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Thursday, December 20,2007

Fed trade steady to $1 lower

by WLJ
Trade was slow getting started last week, despite expectations that short-bought packers would come out early to fill demand. As of last Thursday, however, there was only light trade reported in Nebraska and western Iowa at $98 live and $154-156 dressed, although there was not enough volume to call a trend for the week. Offers remained at the $100 mark for live cattle. In the beef, feedlots were asking $158-160 for their show lists. Most analysts were expecting cattle to trade steady to $1 lower than the prior week at $97-98 live and $155-157 dressed basis. The USDA’s monthly cattle on feed report was expected to show an uptick in the number of cattle placed in feedlots for the second consecutive month. That news is likely to have little impact on the near-term market picture which remains positive for cattle feeders.  Tight front-end ready supplies and a short-fall in Choice product has led to fed cattle prices which remain well above year-ago levels. Although the cattle which suffer the impact of severe winter storms are mostly moved through the production chain, there are not enough Choice grading cattle available to fill improving demand ahead of the summer grilling season. Cattle feeders are also pulling cattle forward in an effort to capitalize on the current price level, which has added to the situation. So long as feedlots are able to maintain their current marketing situation, the picture should remain positive for the next six weeks or so. After that, increases in available cattle should ease some, perhaps moving prices lower as indicated by the current contract prices on the Chicago Mercantile Exchange (CME). Looking even farther ahead, cow slaughter remains well ahead of normal and heifer retention levels have failed to increase as expected. According to Glenn Grimes and Ron Plain at the University of Missouri, as of the week ending March 24, total cow slaughter was up 15.1 percent from a year ago. Beef cow slaughter was up 17.1 percent from 12 months earlier and the slaughter rate has increased as producers move into spring. “For the four-week period ending March 24, total cow slaughter was up 19.4 percent, dairy cow slaughter was up 14.6 percent and beef cow slaughter was up a whopping 24.9 percent from the same four weeks last year,” they said. “There is no question that the expansion made in the cattle herd a year ago has stopped in 2007.” Beef cut-out values continued their pull-back from the prior week’s highs. Heavy offerings of boxed beef from packers have swamped demand, pushing prices lower. Last Thursday, Choice cuts were down $2.32 in morning trade to $164.93. Select dropped $1.53, to trade at $153.45 during the day. There was expected to be more downward price pressure as packers continued to harvest cattle at levels higher than week-ago or year-ago rates. As of last Thursday, the week to date harvest was estimated by USDA at 495,000. That figure was 20,000 more than the prior week and well ahead of the same period in 2006 when packers slaughtered 476,000 head. Analysts said last week that the cutout value would require additional movement downward before packers would be able to move the significant quantity of product piling up in cold storage warehouses. Consumer demand will need to improve as well if packers hope to continue the just slightly positive margins they were enjoying last week. With warmer weather predicted for much of the nation in the week ahead, consumers may begin breaking out the grills, spurring retail product movement and higher cutout values. Price movement on CME last week was mostly downward. Some early week across the board gains on Monday and Tuesday erased some of the prior week’s losses, however, Wednesday and Thursday, the contract trade turned lower with more across the board losses. In last Thursday’s session, April live cattle contracts shed 67 points, closing at $96.45, while June contracts gave up 10 points to close the day at $92.72. August and October contracts were down 27 and 25 points to close at $90.82 and $94.67 respectively. Feeder cattle Prices for feeder cattle varied regionally last week. In spite of the CME index falling to close at $109.22 last Thursday, many of the western states reported increased feeder prices. However, in some western states with large sales, such as Oklahoma and Missouri, cattle prices softened. “There are several reasons why prices went down last week,” said Mark Harmon from Joplin Regional Stockyards. “We’re still running pretty heavy. We are selling a lot of cattle.” Harmon said some of the reasons for the decreased prices were large runs, poor weather, late frost, and the substantial number of new crop cattle among last week’s offerings. “The new croppers are starting to run and that brings the averages down,” he said. Cattle referred to as new croppers are cattle that come into the auction market with extra flesh. Most of them are newly weaned and have had few, if any, shots. “You can still sell a grazer awfully good but if they’re new croppers, they’re just not going to sell as well,” said Harmon. “These calves are just