Close
Home  All Articles
 
 
Monday, November 20,2006

Fed cattle trade early and steady

by WLJ
— Feeder cattle remain under pressure. Fed cattle trade broke out early last week in the northern tier states of Nebraska and Colorado along with the Corn Belt cattle feeding areas. Prices were steady to $1 higher than the prior week at $84-85.50 live and $133-135 dressed basis. In the south, there was some light trade reported last Wednesday at $85, however, once initial orders were filled, trade dropped off as the Chicago Mercantile Exchange (CME) rallied and cattle feeders held out for higher money. Feed grain prices and continuing declines in consumer movement have been equally hard on feedlots and packers in recent weeks. The result has been a steady weakening in fed cattle prices. Last week, analysts said there are more price drops in the weeks ahead. According to Mike Roberts, commodity marketing agent for Virginia Tech, the decline in demand is seasonal. “Beef demand usually eases up prior to Thanksgiving as pork and turkey demand pick up,” Roberts said. The movement of boxed beef out of packing plants has been a concern for weeks as a result of light consumer demand. It appeared last week that decline was finally taking a toll on prices at the retail and wholesale level. Movement of boxed beef was difficult and it took heavy discounting by packers to move product. Last Thursday, Choice product slipped 83 cents to $143 and Select product was down 58 cents, trading at $129.96. Analysts were predicting that prices would continue to move lower toward $140 for Choice product before any significant recovery would begin. Last Thursday, market reports indicated fairly good demand on boxed product on moderate to heavy offerings. Select and Choice chuck and rounds moved lower, while rib and loin primals were called generally steady. Beef trimmings were lower on moderate demand and moderate to heavy offerings by packers. For the week, however, despite the sloppy movement, Choice cuts were even with the previous week and Select cuts were down $2 as a result of better demand for Choice product. Packers were much closer to even money on slaughtered cattle last week than they have been in several weeks and were working through live inventory at high speed to take advantage of margins. Harvest volume for last Thursday was estimated by USDA at 128,000 head. For the week, total slaughter volume was estimated at 509,000 head, which was 7,000 more than the previous week and 42,000 more than the same week last year. Cow slaughter continues to run ahead of normal despite some expectations that it would begin to taper off now that most cull cows have been marketed. However, continued high corn prices and a serious shortage of forage and hay have ranchers looking deep into their herds for culls. Cow slaughter through Wednesday was averaging near 24,000 head per day at that level; cow cutout values continue to decline as production is exceeding retail movement. Prices for 50 percent lean are nearly half of 2005 levels as a result of the heavy volume. Last year for the same week, 50 percent lean averaged near $63. Last week, prices were averaging approximately $36 on the 50 percent lean trimmings. Until demand begins to pick up and slaughter volumes and weights begin to decrease from current levels, analysts expect pricing to remain lackluster. The November cattle on feed report, due out last Friday, was largely expected to show the start of that decrease. Average analyst estimates showed an expectation that placements would be reported in the range of 15.5 percent to 5 percent lower than October 2005. Although average estimates of number of cattle on feed ranged from 3.3 percent to 6 percent above last year, those numbers are greatly reduced from levels seen earlier this year. If the report comes in as expected, it could provide the first hope that the supply of fed cattle is coming more inline with average levels, which should provide a boost to the market next year. On CME, live cattle contracts bounced back slightly last Thursday after losing ground early in the week. The nearby December Live Cattle contract gained 140 points to settle at $88.12, which added strength to feedlots which were holding out for more money late last week. The February 2007 contract was up 155 points, closing at $90.75, and April closed up 147 points at $91.40. Feeder cattle The big story in the feeder cattle markets continues to be the high cost of corn. The surge in both cash and futures markets for corn buyers has put the feeder cattle market into a tail spin during the fall run. However, according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel, the skittish nature of feeder cattle markets might come to an end in the near future. “Some would say that skittish is a bit of an understatement given the slide in feeder cattle markets recently. Most feeder futures contracts have decreased $15-18 per hundredweight since mid-September,” Peel said. "Certainly there are some good reasons for feeder markets to be a bit touchy, but also there are several reasons why the current slide will not go on much longer, and may, in fact, correct a bit in coming weeks.” Peel said the end of the fall runs and the fact that a number of cattle and calves were sent to town early means there is likely to be a shortage of cattle for grazing wheat pasture this winter and next spring, particularly with wheat prices surging ahead as a result of short supplies. “Secondly, feedlots will begin to work through the current bulge of inventories in the next couple of months,” he said. “Regardless of the level of marketings, there is no doubt that October placements were small and will be followed by reduced November placements as well. Feedlot inventories should tighten up considerably by the end of the year and feedlots will again be looking for cattle to feed.” Of course, grain prices continue to be an unknown for cattle feeders, however, Peel said prices aren’t likely to continue to rise as rapidly as they have in the past two months. “Feed prices will be higher in 2007 and feeder cattle prices will be somewhat lower than expected just a few weeks ago,” he said. “However, corn prices will not continue increasing like they have recently and some of the expectations for the future will be tempered by reality.” Peel said the ethanol industry will face several hurdles that will impact the currently projected expansion. Most significant will be a lack of infrastructure, which will prevent the industry from reaching projected levels. “There are already indications of bottlenecks in ethanol plant design and construction. It will likely take longer than expected for some of the new plants to come on line,” Peel said. “Transportation issues will be more important as the truck and rail systems deal with unusual product flows and the unique challenges of transporting byproduct feeds and ethanol.” Despite the good news for feeder cattle markets in the future, last week prices continued their two month decline. The CME feeder cattle index stood at $99.77 last Thursday, down from $102.72 the week prior. Auction market prices again last week showed a sharply lower cash price trend. In Pleasanton, TX, feeder steers were $2-8 lower, with some scattered instances of as much as $10 lower. Feeder heifers were called $3-9 lower on active trade and good demand. In Oklahoma City, OK, the feeder cattle market was one of the few which was steady and in some cases, higher last week. Feeder cattle and calves over 500 lbs. were steady to $2 lower and calves under 500 lbs. were called steady to $3 higher. Demand was called moderate to good, with reports of good numbers of weaned, vaccinated and other value added options on offerings. Farther north, in Joplin, MO, steers under 600 lbs. sold $2-5 lower, 500 to 800 lb. cattle were steady to $2 lower and those over 800 lbs. were called steady. Heifers under 450 lbs. were steady, while those over 450 lbs. were $1-3 lower on moderate to light demand. In the northern tier, markets were much improved. In Basset, NE, the bulk of feeder cattle trended $3-5 higher; with 550 to 650 lb. heifers trading $5-7 higher. Quality at the sale was reportedly good with very good buyer attendance and participation. One of the highest gainers of the week was Riverton, WY. There, steer and heifer calves under 500 lbs. were steady to $2-5 with some instances of $6-7 higher on reputation quality offerings. Steers and heifers over 500 lbs. were called steady with some instances of $1-6 higher. Heifers were steady with lower undertones noted. Demand was called good with good buyer attendance. In Billings, MT, steer calves under 500 lbs. were not well tested. Those in the 500-600 lb. class were $1-5 higher, while those over 600 lbs. were mostly steady. Heifer calves were called steady to $3 higher, with a few instances of as much as $5 higher on good demand. On the West Coast, prices were mostly steady with the previous week on good runs of cattle. In Madras, OR, steers from 400-500 lbs. were steady to as much as $6 higher. Those in the 500-600 lb. range were mostly $1-2 higher and those 700-800 lbs. were also $1-2 higher. Heifers from 400-500 lbs. were steady to $2 higher, while heavier weight 500-700 lb. heifers were steady to $5 lower. In Madera, CA, stocker and feeder cattle were called steady to $3 lower in a moderate test of the market. On CME, higher trade in the live cattle pit, combined with some slight cooling in the corn market, helped feeder cattle make big gains last Thursday. The November contract was up 40 points to close at $97.62. January, March, April and May all gained 300 points on the day. January closed at $98.20, March ended at $97.12, while April closed at $97.80 and May ended the day's trading at $98.32. — WLJ  

