and had actually exceeded 60 mil. lbs. during the summer of 2003. They grew quickly when beef first started flowing back to Korea in May of 2007 but have been zero since the ban was reinstated in October. On the other hand, U.S. pork shipments have grown steadily over the past 4 years with Korea usually ranking between #3 and #5 on the list of U.S. customers and recently keeping pace with Canada and Russia. It is true that U.S. pork exports would probably not have been as large if U.S. beef had been moving, but the pattern here certainly confirms that this market has the potential for growth and is critical to the U.S. beef industry.

TheCattleSite News Desk

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