not ready to be turned out on grass, packing all that fat. Cattle buyers are still looking for thin cattle ready to go to grass.” He continued to say, “Yearlings are still selling well and the heifer thing is a little better than it has been.” Harmon also said that the area has had a hard winter, as have many of the western states. Recent storms across Oklahoma, the panhandle of Texas, and even in the state of Missouri, have caused many problems for farmers and ranchers. “We’ve had a hard winter and there was a bad freeze Saturday (Apr. 14),” said Harmon. “Any corn that was planted is gone and the wheat, which had already come up, is broken. Weather has definitely been a factor in our feeder cattle markets.” Cattle that are ready to go to grass and in thin condition are still in high demand across the western states. In spite of recent winter storms, increased cash and future corn prices, and the decrease in the CME index, producers and cattle buyers remain optimistic about spring grasses. With over 1,200 receipts in Davenport, WA, last week, feeder cattle sold steady to $3 higher. There was active trade and good demand at the sale. Steers averaging between 400 and 500 lbs. sold between $115 and $122 and heavier steers weighing between 700 and 800 lbs. were worth $102. Five and six weight heifers sold between $100.50 and $105 while those weighing in between 700 and 800 lbs. were worth $93.50 to $95.50. To the east in Fargo, ND, lighter steers weighing under 650 lbs. sold $1 higher when compared to the previous week. Heavier steers weighing 650 to 950 lbs. were $2 to $3 lower. Feeder heifers sold unevenly steady. There was good demand, especially for lighter weight cattle. Steers averaging 525 lbs. were worth an average of $119.91. One lot of 750 lb. thin steers called for $106.75. Another lot of heifers averaging 582 lbs. sold for $107.74 and females weighing 807 lbs. were worth an average of $93.19. In Riverton, WY, feeder steers under 500 lbs., higher undertones were noted on a light offering and those over 550 lbs. remained steady. Steers weighing 650 to 750 lbs. sold $4 to $5 higher. Feeder heifers were unevenly steady with lower undertones for those under 550 lbs. Heifers weighing between 645 and 690 lbs. were $3 to $5 higher. Demand was good and trade was active. One package of steers averaging 533 lbs. sold for $135. Heavier steer calves weighing between 715 and 755 lbs. sold between $105 and $110. Heifers weighing between 510 and 595 lbs. called between $105 and $114. A set of heavier females, of replacement quality, averaging 810 lbs., sold for an average of $98. East of Wyoming in McCook, NE, steers and heifers sold steady to $3 higher. The higher prices were on the heavier cattle. One set of steers, averaging 520 lbs., sold for an average of $134.16. Almost 200 head of steers averaging 723 lbs. called for an average of $115.69. Five weight heifers averaged $119.43, with the heavier females, averaging 783 lbs., selling for $101.82. In Salina, KS, feeder steers weighing between 400 and 550 lbs. were lower with fleshy unweaned calves hard to move. Steers weighing 550 to 700 lbs. were steady and those weighing between 700 and 1,000 lbs. were $2 to $3 lower. Feeder heifers weighing 350 to 550 lbs. were $1 lower, 550 to 700 lbs. remained steady, and 700 to 800 lbs. were $2 lower. Steers averaging 475 lbs. sold for an average of $130.54 and their heifermates called for an average of $129.12. Heavier steers averaging 825 lbs. were worth $103.50 and heifers of a similar weight sold for $102. Over 9,500 head were sold in Oklahoma City, OK, last week. Feeder cattle and calves were $3 to $5 lower. Demand was moderate, at best, for all classes. Muddy conditions in the region affected demand. Also, the recent losses in CME futures has placed pressure on the prices. One set of 475 lb. fleshy calves sold for $130. Slightly bigger steers that were thinner in type, weighing 527 lbs., sold for $137. Steers averaging 634 lbs. sold for $119.85. Another set of heifers averaging 431 lbs. were worth $118, while fleshy heifers averaging the same weight sold for only $113. One lot of replacement quality females averaging 825 lbs. called for $94. Further to the east in Joplin, MO, 6,500 head of cattle were sold last week. Steers and heifers under 600 lbs. were $2 to $5 lower with most of the decline on new crop calves. Calves over 600 lbs. remained steady. Demand was moderate for thin grazing calves and feeders and moderate to light on new crop calves. Steers weighing between 500 and 600 lbs. sold between $114 and $126 and thin steers at the same weight were worth $121 to $131. Heavier steers weighing between 700 and 800 lbs. sold for $100 to $109. Heifers that weighed an average of 550 lbs. averaged $106.75 and thin females at the same weight called between $102 and $114. South in Dalhart, TX, feeder steers under 600 lbs. remained steady and those over 600 lbs. and all feeder heifers were firm to $1 higher. Trade was active and demand was good. One package of steers weighing 417 lbs. sold for $150. Steers weighing between 600 and 700 lbs. averaged $115. Heifers weighing between 500 and 600 lbs. called for $122.50 and seven weights averaged $106.25.