Read more
Monday, November 13,2006

Fed cattle trade declines $2-3

by WLJ
— Corn prices continue to pressure feeders. Fed cattle trade came early again last week at $86 live and $132-135 dressed. Those prices were mostly $2-$3 lower live and $4-$5 lower dressed basis. Texas feedlots sold 20,000 head of cattle at $86-$86.50, Kansas feedlots reported selling 11,000 head at $86 live and $1.365 dressed, Nebraska feedlots reported selling 22,000 head of cattle for $85-$86 live and $1.33-$1.35 dressed, and Colorado feedlots reportedly sold 5,500 head for $86-$86.50 live and $1.35 dressed. The decline in the cash market, along with continued declines in the futures market, is being driven by shrinking retail beef demand and larger numbers of front-end fed cattle supply. The market last week declined to its lowest point since August, which does not bode well for cattle feeders who are faced with rising costs of gain as a result of the very bullish grain markets. According to the most recent Kansas State University “Focus on Feedlot” survey, average steer and heifer weights were up significantly again during the third quarter, adding to the already large supply of beef on the market. Average steer closeout weights reported during the quarter were 1,339 lbs. compared to 1,312 lbs. last year. Heifer weights were also higher, at 1,195 lbs., up eight pounds from 2005. Compared to the five-year average, steer weights were 46 lbs. higher and heifer weights were 33 lbs. heavier. Applied industry-wide, those calculations illustrate how rapidly additional weight can impact overall beef production numbers. Last Thursday’s harvest was estimated at 125,000 head, even with week prior and year ago numbers and the week-to-date kill stood at 502,000 head. That number was 2,000 head below the previous week, but still well ahead of the prior year when 478,000 head were harvested. The large kill numbers weren’t helping the boxed beef values as slumping demand at the consumer level and lower priced competing meats continue to cause sluggish movement off of store shelves. Retail buyers have been forward contracting for rib cuts to meet holiday demand, however that hasn’t been enough to sustain cutout values. Last Wednesday, the Choice cutout closed $2.52 lower to settle at $144.34 and the Select cutout closed 28 cents lower to settle at $132.41. Sales volume was called good with 537 loads of beef sold. The Choice/Select spread settled at $11.93, a loss of $2.24. In Thursday’s trade, the cutout remained under pressure, with Choice shedding another 63 cents to trade at $143.71 and Select dropped 36 cents, trading at $132.05. The Choice cutout value is off nearly $5 since the end of October. Select product is down more than $3 in the same time period. Packers have been faced with a build up of inventory, particularly in the slow moving end meats, and have had to offer big price breaks in order to keep it moving in the pipeline. Last week there were also some discounts in the Choice loin primal, which had been critical in maintaining cutout values. Analysts last week said if this discounting continues, it is a sure sign that both cutout values and fed cattle prices will continue to slide. The cow beef cutout also came under pressure last week as a result of the heavy supply on the market. Cow carcass cutout value dropped more than $2.50, from $104.03 on Monday last week to $101.40 on Thursday. Slaughter increases this fall have been largely in the area of cow and bull slaughter because of the drought. These increases in cow beef caused the cow carcass cutout value to decline last week. The 90 percent lean boneless beef prices dropped nearly $3.50 in the first half of the week. The 50 percent fed cattle trim traded mostly steady during the same time period. On the Chicago Mercantile Exchange (CME), live cattle contracts were mixed in last Thursday’s session. December was up 42 points at $85.87, February was down 10 points to $89.10, and April was up two points at $89.75. For the week ending Thursday, live cattle contracts were steady to slightly higher in mostly light trade on CME. The next important event for contract trade will be the release of the cattle on feed report, due out on Nov. 17. Feeder cattle Feeder cattle prices continue to be pressured by strong grain prices and contract trade on the CME last week made new contract lows, particularly in the deferred months. Despite the pressure, there was some price correction in the contract trade last Thursday, with feeders moving higher across the board. November was up 152 points to $100.47. January was up 167 points to settle at $96.37 and March was up 145 points, closing at $95.20. Last Thursday’s CME cash index declined $1.28 to settle at $101.44. Cash prices at auction markets for the week were lower across most of the western U.S. despite lower than normal receipts for this time of year. Last Thursday’s CME cash index declined $1.28 to settle at $101.44. Many feeder cattle were marketed early this year and the decline is apparent at most markets. Health concerns also played a role in last week’s market slide. Weather conditions have been highly variable in much of the Plains and intermountain region this fall and the wide swings in temperature have buyers very cautious about the health and background of their prospective purchases. Buyers were particularly selective last week, showing heavy preference for cattle and calves which had been weaned and vaccinated. Loud lots fresh off the cow were discounted heavily. Although grain prices have been hanging heavily on the feeder cattle market, there is some positive news for southern Plains operators. Rain last week came at a good time for the wheat crop and grazing conditions have reportedly improved across parts of Oklahoma and Texas for stockers and backgrounders. This hasn’t stopped the price slide in the cash market, but is has perhaps moderated the decline, according to market reports. In Amarillo, TX, last Tuesday, compared to the prior week, feeder steers and heifers were mostly $3-6 lower, with some instances of as much as $10 lower. Oklahoma City, OK, prices were $2-5 lower last week on lighter than normal receipts. Most 600- 750 lb. cattle were calves at this sale. Demand was called moderate for all classes with buyers being very selective on which lots were purchased. Rains fell early last week with some areas receiving up to two inches, while others saw very little. In Joplin, MO, Compared to the previous week, steers sold $3-5 lower and heifers were $4-6 lower. Demand was called moderate to light on moderate supply. In Dodge City, KS, compared to the prior sale, feeder steers and heifers in the 350-700 lb. range were sharply lower, losing as much as $10-12. At this market, some fleshy and unweaned calves sold as much as $15 lower. The La Junta, CO, market last Wednesday sold steer calves $5-8 lower, with the exception of 400 to 500 lb. cattle, which were $10 lower. Heifer calves were $5-8 lower with some instances of as much as $10 lower. Yearling feeder steers and heifers were lightly tested in active trade on moderate demand. At the market in Bassett, NE, compared to the last sale, feeder cattle trended $5-7 lower despite good quality cattle through the market. Demand was called weak on offered lots. In Riverton, WY, compared with the previous week, steer and heifer calves were under pressure, trading $1-4 lower, with instances of as much as $5-6 lower. Yearling steers, on a light offering, were $2-3 lower, and heifers under 900 lbs. were $1-2 higher. In Billings, MT, compared to the prior week, steer and heifer calves were $3-6 lower. Calf demand was called light at the sale, mostly as a result of the sharply lower futures market, a drop in the fed cattle market, and higher cost of gain, according to reports. In Davenport, WA, compared to the previous week, feeder cattle were $5-7 lower on moderate trade and light to moderate demand. In Vale, OR, most all classes and calves were $2-5 lower on moderate trade and moderate demand. — WLJ