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Thursday, December 20,2007

Investigators find no threat in Washington cattle deaths

by WLJ
After conducting a detailed investigation into the deaths of 50 to 60 cattle at a former dairy in Addy, WA, state investigators have found no serious animal diseases or toxic contamination of the animals’ feed that could have caused the fatalities. “During this investigation, we have found no threat to the health of people or other animals,” said Washington State Veterinarian Leonard Eldridge. “We have not been able to identify a common cause of death of these animals. Frankly, we may never know specifically what killed the animals that died before the start of this investigation.” When Washington State Department of Agriculture (WSDA) veterinarians visited the farm on March 8, they immediately established that the death of the animals had occurred over several months. The dairy’s owner reported to investigators that between 50 and 60 cows had died. During this first visit to the farm, investigators found no symptoms of contagious foreign animal disease in any living animals.   At that time, the farmer reported concerns about heavy metals contamination of the animals’ feed source as a possible cause of death. Due to these concerns, the dairy owner made a decision not to ship milk off the farm since December 2006. The animals were eating alfalfa hay, as well as haylage, grown in Addy in Stevens County. Investigators took feed samples at the farm and at the site where the hay was grown. The feed samples were tested for heavy metals and a nutritional analysis was conducted. The heavy metals testing on the feed was conducted by the Washington Animal Disease Diagnostic Laboratory (WADDL) in Pullman, WA. The laboratory has determined that no elements analyzed were present at excessive concentrations in comparison to recognized reference ranges. In other words, WADDL investigators have determined that the feed is safe to give to cattle. Nutritional testing on the feed was conducted at WSDA’s laboratory in Yakima, WA. The hay samples would have provided appropriate nutrition for adult cows that are not being milked. Milking cows generally require a feed supplement that provides additional vitamins, minerals and calories to ensure proper nutrition. On March 21, WSDA investigators returned to the farm. The herd owners volunteered three animals to be sacrificed to aid in the investigation. The animals were autopsied at WADDL where further pathology, microbiology and toxicology analyses were conducted. Again, the lab investigators found no remarkable concentrations of any of the heavy metals included in their analysis. The liver, kidney, blood, hair and hoof samples did not appear to contain excessive concentrations of any of the elements tested. Furthermore, other tests found no presence of foreign animal disease, bovine spongiform encephalopathy or any other potentially fatal diseases. WSDA’s Eldridge has advised the herd owners of the results of the investigation. Eldridge suggested that the owners take steps to improve the general sanitary conditions on the farm and seek consultation on herd health management and nutrition. Eldridge also advised that a veterinarian should immediately examine any additional dead animals.

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Thursday, December 20,2007

Registration open for BIF meeting in Colorado

by WLJ
The Rocky Mountains provide the backdrop for the annual meeting and 40th anniversary celebration of the Beef Improvement Federation (BIF). The meeting will be held June 6-9 in Fort Collins, CO. It will focus on the future of genetic evaluation and improvement, with a variety of presenters from around the country. The meeting will take place at the Hilton Fort Collins. To register and for program details, go to www.beefimprovement.org under the conventions tab. Pre-registration is due May 15. For information, contact Willie Altenburg, 970/568-7792, willie@rmi.net or Mark Enns at 970/491-2722, Mark.Enns@Colostate.edu. “The BIF meeting is a great opportunity for cattlemen from around the country and the world to come together and discuss genetics and how to improve our industry,” says Altenburg, Colorado planning chairman. Mark Enns, Colorado State University (CSU) and program chair, states: “As we put together speakers and topics for this BIF annual meeting, the committee wanted subjects that would get beef producers thinking. And, to capture those thoughts, we will be using an audience response system throughout the meeting and building discussions off the group.” The meeting will kick off with Colorado Welcome Reception on Wednesday evening, June 6. The history of Artificial Insemination will be the focus of the National Association of Animal Breeders Symposium that evening as well. On Thursday, June 7, participants will discuss “Performance Programs at a Crossroads” as speakers talk about the current performance programs’ cost and benefits and gather the audience’s views on the direction for future genetic improvement initiatives. Awards for the Commercial Producer of the Year will be presented and committee meetings will be held in the afternoon. Thursday also has a spouse/family tour to Estes Park and the historic Stanley Hotel, plus a trip to Rocky Mountain National Park. That evening, the group will experience “Foam on the Range” at the CSU Equine Center for an evening of great conversation, a steak dinner, tasting the products of Colorado-produced ale, and viewing cattle from area seedstock producers. Friday focuses on “Challenges to Conventional Wisdom.” Presenters will lead the discussion on uses of genetics technology and changes seen in the quality grades of cattle. The Seedstock Producer of the Year will be named, and committee meetings will be held that afternoon. Friday evening, attendees can head up to Old Town Fort Collins to enjoy the local restaurants. Producer tours will visit many Front Range locations throughout the day on Saturday, June 9. Two tours are offered. The first tour, “Beef Industry Players,” has stops at Kuner Feedlot, Five Rivers Cattle Feeding, Safeway’s Distribution Center and Aristocrat Angus. The “Seedstock Alliances” tour features Walter Farms, Inc., Five Star Cattle Systems, Kuner Feedlot and Five Rivers Cattle Feeding. The BIF Annual Research Symposium and Annual Meeting is hosted by CSU, Colorado Livestock Association, Colorado Cattlemen’s Association and BIF.

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Thursday, December 20,2007

Corn, cattle create new paradigm for producers

by WLJ
When feed prices double, cattle producers think twice as hard about management options. Common responses include cutting expenses, increasing efficiency, and finding ways to get paid more for the saleable product, calves or carcasses. “We’ve really come into a different paradigm with predictions of $4 (per bushel) versus $2 corn,” says Mark McCully, Certified Angus Beef LLC (CAB). “We’ve also come into a different paradigm when we look to a $20 Choice/Select spread, versus a $6 spread.” That widening spread refers to the difference in boxed-beef cutout value per cwt. between USDA Choice and Select grade. The price spread between Choice and CAB brand product also has widened significantly. McCully, CAB supply development director, says producers need to focus on cattle that better use their resources, yet produce calves that achieve premium quality, to deal with the changing markets. Duane “Doc” Warden, of Council Bluffs, IA, started his Angus seedstock business in 1964 and began testing for feed efficiency 18 years later. “The thing that costs the most with cattle is feeding them,” he says. “If you can improve their feed efficiency, you obviously are going to make more money.” That’s only if you stay with the other strengths of the Angus breed, Warden adds. “Increasing feed efficiency does not affect quality grade,” he says. Warden recently fed out 40 steers that didn’t make the cut as breeding stock. They went 98 percent Choice and 50 percent CAB, with no Yield Grade 4s. “The most efficient bulls weren’t always the ones I’ve kept,” he says. “I very consistently keep birth weights down and try to keep everything else in balance on other traits.” For more than 25 years, Warden has been tracking efficiency and says he’s improved it by at least 10 percent in his herd. His top bull, “4 point 8 of Ironwood,” is named for his 4.8 pound feed/gain ratio, finishing first in feed efficiency in the Circle A Sire Alliance during its test year. “Efficiency is hard to measure,” Warden says. “You can’t see it. It’s very hard for people to get a handle on what they have.” Missouri Beef Extension Specialist Bob Weaber notes selection is also a challenge. “There has been an interest in feed efficiency for a long time,” he says. “We just don’t have many tools to get at it.” Producers can be encouraged by how easily it’s passed on to offspring. A heritability of 0.35 to 0.4 puts feed efficiency in the moderate-high range. “That’s basically the same as the birth or yearling weight, which is good because it means there’s a lot of opportunity to make progress with selection tools if we had them,” Weaber says. McCully developed a model to look at the effect corn price has on the dollar value of efficiency. His theory sorts calves into two groups, “average” and “best.” His numbers are based on a 650- pound feeder calf, fed for another 650-pound of gain. “What kind of impact do these new economic dynamics have on value differentiation of cattle in the feedlot?” McCully asks. “A big difference, if you run some numbers.” In this scenario, “average” cattle gained three pounds per day (ADG) and had a 6.4 ratio of feed pounds required to gain a pound of beef (F/G). “By moving those numbers to a 3.8 pound ADG and a 5.9 F/G, better cattle would save $26 in feed cost per head with $2 corn,” says McCully. “The reality is, corn is not $2 anymore.” The same numbers with $4.20/bu corn show a $52 cost difference between the average and the best cattle. “This new situation doubles your performance value differential,” he says. Warden says that might push people to pay more attention to efficiency. “The increased price of corn is just a way to bring this to mind a little more,” he says. “It’s always important.” Cow/calf producers who don’t retain ownership through the feeding phase may not see a direct benefit from this focus, but Weaber says there are advantages in the cowherd. “If we make the calves more efficient, that will probably make the cows more efficient,” he says. In addition, by selecting for smaller mature size and lower milk production, maintenance energy requirements of cows could be improved indirectly. “In our maximal production economy, it isn’t a real popular thing to do. But, if a guy sits down and goes through the worksheet, frequently the smaller, lower-milk cows generate more gross revenue on a fixed forage or nutrient supply base than the high-input cows,” Weaber observes. “Especially at $4 corn.” Since all growing cattle eat, gain and therefore have F/G numbers, widespread improvement would have an enormous impact on the entire industry. Weaber says if every fed beef animal converted at 6.5 today and improved to 6.1, the feed savings to cattle feeders with a ration priced at $170/ton could be over $635 million. An upward adjustment in percent Choice could also put dollars in a producer’s pocket, and it can happen concurrent with those performance improvements. “When you take this same idea and compare a $6 Choice/Select spread to a $20 one, you can see that more dollars in the system magnify a modest improvement in quality grade,” McCully says. With a $6 Choice/Select spread, a pen of cattle achieving 60 percent Choice and 16 percent CAB and Prime would receive around $35 per head in premiums. That’s about $25 per head behind a pen that goes 90 percent Choice or above with 40 percent of those qualifying for CAB and Prime. “The value difference in our market is compressed with a $6 spread. Higher spreads amplify it,” says McCully. Those groups have a $58 per-head difference when a $20 Choice/Select spread is applied. Andy Gottschalk, veteran market consultant with HedgersEdge.com, says that $20 spread is not unlikely. “We’ve seen a general widening in the Choice/Select spread over time,” he says. “The consumers have clearly voted with their dollars. They are willing to pay more for high-quality beef. “All other things being equal, that will tend to drive the Choice/Select spread to even wider levels than we have seen in the past,” Gottschalk says. Cattlemen who haven’t yet found merit in aiming for quality might reconsider now, McCully says. “We’re trying to illustrate to producers that in these times we’re entering, an investment in better genetics, managed properly, can align their cattle to take advantage of the market,” he says. Gottschalk says there are economic signals that favor Choice beef production. “As it continues to move, the Choice/Select spread will pay cattlemen for the quality product they produce,” he says. “That’s what the system should have been doing all along and for many years, but it didn’t do that. I believe that was a contributing factor to a 19-year decline in the demand for beef.” Even when the Choice/Select spreads narrows seasonally, as it often does in the summer and late winter months, Gottschalk says it’s a worthy goal. “Over the longer period, we see the consumer’s willingness to pay more for high-quality product,” he says. “That’s what producers need to stay focused on, and not become overly concerned with what is usually shorter-term oversupply.” McCully says the combination of higher corn prices and increasing premiums for quality beef bring bull-buying decisions into full light. “If you equate all of these value differences between the average cattle and best cattle back to an individual bull, the discrepancy is astounding,” McCully says. If a bull produces 60 calves in his lifetime, there could be a $6,630 overall difference between those that perform and grade at the above-average level and those that are merely average. “Theoretically, you could pay at least $6,000 more for the best bulls than you could for the average bull with these new economics,” he says. “Of course, that assumes the cow/calf producer is able to market those value-added genetics.” Not all the value of grade and gain will get back to the farmer or rancher, but there are ways to realize benefits. McCully suggests participating in the AngusSource program and using the marketing documents, or retaining at least partial ownership throughout feeding. “Feedlot managers understand these value differences, but I’m not sure they have fully adjusted their feeder-calf procurement orders to this new mindset,” he says. “I’d encourage them to pay what the good cattle are worth and further discount the cattle that don’t work in the yard or in the packinghouse.” McCully says historically, a $5/cwt. premium was considered the top end for the best 600-pound feeder steer. “This new paradigm—with top efficiency and grade working on $4 corn and a $20 Choice-Select spread—suggests the premium should be three times that,” he says. “To make progress, we need to eliminate the idea of letting the superior cattle subsidize the poorer ones. Grid marketing is getting fed cattle on track but we still need to rethink how we assess value on feeder calves.” The astute producer must evaluate how each area of this fast-paced, ever-changing market affects the bottom line. “We’re putting everything in a pressure cooker right now,” McCully says, “and the true value will show itself where performance and quality are concerned.”