Read more
Monday, October 30,2006

Washington property rights initiative faces opposition

by WLJ
—Washington state bill will protect landowners, large and small. Initiative 933 (I-933), a property-rights measure sponsored by the Washington Farm Bureau, is scheduled to be considered by Washington voters on Nov. 7. The initiative, if passed, would require state and local government agencies to either compensate private landowners for regulations that decrease the value of private property, or waive those laws for affected properties. The bill is retroactive and will impact property regulations passed as far back as 1996. Jack Field, executive vice president for Washington Cattlemen’s Association, said the organization is fully behind the initiative. “We are fully behind it, a big, solid yes vote,” Field said. He encouraged all Washington voters to support the measure. “The initiative is designed to protect all property owners, whether they own a shoe-box sized piece of land or a million acres.” Field said the bill protects property owners from governmental regulations which are applied to landowners unevenly. “In this state, there is a huge issue involving setbacks from wetlands and critical areas ordinances. This bill will either compensate land owners for lost value as a result of those required setbacks or allow an exemption to the requirement if it is a regulation that is unevenly applied.” Field said the bill does not apply to zoning regulations because courts have ruled in past cases that zoning laws are applied to all land owners at some level. As a result, land owners impacted by changes in zoning regulations will not be protected or compensated even if the measure passes. The organizers of the I-933 initiative chose a 10-year retroactive period, in part, to keep the measure from being too cumbersome. Officials say 1996 also is the year agricultural land began taking a back seat to conservation concerns through changes in the state’s Growth Management Act. Washington’s initiative is similar to property-rights measures on the ballot in at least three other western states and has put producers and ag land owners front and center in the battle for public opinion. Field, who had just returned from an I-933 rally in support of the bill in Ellensburg, WA, said the drive for passage of the initiative has been very positive with a lot of support from land owners across the state. The state Farm Bureau is the most vocal public supporter of the initiative, saying it will help guard against government regulations which have potential to impact land productivity or profitability. Field said the initiative has broad-based support on the largely urban western Washington, as well as mostly agricultural eastern Washington. “At a number of rallies across the state, including one in Seattle, we have had business people come out and wave and give us a thumbs up, showing their support,” he said. The opposition has deep pockets, according to Field, counting among their financial backers co-founders of Microsoft Bill Gates and Paul Allen. “They are gaining momentum,” Field said of the No on 933 backers. Opponents of the initiative say the measure could compromise environmental protection of critical habitat areas and further expand the area’s growing suburban sprawl. They point to a state budget office study that said the measure could force the government to pay more than $8 billion in claims over the next six years. Field, however, claims that’s not true. “The dollar figures are skewed because rather than compensating land owners, they can simply issue an exemption,” he said. “We’re just saying that if government has taken rights away from you in the last 10 years and you can show it, then they ought to be accountable to respect those rights,” said Dan Wood, Washington State Farm Bureau spokesman. “It’s not a big, scary concept.” I-933, and similar measures in other states, is modeled after a bill passed in Oregon in 2004 where voters enacted a law forcing government to pay private property owners for regulations that harm land values. Washington state supporters say their measure has key differences, but critics say the two measures are close enough to make Oregon’s $4 billion in claims a striking lesson. According to records filed with the state, the pro-933 campaign has raised nearly $800,000. Its largest contributor is Americans for Limited Government, a group headed by New York resident Howard Rich who has helped bankroll similar measures elsewhere. I-933 opponents have raised more than $2.6 million, with the largest donations coming from The Nature Conservancy and wealthy, local people including Aldus Corp. founder Paul Brainerd and Microsoft co-founders Bill Gates and Paul Allen. The opponents of the measure have been outspending the pro-933 camp, using their larger bankroll to fund an aggressive media campaign to turn voters against the measure. That opposition is evident in the recent independent Elway Poll which surveyed registered voters in Washington state Sept. 21-24 and found 47 percent of those questioned said they would definitely or probably support the measure, while 31 percent said they opposed it or would probably vote no. The Elway Poll surveyed 405 people by telephone with a margin of sampling error of plus or minus 5 percentage points. The I-933 numbers have shifted in favor of those opposed to the initiative since July, when 55 percent told Elway pollsters they were in favor and 23 percent said they were against it. Field said it is more important than ever for voters in the agricultural industry to come out in support of the property rights measure. — John Robinson, WLJ Editor  

Read more
Monday, October 30,2006

October cattle on feed sets record

by WLJ
— Heifer placements up 16 percent from last year. The October cattle on feed report came in near pre-report expectations and was considered largely neutral. It showed the number of cattle on feed, estimated at 11.4 million head, up 9 percent from October 2005. The number was the highest October cattle on feed number for the data series beginning in 1996. The number of cattle and calves being pushed into feedlots by drought this year has continuously been at or near record levels, however the data shows that placements are beginning to taper off. Placements for September were 2.23 million head. That figure was 5 percent below October 2005 and 6 percent lower than the same month in 2004. Lightweight placements continue to lead the weight category with 725,000 head of placed cattle weighing less than 600 pounds. That number is 28 percent above last year when 565,000 head under 600 pounds were placed in September. In 2004, there were 623,000 head under 600 pounds placed during the month. Cattle in the 600 to 699 pound range were down 18 percent. Cattle placed in the 700 to 799 pound range were down 18 percent and those 800 pounds and over were down 12 percent. The lower number of heavy weight cattle is expected to be supportive of prices over the next several months as feedlots work through the continued large supply of front-end ready cattle. The cattle placed in September as lightweights will be spread over a longer marketing period. And, should winter grazing develop, some cattle could go back out on grass, especially with the higher cost of feedlot gain. Those costs are already adding pressure to the feeder cattle market and calf prices have been trending steadily lower over the past several weeks. According to Andy Gottschalk at HedgersEdge.com, feeder cattle prices have declined as much as $60 per head as a result of the advance in corn prices this fall. Last week, December new crop corn was trading at $31.5 per bushel early in the week. “Gain costs in the fed sector have increased 20 cents per pound versus last year. Additional increases may be associated with gain costs in the coming year,” Gottschalk said. “As such, rallies in the feeder and calf prices should be limited and the highs attained this year are unlikely to be challenged.” Perhaps the most significant aspect of the report was the number of heifers and heifer calves placed during September. According to Jim Robb, director of the Livestock Marketing Information Center, the number of heifers placed on feed shows that the herd expansion started last year may have stalled or at least slowed substantially. “The number of heifers and heifer calves placed on feed during September was the most important number of the whole report. It shows that there will be a significant increase in heifer slaughter in the year ahead. When you combine that number with the increase in cow slaughter this year, it shows the U.S. herd expansion is much smaller than expected at the beginning of the year,” Robb said. “Although I don’t believe it will drop back to zero, I expect herd expansion will be around a half-percent or less.” Marketings, with one fewer days during the month, totaled 1.77 million head. That number was 3 percent below 2005 and 2 percent lower than 2004. When the marketing rate is compared however, the number is even more concerning. Gottschalk said the marketing rate is contributing directly to the larger carcass weights and beef production. “Marketings relative to cattle on feed were a disappointment, with a marketing rate of only 16.1 percent versus a five-year average of 18.4 percent. Thus, marketings fell short of the five-year average marketing rate by 252,000 head,” Gottschalk said. “Carcass weights are not at record levels by default. Rather, record weights are the result of reduced marketings.” Gottshchalk blamed the lackluster marketings on the continuous decline in beef demand at the retail level. “Third quarter beef demand is determined to be weaker than expected. Our measurements of demand suggest a decline of 6.33 percent versus the third quarter of 2005. Even when measured in nominal dollars, beef registered a decline in demand. The third quarter of 2006 marks the seventh consecutive quarter of declining beef demand,” Gottschalk said. “The inability of the packer to advance and/or sustain beef cutout values in the midst of reductions in weekly kill rates is a glaring verification of the weak demand structure they navigate.” Gottschalk said the expected increase in demand now that energy prices are moderating hasn’t yet proven out. He pointed out that consumers spent $3.7 billion less on fuel in September this year than in 2005. In addition, with the decline in natural gas, home heating costs for those heating with natural gas are expected to be $119 per month less than last winter, a 40 percent decline. Those who use heating oil are expected to pay slightly more. “We shall soon know if any of that consumer gain from lower total energy costs trickles down to beef and the meat sector. We are guardedly optimistic that, as we move forward, consumers will increase their spending on beef,” Gottschalk said.—John Robinson, WLJ Editor