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Thursday, December 20,2007

Texas Cattle Raisers elect new officers

by WLJ
New officers were elected March 26 during the closing session of Texas and Southwestern Cattle Raisers Association’s (TSCRA) 130th annual convention in Fort Worth, TX. Jon Means of Van Horn, TX, was elected president; G. Dave Scott, Richmond, TX, first vice president; and Joe J. Parker Jr., Byers, TX, second vice president and secretary. Longtime TSCRA Director Louis M. Pearce Jr. of Houston was elevated from honorary director to honorary vice president status. New honorary directors are C. H. “Terry” McCall of Comanche, TX, and Scott Petty Jr. of San Antonio, TX. New directors are John L. Cantrell of Cresson, TX; Beth Knolle Naiser of Sandia, TX; Charles R. “Butch” Robinson of Houston, TX; Steve Sikes of Fort Worth, TX; Steve Swenson of Dallas, TX; and Dennis W. Webb of Barnhart, TX. Jon Means is a fourth-generation rancher who raises commercial Angus and Angus-cross cattle in the Davis Mountains area of west Texas where his ancestors settled in 1884. He resides at the Moon Ranch in Jeff Davis County, is managing partner of Means Ranch Co. with operations in Culberson and Jeff Davis counties, and owner of the H-Y Ranch Co. in Grant County, NM. He is also a partner in Alamo Cattle Co. Means serves on the board of directors of the Fort Davis State Bank, National Finance Credit Corp.of Texas, the Texas Livestock Marketing Association and the National Cattlemen’s Beef Association (NCBA). He is a member of the Texas Cattle Feeders Association and the Private Lands Advisory Board of the Texas Parks and Wildlife Commission. He served for six years on the board of the Texas Beef Council and for 25 years on the board of directors of the Highpoint Soil and Water Conservation District Dave Scott operates G.D. Scott Cattle Co. and has partnerships in Fort Bend, Harris, Waller, Robertson and Cottle counties. He is also vice president of Port City Stockyards Co. at Sealy, TX. In 1960, he became a partner with his father in Scott Livestock Commission Co. Established in 1931, it was the first commission company on the Port City Stockyards at Houston. Scott is a life member of the Houston Livestock Show and Rodeo and chaired its Range Bull and Heifer Committee for six years. He is also a life member of the Fort Bend County Fair Association and a member of Texas Cattle Feeders Association, NCBA, and the Brazoria County Cattlemen’s Association. New to the slate of officers is Joe Parker Jr. who is a partner in Parker Ranches Ltd. with his brother Jim. They are involved in ranching, wheat farming and operating a pecan orchard. Parker is also chairman of the board and president of the First National Bank of Byers, vice president and manager of Parker & Mayo Inc., an investment company, and partner and manager of Parker Minerals Ltd., an oil and gas investment company. He is a member of NCBA, a director of the North Texas Rehabilitation Center in Wichita Falls, TX, and a state director of the Independent Bankers Association of Texas. TSCRA is a 130-year-old trade organization whose 14,500 members manage approximately 5.4 million cattle on 70.3 million acres of range and pasture land, mostly in Texas and Oklahoma. It was organized in 1877, primarily to fight cattle theft.