Read more
Monday, October 30,2006

Obituary

by WLJ
Gary Eugene Parker Gary Eugene Parker passed away on Oct. 20, 2006, in the arms of his beloved wife following a battle with asbestos-caused cancer. The world became a brighter place on Sept. 10, 1944, when Gary was born in Great Falls, MT. Alton and Esther (Rooney) Parker had no idea how many lives their son would touch in his 62 years, or how successful he would be in every way. He graduated from Great Falls High in 1962 and married Cathy Darko in 1964. They have two daughters, Ronalee Ann (Roni) and Gerri Lynn. Even in high school, Gary had the dream and desire to train bird dogs. He ultimately opened his own kennels and began training professionally. He was carrying a truck full of champion dogs, winning every dog trial he went to when, at the age of 36, he chose to change his life’s path completely. Gary began his registered Angus career with John Hoyt at the Jolly Roger Angus Ranch in Belt, MT. When Stevenson Basin incorporated in 1983, he joined them to assist in added marketing. In 1988, Gary and Cathy divorced and Gary moved to Laramie, WY, with the creation of Taylor Angus. Gary stayed on the leading edge of the Angus industry at every step. In 1991, Gary married Gloria Lindeman, bringing the daughters to a total of five. Annette and Sanya lived in Montana and Kelly grew up on the ranch in Laramie. Gary and Gloria truly were soul mates, complementing each other perfectly. Their balance, support and love carried them well in whatever it was they were doing and was so overwhelmingly apparent to everyone that knew them. In 1994, Gary and Gloria set out on their own, buying a ranch in the Little Laramie Valley. Shamrock Angus was built through pure determination and hard work. He and Gloria achieved their goal in creating the best herd of cattle possible to live on the top of the mountain and pioneered high elevation/brisket awareness and PAP testing. To see such an amazing life come to an end, such an amazing person lay still, that’s hard. He truly lived more life in his one relatively short lifetime than most people can imagine. He will truly be missed by every single person whom his life graced. He is survived by wife Gloria (Lindeman), Laramie, WY; daughters and grandchildren Roni, Mike, Andee and Adam Baker of Park City, MT; Gerri, John, Adessa and Parker Campbell of Hobson, MT; Annette, Scott, Madison and Jaeger Jones of Anchorage, AK; Sanya Krenzelok and Brian Fields, Portland, OR; Kelly, Mark and Riley McBroom, Anchorage, AK; Parents Alton and Esther Parker of Great Falls, MT; Sister Karen and Dan Griffin of Great Falls, MT; Brother Pat and Becky Parker of Great Falls, MT. Gary was preceded in death by an infant daughter, Cindy. Gary’s life was celebrated the week of Oct. 23, 2006, at the Ranch in Laramie with a rosary and celebration of life Oct. 24, followed by a funeral service on Oct. 25 which was followed by a reception. Gary was returned to Montana for a grave-side service and committal in Lewistown, MT, on Friday, Oct. 27. Memorials are suggested to Hospice, University of Wyoming Ag Department, or a significant charity of your choice.  

Read more
Monday, October 30,2006

Feeder cattle lower due to rising corn

by WLJ
Fed cattle trade was again slow to develop in a very cautious market. At mid week, feeders were holding out for $90 and packers were offering $85. Packers have had positive margins over the last few days; that margin was only about $5 a head and history has shown us that it doesn’t take a packer long to give it all back to the feeder. Only 14,000 head had traded through Thursday at $87 live, $137.00 dressed. Trade was expected to wait until Friday to get underway at steady money. Slaughter levels were fairly strong even though packers announced that they intended to cut slaughter levels for the next six weeks or so because of weak beef demand. That didn’t seem to last long as daily slaughter levels were in the 126,000-128,000 head range for most of the week. If packers are serious about lowering slaughter levels, it usually shows up on Friday or Saturday, which haven’t been down significantly. Last week the industry processed 639,000 head. Last year, 621,000 head were processed at that time. So far this year, the industry has processed 962,000 more cattle than a year ago, or just a touch over a billion pounds of beef. Futures markets were fairly flat until Thursday when live cattle jumped $1.70 on the nearby contract and $2 on December to close at $90.65. Some of the speculation for the market strength was the storm market, which was fairly limited and won’t have much effect. The boxed beef cutout values were holding their strength at current market levels and supporting live values. The idea is that cattle feeders may be more current than many thought because slaughter weights have topped out, signaling their seasonal high. The beef markets have maintained some good strength. The Choice cutout was at $147.68 and Select was at $137.60. Trade volume was very good on the 25th but lackluster for the rest of the week. The cow beef cutout has been much stronger in recent weeks at $106.57. The trim markets have also been good with 90 percent lean trading at $133.99, but the 50 percent product was at a low price of $36.83. The corn markets are where everyone’s attention is. Both the futures and the cash markets have a good head of steam on them and are moving the corn markets rather well. According to Dillon Fuze, extension economist at University of Utah, the ethanol industry is on a roll. Corn The ethanol industry is in the middle of a major expansion. Government regulated clean fuel regulations and $75 per barrel crude oil prices have created a major incentive for the ethanol industry to expand. There are 97 ethanol plants operating and 35 more plants are under construction. The ethanol industry is now using more than two billion bushels of corn. That represents about 18 percent of corn use and that percent will likely exceed 20 percent in the near future. Ethanol production is expected to increase another 35 percent in the next cropping year. What impact will that have on corn prices and how might that impact the cattle industry? A look at the Chicago Board of Trade December corn futures provides some insight: December 2006, 2007, 2008 and 2009 prices were $2.43, $2.88, $3.09 & $3.18, respectively on Sept. 11, 2006. From 1960-1972, the farm price for corn averaged $1.13 per bushel and the fed cattle price to corn price ratio averaged 24. Increased exports of corn increased the average price of corn to $2.46 per bushel from 1973-1996 but fed cattle prices also increased and the fed cattle/corn price ratio averaged 26 over that time period. However, the last 10 years have seen corn exports flatten out and corn production increase. Farm gate corn prices have averaged only $2.14 per bushel from 1997-2006. Fed cattle prices have moved to record high price levels over that time period and the fed cattle price/corn price ratio grew to an average of 35. Relatively cheap corn has been a factor in the increase in fed cattle slaughter weights and has influenced the proportion of calf-fed versus yearling-fed cattle. If the trend towards higher priced corn, as projected based on Chicago Board of Trade December corn futures, is correct, how will sustained higher corn prices impact the cattle industry? Will some of these feeding trends that I just mentioned be reversed? Will we see lighter fed cattle slaughter weights? Will we see calves being grown to heavier weights outside of the feedlots before being placed on feed? If corn price increased and all other factors remained constant, I think I would be safe in concluding that weights would decline and that cattle would be placed at heavier weights. However, there will be competing and offsetting forces at work in the market. If more calves are placed in background and stocker programs, that would tend to increase the price of corn stalks, silage, summer grass, and wheat pastures. Given present cattle numbers, there is an excess feedlot capacity. Owners of those feedlots will not likely want them to be empty. Feedlot economics is like the tourist and motel business; you have got to keep the rooms full to be profitable. Will cattle feeding location shift towards proximity to the ethanol plants (Iowa, eastern Nebraska)? Research has shown that feeding ethanol byproducts can fit well in a feedlot ration. Dried distillers grain, wet distillers grain, and wet corn gluten are some of the more popular by-products. The dried distillers grain can be shipped economically some distance. The wet distillers grain and the wet corn gluten must be fed fairly close to the plants for it to be economical. Will we see an increase in cattle feeding in the Corn Belt and a decrease in the Great Plains? Probably, but I think there will again be competing forces at work in the market that will limit growth in Corn Belt cattle feeding. The current excess feedlot capacity that I already mentioned is one factor and the location of fed cattle slaughter plants is another factor. Environmental regulations in the more humid and more heavily populated Corn Belt region, compared to the high Plains, will likely also curtail feedlot expansion in the Corn Belt. I don’t have all (maybe none) of the answers to many of the questions that I posed in this article. However, I think we all need to ponder the questions. There is not likely an economist smart enough, or a model sophisticated enough, to foresee all of the changes over the next few years. However, I am a strong believer in the power of the market place to allocate resources based on market prices. The price of corn and the price of soybeans cannot get too far out of equilibrium before acreage devoted to each crop will be altered to bring the prices back into an equilibrium close to the cost of production. I do think we will see higher and more volatile corn prices in the future. That will impact cattle feeding profitability. Cattle feeders will not bear all of that added risk and reduced profitability. They will pass some of it back to cow/calf producers and stocker operators in the form of lower, and perhaps more volatile, calf and feeder prices. I would suggest cowboys do what they always do: pull your hat down, tighten your cinch, and hang on for the ride. Feeder cattle The cash feeder cattle market moved mostly higher last week, with the exception of the far northern tier, which was impacted by some severe winter weather, particularly in Montana where prices were depressed as a result of the weather. Feeder cattle futures were mostly uneven last week, but remained mostly steady with the prior week.It appeared that the potential for a higher cash fed cattle market last week was lending support to cash feeder cattle in the country. Three consecutive weeks of lower trending Chicago Mercantile Exchange (CME) trade and higher Chicago Board of Trade December corn prices were shrugged off by the cash market last week, despite feedlots having to sharpen their pencils to recalculate breakevens now that the cost of gain has risen. Particularly for feedlots which haven't locked in corn prices for the winter, those costs are significantly higher for the first quarter of 2007. Last Thursday, December new crop corn was trading in a range of $3.25 to $3.30 per bushel, with analysts predicting it could move higher. According to reports, winter wheat pasture, a favorite ration for southern Plains backgrounders, has now received adequate moisture levels over most of the winter wheat region to give the crop a good stand, but many graziers have yet to purchase their stocker cattle. This demand should come into play soon as temperatures cool down and sickness becomes easier to manage in newly received cattle. The improvement of wheat grazing prospects will be a benefit to southern Plains markets, particularly since last year cattle backgrounders had difficulty finding adequate pasture to graze cattle. In Crockett, TX, last week, feeder steers and heifers traded steady to $2 higher. Trade and demand was called strong. In Oklahoma City, OK, compared to the previous week, feeder cattle sold $1-2 higher with good demand for limited numbers since most cattle were marketed early in the region as a result of the summer drought. However, the feeder supply was much improved compared to recent weeks. Steer and heifer calves were $2-3 higher also with good demand, especially for long weaned calves. In West Plains, MO, compared to the previous week, the steer and heifer market was $2-5 higher. Several light steers calves under 450 lbs. at the start of the sale sold $8-12 higher, but only briefly. Supply was called moderate and demand moderate to good, with most buyers being fairly selective for quality and condition with the majority of sales toward the upper end of the price range being weaned or at least having one to two rounds of vaccinations. According to market reports last week, the one thing that will get most order buyers' attention and bring them to the front edge of their seats during these times of high feed costs, depressed futures and fat cattle, is a good set of weaned/vaccinated calves in right flesh showing characteristics of overcoming shipping stress with a minimal cost start-up. In Dodge City, KS, last week, steers 300-600 lbs. were steady to $3 higher, with some sporadic instances of $6 higher on weaned 400-450 lb. steers. Those in the 600-700 lb. range were steady to $3 lower, while 700-950 lb. steers were called steady to $3 higher. Heifers from 300-450 lbs were steady to $3 higher, with some instances on weaned 400-450 lbs. of $6 higher. Heifers in the 450-700 lb. range were weak to $4 lower and those 700-950 lbs. were steady to $3 higher. At Loup City, NE, in contrast to the prior week, steers and heifers traded $2 either side of steady with the bulk of offerings trending steady on a lighter than normal run of cattle. Demand was called moderate to good at the sale. In Aberdeen, SD, at Hub City, compared to the prior sale, feeder steers and heifers sold steady to $3 lower with the best demand for reputation steers over 600 lbs. and fancy heifers which will be working in breeding herds. As mentioned earlier, Montana feeder cattle markets were hampered by weather early last week. At Billings, MT, compared to the prior week, steer calves were $3-8 lower, except those in the 400-450 lb. class which sold $9-10 lower. Heifer calves were $3-7 lower, except 350-400 lb. heifers which were called rather steady on light demand. At the market in Jerome, ID, feeder heifers in the 400-500 lb. range sold in a wide spread of $92-110 and 500-600 lb. range from $97.75 to $109. Steers in the 400-500 lb. range sold from $110 to $120. Those in the 500-600 lb. class sold in a range of $104-114 and steers in the 600-700 lb. range sold from $96 to $108. Heavy 700-plus pound cattle sold in a narrow spread of $95-99 last week. In Davenport, WA, compared the previous sale, a good run of cattle and calves were uneven, with weights less than 600 lbs. and all heifers selling $2-4 higher. Steers over 600 lbs. were called steady to $2 lower. Trade was moderate to active with moderate demand. In Vale, OR, the market last week was steady on moderate demand for calves in the 300-500 lb. range. Those weights over 600 lbs. were $2-3 lower than the previous week. Cattle in the 500-600 lb. class sold in a range of $104-112 and yearling steers from 700-900 lbs. sold in a range of $87 to $97.   Last week, feeder cattle contracts on CME were mostly mixed to lower, with the rising grain market taking its toll on contract trader's nerves. Despite that, the grain market showed some weakness last Thursday and feeder cattle futures rose slightly higher across the board in last Thursday’s session. The October contract closed the day at $107, which was 30 points higher, and even with the week prior average. November was up 30 points as well, closing at $104.75. December was slightly higher at $102.80, March was up 22 points at $101.57 and April, the biggest gainer of the day, closed up 45 points at $101.55. Market analysts last week said any weakness in the corn market could provide a rallying point in the feeder cattle contracts.