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Thursday, December 20,2007

Tight supply sustains market

by WLJ
The currently tight fed cattle supply continued to be supportive of the market last week with feedlots holding out until late in the week to trade cattle. As of last Thursday, there was some mostly steady light trade reported in Texas and Kansas at $96 live basis and in the Corn Belt at $154 dressed. Volume, however, was reportedly light and no trend was readily apparent. Most market analysts, however, expected trade to remain steady with the prior week when cattle traded at $96 live in the south and northern Plains live sales traded at $95-96.50 with dressed sales at $155. In the western Corn Belt two weeks ago, live sales traded at $96-97 and dressed sales were in a narrow range at $155 to $156. Jim Robb, director of the Livestock Marketing Information Center, said last week the seasonal top is in for the year, however, the tight supply of fed cattle means that feedlots are in the driver’s seat for the time-being. “Packers, whose margins were being quickly eroded by a falling boxed beef market, are being forced into a situation where they are having to chase Choice product in order to meet increasing demand going into the summer grilling season,” Robb, said. He also noted the seasonal drop in the Choice grading percentage has been sharper than expected this spring, falling nearly 3 percent last week to 50.46 percent of the slaughter mix. That has led to a widening of the Choice/Select spread which, last Thursday, was in excess of $13. Robb said one of the key factors in the currently steady market in the face of falling boxed beef prices is a drop credit which is $2.25 higher than last year’s price of $7.74. “The drop credit right now is significantly higher than last year and that’s really supporting the market,” Robb said. “Hide prices and other values are up over year ago levels, and that’s adding to packer margins.” Last week, HedgersEdge.com estimated that packers are still in positive territory, earning $2.70 per head on harvested cattle. It is clear that the drop credit is a factor in keeping that margin in the black. One factor weighing on the market is the currently high level of beef production. Slaughter for the week through last Thursday was estimated at 492,000 head, 3,000 fewer than the prior week’s total, however, that figure was well ahead of the same period in 2006 when total harvest was just 479,000 head. Carcass weights are even with last year and have not declined as significantly as expected, adding to the volume of beef being marketed. Adding to the amount of product available to wholesale and retail buyers is the continuation of heavier than normal cow slaughter. “Both beef and dairy cow slaughter is still higher than normal,” said Robb. “I think that producers have been more aggressive in culling open cows this spring. After the winter, there are more cows coming up without calves and producers are looking around at pasture and forage conditions, remembering last year’s drought, and sending those open cows to town.” The implications of heavy culling, combined with the high number of heifers on feed this year, are likely to have a far wider reaching impact than just the currently heavy cow slaughter, according to Robb. “A lot of the feedlot operators I have talked with in the last several weeks all want to talk long-term. No one is interested in the short-term. There is a legitimate concern among cattle feeders that we haven’t stabilized the U.S. cow herd numbers,” he said. “There are not as many cows out there now as there were a year ago and there is no expansion underway. The 2007 calf crop is very likely to be smaller than the 2006 calf crop. If heifers are retained out of those numbers for expansion, the available feeder cattle supply becomes even tighter this year.” Moisture and pasture condition, combined with the Corn Belt weather forecast, are now key factors in the direction cattle markets will take over the course of the summer. Corn planting is already behind schedule in many major corn producing states which could begin to impact the per bushel price. Meanwhile, good precipitation in most areas has led to good pasture conditions in cow/calf country which could offset some production costs and lead to another good year for cow/calf producers. “It is important to watch the corn markets,” Robb said. “I think they definitely have the potential to whipsaw the feeder cattle market around a few more times this summer.” Feeder cattle The aforementioned spring storms have doused many western states with much needed moisture within the last few weeks. This, coupled with warmer temperatures, has raised the spirits of many owners of stocker operations, prompting them to once again pay higher prices for cattle ready to go to grass. “We have got quite a bit of grass coming up here,” said Tom Gering of northeastern Colorado. “This last bit of moisture will really help if we can just get the temperatures to come up a little. It looks like conditions are favorable for us to have plenty of grass this summer. At least I’m hoping we will. I’m actually planning to turn out a bunch of fall calves soon.” A crop, weather and pasture report from USDA says that states east of the continental divide should have above normal temperatures and near normal precipitation. To the west, it is expected that states will see above normal temperatures and precipitation. Recent rain and snowfall has significantly improved soil and topsoil moisture conditions. The increased moisture and warm temperatures have significantly improved ranges and pastures when compared to one year ago. USDA reports that a few spring pastures have opened up and livestock are already being turned out for grazing. On The Chicago Mercantile Exchange (CME) last Thursday, feeder cattle contracts traded in a narrowly mixed range. April was down 5 points, closing at $106.80. May closed up 17 points at $106.15 and August was down 2 at $110.97. September calves were up 10 points and October shed 42, closing at $110.65 and $109.90 respectively. Despite mixed trade on CME, cash feeder cattle prices remain steady. Most of the demand is for thin, light weight cattle ready to go to grass. The new crop cattle, coming in with more flesh, are taking quite a significant hit in auction markets throughout the West. “I just don’t want those heavier conditioned calves,” said Gering. “They don’t do as well when you turn them out on grass.” In Famoso, CA, stocker cattle sold $3 higher and feeders were steady. Offerings were of high quality. There was a big demand for stocker cattle, mostly for out-of-state grass orders. Demand was especially high on green cattle weighing 450-690 lbs. There was also a big demand for feeders, especially for high quality, green types weighing 700-850 lbs. Stocker steers weighing between 425 and 500 lbs. sold for $133.50 while their female counterparts were worth $113. Feeder steers weighing 725-900 lbs. sold for $100 and females that averaged 775 lbs. called for $94.50. To the north in Toppenish, WA, feeder cattle were $2 to $4 higher. Trade was active with good demand. Steers averaging 578 lbs. sold for $115. One set of steers that weighed only 10 pounds more, but were value added, sold for $118. One large group of heifers weighing 675 lbs. sold for $98.90. Another group of heifers weighing only 694 lbs., but were fleshy in their condition, only sold for $94.50. To the east in Sioux Falls, SD, feeder steers and heifers sold steady to $1 lower with most of the decline on cattle over 900 lbs. Demand was moderate to good with numerous packages and small lots in moderate to fleshy conditions. One set of steers averaging 515 lbs. sold for $119.50 while another group of thin steers averaging 508 lbs. sold for $132. One set of heifers weighing 650 lbs. sold for $105 and those weighing 697 lbs. in fleshy condition were only worth $94. In Fort Collins, CO, feeder steers were mostly steady to $1 lower. Feeder heifers were mostly steady to $2 lower, the full decline being on weights under 600 lbs. Demand was moderate to good with the best demand on larger strings of feeders weighing over 600 lbs. Five weight steers averaged $125.50 and seven and one-half weights sold for an average of $104.50. Females weighing between 500 and 520 lbs. sold for an average of $112.75 and the heavier females, weighing between 735 and 770 lbs., were worth $98.50. In Bassett, NE, feeder steers and heifers trended steady to firm. Offerings consisted of average to good quality fall calves and yearlings. Demand was moderate to good from a shorter than usual list of buyers. Steers averaging 475 lbs. sold for $144.50. Thirty-seven head of fancy steers weighing 555 lbs. sold for $141.50. Heifers weighing 525 lbs. were worth $120.20 while the heavier females of replacement quality, weighing an average of 735 lbs., called for $106.50. Another big run in Oklahoma City, OK, with over 10,600 offerings. Feeder steers and heifers were steady to $2 higher. There was a short run of stocker cattle which sold firm to $4 higher. Demand was good on all stocker and feeder cattle, moderate for new crop calves, many of which were carrying heavy flesh. Demand continues to run very good for short supply of 500 to 750 lb. cattle in thin condition. Four and one-half weight steers averaged $139.50. Heifers averaging 569 lbs. sold for an average of $113.48 and those in fleshy condition at a similar weight were only worth $108. In Abilene, TX, feeder steers under 600 lbs. were $1 to $2 higher. Those weighing over 600 lbs. were steady to $2 lower. Feeder heifers under 600 lbs. were steady to $2 lower while females over 600 lbs. were steady to firm. Steers weighing between 400 and 500 lbs. sold for an average of $123.50 while heifers brought $116.50. Steers weighing between 700 and 800 pounds were worth $103.50 and their heifermates sold for $95. In Joplin, MO, feeder steers and heifers remained steady. Demand and supply were moderate. Steers averaging 550 lbs. sold for an average of $117.62 and weaned, thin conditioned cattle at the same weight were worth $126. Heifers averaging 550 lbs. sold for an average of $110.50.