Read more
Monday, October 30,2006

Corn prices continue to move higher

by WLJ
— Additional price increases expected to further pressure market. The recent run up in corn prices has had corn users scrambling to lock in prices if they haven’t already done so. Analysts are encouraging the move, saying the price could be set to rise higher when USDA releases the next corn crop update next month. Many analysts are predicting the harvest estimate to be revised lower as a result of lower than expected yields, particularly in portions of Iowa. Dan Childs, ag economist with the Noble Foundation at Ardmore, OK, speaking at the Greater Oklahoma Farm Show recently said producers are going to have to look more closely at supplemental feeding programs and put a pencil to cost of gains as a result of the rise in grain prices. He said a recent price rally and tight corn supply report may be attributed to the ethanol boom and could put downward pressure on feeder cattle. “We may not see $1.80 corn for a long time,” Childs said. “I don’t think we will be able to send calves into the feed yard like we have been. We’ll have to find some way to keep these calves at home.” Robert Wisner, agricultural economist with Iowa State University, said the Oct. 12 corn crop report put total yield almost a billion bushels below expected market demand for the marketing year despite being the second largest crop on record, if yields reach the report’s projections. The yield, at 10.9 billion bushels, had pushed prices past $3.30 per bushel on the Chicago Board of Trade last week, with some analysts predicting it could go higher during the marketing year. “This year’s shortfall can be met by drawing down the large carryover stocks that were built up in the 2004-2005 marketing year. However, USDA currently projects August 31, 2007, U.S. corn carryover stocks at 996 million bushels. That is only a 4.4 week supply available a little more than a month before the main Corn Belt harvest season gets into full swing,” Wisner said. “Reducing the carryover stocks by another 200 million bushels next season, with prospects for total use in the 12.5 to 12.6 billion bushel range, would put the carryover at a 3.3 week supply. That would be a very tight old-crop situation.” He said there is a possibility USDA would move the estimated national yield lower again when it issues the Nov. 9 report next month. He said there were 14 years between 1965 and 2005 when the yield estimate declined from September to October. “Seventy-one percent of those 14 years had a further decline in the season final estimate. The average 2.8 percent decrease, if it occurred this year, would lower the U.S. corn crop by another 310 million bushels and would create a 1.3 billion bushel production-use deficit unless prices rise enough to ration use,” Wisner said. “That would bring August 31, 2007, U.S. corn carry over stocks down to about a 3.2 week supply. In 1995-96, the year when central Iowa cash corn prices were above $5 per bushel for six months, the U.S. corn carry over stocks were a 2.6 week supply.” Those projections are making many corn growers wish they still had corn left to sell since much of the crop this year has been forward contracted. For cattle producers, the result of the price increases means additional pressure on feeder calf markets and increasing costs of gain for feedlots. According to Chris Hurt, Purdue University extension economist, the rise in corn prices and subsequent drop in calf value has resulted in a $1.9 billion decline in annual returns for cow/calf operations. He also said excess feedlot capacity has also been costly for that segment raising feedlot breakevens. “However, learning to feed distillers’ grains at much higher inclusion rates remains the opportunity,” Hurt said. How the industry will respond to higher feed grain costs is yet to be determined, however, Hurt said the effects were already becoming evident. “The latest USDA cattle on feed report gives just a few clues (to how the industry will respond). Placements were down 5 percent, indicating less willingness to put cattle in the feedlot with such an uncertain feed price situation,” he said. “However, the October cattle on feed report is still not current enough to reflect the direction of feedlots yet. It is for the month of September, and much of the corn price increase came in October.” Hurt said over the last month, feeder cattle prices have shown the effects of the rise in price. “November feeder cattle futures, as an example, dropped $10.87 from mid-September through October 20. Cash prices for 500-550 pound steer calves at Oklahoma City, OK, dropped by $10.59 per hundredweight. So the initial surge of higher feed prices is being felt most heavily by two industry sectors. The first is feedlot managers who paid high prices for calves and did not have their needed feed costs hedged,” Hurt said. “The second, and biggest losers from much higher feed prices so far, are the cow/calf operations and some backgrounders. The cow/calf segment is particularly hard hit as lower calf prices can be expected as long as feed prices stay high, or until distillers’ grain use can help moderate overall feeding costs.” According to Wisner, ethanol production, creating the opportunity for feeding distillers’ grains, is only going to grow. According to him, ethanol production is expected to use 34 percent more corn during the upcoming marketing year than during the current year. Although the expected short fall can be met with the carryover stock from the 2005/2006 marketing year, the number of acres planted in corn next year will likely increase to meet future demands, according to Wisner. He said next year’s planted acreage will likely grow by 9 to 11 percent to meet the growing demands of the industry, although that number is subject to market forces and growing conditions at home and abroad. — John Robinson, WLJ Editor