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Thursday, December 20,2007

USDA extends BSE testing in Washington

by WLJ
The only bovine spongiform encephalopathy (BSE) testing laboratory in the Pacific Northwest will remain open for another six months, but officials insist it isn’t because of increased fears of the chronic brain-wasting disease in the region. The USDA contract for testing at Washington State University’s (WSU) College of Veterinary Medicine expired March 1 as part of the agency’s efforts to scale back monitoring for BSE. USDA has extended the contract through Sept. 30, with the option for further extensions, WSU officials said. “Reports circulated in the media a few months ago that stated the WSU laboratory was shutting down,” said Terry McElwain, executive director of the Washington Animal Disease Diagnostic Laboratory at WSU. “The USDA was simply scaling back the amount of testing being done but was intent on maintaining the capacity and ability to ramp up BSE testing in a moment’s notice.” The WSU lab was opened after the nation’s first BSE case in the Yakima Valley in December 2003 prompted some new safeguards. Since then, it has processed more than 46,000 samples sent from packing plants in five Northwest states. It takes less than eight hours to test for BSE at the lab, which has the capacity to test several hundred samples a day.

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Thursday, December 20,2007

Swift & Co. partners with Optibr and to enhance Japanese beef promotions

by WLJ
Imagine information on the food you eat available literally at your fingertips. It is now possible to use your cell phone to scan a bar code on a package of meat and thereby access all the background information that led up to that product arriving in your home. As food traceability becomes more important to consumers, information delivery becomes critical to market success. Optibrand has partnered with Swift & Company, the U.S.’s third-largest processor of fresh beef and pork, to provide a traceability program that meets the rigorous demands of the Japanese market. For the first time, Japanese distributors and retailers will be able to offer U.S. beef with complete traceability information available via a bar code on the package. Consumers can retrieve the product’s supply chain history, from farm to retail shelf, by scanning the bar code with a cell phone or accessing the information online. The combined technologies of Optibrand and Swift & Company make providing complete product traceability information possible. Optibrand’s Secure Asian Export Solution helps meet the demands of export customers by linking animal identification to age, source and process verification information. Swift’s Swift Trace program allows the processor to trace product from individual age- and source-verified cattle to finished boxed product. “Together, we make available the complete product ‘story’ that, we believe, increases consumers’ trust in the food they’re purchasing,” said Mark Swanson, Optibrand’s chief operating officer. “Trust is key to repeat purchases for consumers worldwide.” The technology proved successful in field tests last month in Japan. The first cattle were enrolled into the program in the fall of 2006 and the first finished product was delivered to Japanese distributors in April of this year. “The program’s successful field tests represent another step in enhancing the capabilities of our existing Swift Trace system,” said Warren Mirtsching, Swift’s senior vice president, Food Safety and Quality Assurance. “We are pleased to partner with Optibrand to demonstrate the efficacy of our combined technologies.” Mark Anderson of Producers Livestock Marketing Association noted, “This is the type of system we, as feedlot operators, have been waiting for. In a cost-effective manner, we can now offer value-added programs on our cattle and to our customers for both the domestic and international markets.” Anderson supplied cattle for the initial product shipments to Japan. “The Optibrand system marries all the data collected at individual points along the supply chain. Retailers who want to receive, and provide to their customers, the assurance gained with traceability information in an easy to use fashion, now have the opportunity with Optibrand’s system,” said Swanson.