Read more
Monday, October 30,2006

Beef talk

by Kris Ringwall, North Dakota State University
Do not cut out tags The other day I was visiting with a producer who wanted carcass information on the calves he sold. His frustration was directed at the failure of the system. None of the performance data from his calves was coming back to him. He tagged his calves with electronic identification (EID) tags and followed all the appropriate steps, but nothing happened. The principal reason was the electronic ID tags in his calves had been cut out when the calves arrived at the feed yard. Sometimes the message needs to be very blunt: “Do not cut out electronic identification tags, commonly known as EIDs.” The EIDs may have different appearances, depending on the tag company design, but essentially they consist of a button that is attached to the ear by means of a stud. These tags are passive electronic devices that have little to no information on them. The same holds true for all IDs that an animal may have. The visual tag IDs or brands are very important in determining who an animal is. The verification of the EID, along with visual IDs, is important to maintaining the accuracy of the database. In the previous two years, 7,282 calves have been tagged with EID tags in preparation for tracing the calves through the backgrounder, feedlot and harvest process. Our trace-back efforts have revealed 1,440 of the animals still are grazing pastures at home as replacement females. Of the 5,842 that left the home ranch in 2004 and 2005, 3,584 calves have been lost in the system (to date) and 61.3 percent of the calves were not tracked through harvest. The most obvious reason is the tags were cut out. Once the tags are removed, all information flow stops immediately. A very distant second reason is the inability to timely negotiate with individual feed yards to make arrangements at the harvest facility to have the tags read so the appropriate carcass data can be collected. The bottom line is worth repeating: “Do not cut out ear tags from cattle, and that goes for all cattle!” Another little quirk came up in the discussion that shows the relative degree that the electronic ID is misunderstood. There is a thought by some that the EID device can record data and actually is monitoring the calf and its environment. Therefore, the tags should be cut out and destroyed. The passive EID tag (used in the CalfAID program) is not capable of acting under its own power to record data. The tag must be read by utilizing appropriate equipment that only reads a factory-installed number that is permanently embedded in the tag. No other information is on the tag. There are active tags that can store data. However, that tag is not promoted to any large extent in the industry. Even then, appropriate programs must be retained and utilized through specific equipment. The common low-frequency tags currently used do not record data. The tags that do record data require special equipment that is very obvious within the work facilities. Hopefully, with time, more data will start coming back to help producers with management decisions to enhance the management of their beef cattle operations. The center has a goal of distributing 20,000 EIDs for the express purpose of helping producers better understand the complexities of tagging cattle. Each year does get a little better, but one step at a time. Remember: Do not cut out those tags.

Read more
Monday, October 23,2006

Outlook predicts mild winter for much of U.S.

by WLJ
Most of the country will see winter temperatures above normal, though slightly cooler than last year’s very warm winter, according to the winter weather outlook announced today by the National Oceanic and Atmospheric Administration (NOAA). According to scientists at the NOAA Climate Prediction Center who produce the outlook, drought conditions also are expected to improve in most areas of the Southwest, while some drought conditions are anticipated in parts of the Pacific Northwest. The projections, based on the last edition of the U.S. Seasonal Outlook, were issued by NOAA in conjunction with the 2006-2007 Winter Fuels Outlook Conference. Weak El Niño conditions have developed in the tropical Pacific can and are expected to persist through the winter, possibly strengthening during the next few months to an event of moderate strength. However, this event is not expected to reach the magnitude of the strong 1997-1998 El Niño event. “The strengthening El Niño event will influence the position and strength of the jet stream over the Pacific Ocean, which in turn will affect winter precipitation and temperature patterns across the country,” said Michael Halpert, lead forecaster at the NOAA Climate Prediction Center. “This event is likely to result in fewer cold air outbreaks in the country than would be expected to occur in a typical non-El Niño winter.” The winter outlook reflects a blend of factors associated with weak to moderate strength El Niño events across the central and eastern Pacific Ocean, combined with longer-term trends. From December through February, the lower 48 states can expect about 2 percent fewer heating degree days than average but about 5 to 10 percent more heating degree days than last year’s very warm winter. Seasonal forecasters also expect warmer than average temperatures across the West, the Southwest, the Plains states, the Midwest, and most of the Northeast. Near-average temperatures are expected for parts of the Southeast. The outlook for winter precipitation calls for wetter than average conditions across the Southwest. Drier than average conditions are expected in the Tennessee Valley, the northern Rockies, the Pacific Northwest and Hawaii. Other regions have equal chances of drier, wetter or near normal precipitation.

Read more
Monday, October 23,2006

International picture bright for U.S. cattlemen

by WLJ
The worldwide picture for U.S. beef exports looks positive, according to Clayton Yeutter, and that’s good news for cattlemen. Speaking at a joint meeting of the Texas Cattle Feeders Association (TCFA) and the Texas and Southwestern Cattle Raisers Association (TSCRA) in Amarillo, Yeutter told cattlemen that there is some good news in the international competitive picture. Cattle feeders were in Amarillo for the TCFA annual convention and TSCRA members gathered for their fall board and committee meetings. Yeutter, a past USDA secretary and former U.S. trade representative, believes that beef’s traditional export markets will come back fairly quickly and that’s encouraging for the U.S. cattle industry. “The real question is, can we build on that and make it bigger in the future?” Yeutter thinks the U.S. beef industry can, even in the face of global competition from Brazil, Australia, Argentina and the European Union. “First, when and if we ever complete the Doha round of multilateral trade negotiations, agricultural export subsidies of all kinds will disappear forever.” The biggest user of agriculture export subsidies, including beef, is the European Union, he said. “Once those export subsidies are out of the picture, that will make it far more difficult for the European Union to move product into the world market in competition with the United States.” Yeutter said many feel the Doha round of World Trade Organization talks is dead. “But my personal judgment is it will come back to life. I’m not sure it will come back to life in the next few months, but I think it will get there eventually. I believe that export subsidies in agriculture are going to go by the wayside and that’s going to be good for the industry.” Argentina and Australia have the potential to be major world competitors in beef exports, but Australia doesn’t have the resources to expand its beef industry much beyond its present size, Yeutter said, and Argentina’s government will continue to hamper the nation’s ability to export beef. “So that means Brazil is likely to be our major competitor in export markets in beef. And what we have to do is beat the Brazilians in terms of quality of product. We need to put higher valued, higher quality beef into the international marketplace in the coming years.” Yeutter told cattlemen that someone always asks if there are enough affluent people outside the U.S. to buy American beef. Where are those consumers? “Basically, it’s the developing nations throughout Asia that will have the population and the growing purchasing power to be able to handle additional imports of American beef products. And those can be some excellent markets for American beef through the years.”

Read more
 
 
User Box (click to open)
 
SEARCH IN WLJ
Get WLJ In Your Inbox!
   
 
S M T W T F S
1 2 3 4 5
6 7 8 9* 10 11 12
13 14* 15 16 17 18* 19
20 21* 22 23 24 25 26
27 28* 29 30 31
 
 

© Crow Publications - Any reprint of WLJ stories, except for personal use, without permission, written consent and appropriate attribution is prohibited. 2008 Crow Publications. All rights reserved.