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Thursday, December 20,2007

Wyoming officials worry brucellosis rule could affect state's cattle ranchers

by WLJ
State of Wyoming officials say they’re concerned an upcoming federal rule governing brucellosis in wildlife and livestock might threaten the state’s newly regained brucellosis-free status. During a meeting of the state Brucellosis Coordination Team, Wyoming Game and Fish Department Director Terry Cleveland said he’s worried that the new rules might, in effect, punish Wyoming cattle ranchers because of brucellosis in elk. “I don’t want Wyoming livestock producers to lose (brucellosis-free) status because of disease in wildlife,” Cleveland said. Wyoming Gov. Dave Freudenthal also has objected to the rulemaking, saying in a December letter to U.S. Secretary of Agriculture Mike Johanns that a nationwide approach to fighting brucellosis was “a monumental shift in a direction that is unacceptable to the state.” Brett Combs, a veterinarian for USDA’s Animal and Plant Health Inspection Service, said he would relay Wyoming’s concerns to federal officials. Part of the problem, state officials said, is that they haven’t been able to see the draft rules, which are scheduled to be published in the fall. By then, they worry, it might be too late to make substantial changes to protect Wyoming ranchers. Brucellosis infects cattle, elk and bison and can cause cows to abort. Wyoming lost its brucellosis-free status in 2003 when the disease was found in a herd of cattle near Pinedale, WY. The state only regained brucellosis-free status last fall.

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Thursday, December 20,2007

Modern grass cattle concepts

by WLJ
Cattle genetics have changed and backgrounders may need to react. Frank Brazle, retired Kansas State University Extension beef specialist, has studied the stocker industry for more than 30 years. “There used to be just acres and acres of light-weight cattle, and they had to be backgrounded,” he says. “The cows didn’t milk as well and the calves didn’t have the growth.” Now most of those lighter calves are specific to the “fescue belt”—from southeast Kansas to the southern Appalachians—where endophyte fungus can retard milk production. Otherwise, calves are coming off the cow weighing more than ever before, says Brazle. Mark McCully, supply development director for Certified Angus Beef LLC (CAB), notes that the American Angus Association has documented genetic improvement over time. “From 1985 to 2005, the adjusted yearling weight EPD [expected progeny difference] climbed by 175 pounds,” he says. “That suggests the traditional methods for backgrounding Angus calves may need a little modification.” Feedlot owner-manger Steve Peterson works with a number of backgrounding yards near his 4,400-head Lebanon, KS, finishing yard. “We try to maximize energy without pushing the cattle so hard that they finish at lighter weights. It all depends on the genetics and type of cattle,” he says. “I want them to have plenty of energy, which is very important if you’re feeding cattle toward a high grading endpoint.” The CAB-licensed feeder says he grows some of the top cattle at 2.5 to 3 pounds a day and still feeds them 120 days in the feedlot. Research shows supplementation on grazing programs benefits both the quality grade of those calves and carrying capacity of the land. University of Nebraska data found supplemented calves graded 67 percent Choice, compared to 51 percent on grass alone. The carrying capacity on that pasture also increased by 40 percent. “You don’t ever want to slow down on nutrition because it’s costly to play catch up,” Peterson says. “Once you stop that marbling process, whether it’s stress or other factors, you’ve got several days to catch up. Sometimes you never do.” McCully says today’s practice of assembling groups of calves over time may need to be revisited. “Many backgrounders gradually purchase calves and put them on a maintenance ration, or the bare minimum, while they’re gathering enough animals to turn out together,” he says. “Any time a calf is put on a restricted diet, it hurts marbling.” Health and stress can also suppress appetite and grade, Brazle says. “If calves get sick and they’re not performing up to a pretty decent level, that will affect grade later on,” he says, suggesting growers place calves in a feedlot pen for a few days to “get the bawl and run out of them.” In his backgrounding yard, animals are then moved to 10-acre grass traps, out of the mud and with room to roam. “The spread of viruses is slowed down because they’re not in such close proximity to each other,” Brazle says. “It allows the viral vaccinations we give to start building up immunity to protect those calves.” With high corn prices and predictions of $20 Choice-Select spreads, coordinating management between stockers and feeders could really add up. “There will be more emphasis on performance, both the ability to gain and convert,” Brazle says. “Cutability and grade will have more value, too.”

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