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Thursday, December 20,2007

Market holds steady

by WLJ
News last week that South Korea had shut off beef trade, at least temporarily, presented the market with a potential setback, and perhaps enough reason to stall fed cattle trade. The news of banned materials being found in a shipment from Cargill’s Friona, TX, plant gave traders on the floor at the Chicago Mercantile Exchange (CME) reason to cash in their chips last Wednesday, taking profits from over-bought contracts, sending the market lower. Live cattle contracts and feeder contracts had run up impressively over the prior week, so it appeared the sell-off would be likely anyway. Whether it would have been as steep a drop without the unfortunate news from South Korea was difficult to determine, however, after setting new life-of-contract highs, some profit taking was inevitable. Regardless, that reversal brought an end to last week’s upward momentum and stalled any action in the cash market until later in the week. Analysts last week said they expected trade to develop at steady to slightly higher money despite the pullback in the futures market and the bad news from overseas. As of mid-day last Thursday, asking prices were holding firm at $94 and up in the southern Plains and at $148 plus in the north. Prior week sales averaged $90-91 live basis in the north, with dressed trade at $140-143; in the western Corn Belt, live sales traded at $88-90 and dressed sales ranged between $140-142. In the southern Plains, live sales traded at $91-91.50 and dressed sales in Kansas were in a narrow range of $143-143.50. Despite the problems in Korea last week, the domestic market showed signs of life and packers were able to move the cutout values higher on good product movement. As of mid-day last Thursday, the Choice boxed beef cutout was up at $144.66 while Select was higher at $138.90. There were reports last week that beef shipments to Canada and Mexico have picked up in recent days as a result of the slipping U.S. dollar against foreign currency. Forward contracting by domestic buyers is also adding support to the cutout as demand begins to pick up seasonally at home. Depending on the results of the Korean investigation, the boxed beef markets should continue to strengthen as we progress into the fall. That strength will be critical if the industry is to maintain fed cattle prices at expected levels in the fourth quarter. Packers last Thursday processed 124,000 head, down 1,000 from a week earlier, but up substantially from 105,000 head last year. For the week to date tally through last Thursday, packers had killed 497,000 head, 1,000 fewer than the same period a week prior and 57,000 more than the same period in 2006. Feedlots remain in a very current condition, with reports of some pulling cattle forward. However, premiums in the futures markets for the final quarter of this year are likely to limit that practice soon, if they haven’t already. CME live cattle contracts ended last Thursday’s session in the red across the board. August live cattle issues declined 50 points to settle at $92.92, while October fell 62 points to $98.15. December 2007 and February 2008 contracts dropped back below $100, dropping 32 cents on the December contract, which ended at $99.95, and 57 cents on the February contract, which closed the day at $99.45. Feeder cattle Corn markets gained some strength last week after private analysts began releasing crop projections that proved to be bullish for the market. That forecast, which predicted a 148 bushel per acre average yield, added to the positive tone for the corn market and amounted to a 12.644 billion bushel production forecast for U.S. corn. This was much lower than current expectations for a crop near 13 billion bushels. December new crop corn traded higher last Thursday following the report to end the Chicago Board of Trade session five cents higher at $3.41. That prediction, coupled with a tough couple of trading days in live cattle markets, sent feeder cattle contracts sharply lower, dropping them from contract record highs set early last week. The August contract fell $1.05, closing last Thursday’s session at $115.92. September was down the same amount, closing at $116.35, and October dropped 87 points, ending the day at $117.32. Cash trade last week was a different matter altogether, particularly for those cattlemen selling yearlings on Superior’s Winnemucca, NV, video sale. Prices being paid for yearling cattle were very good. For example, 190 head of 780-785 lb. steers sold in a range of $113.60 to $118.75, while 238 head of 800 to 840 lb. steers sold in a range of $115.10 to $117.25. In addition to solid prices being paid for heavyweight feeder cattle, lighter weights, particularly those for later delivery, sold well, such as 160 head of 600 lb. steers which brought an average of $127.50 or 200 head of 500 lb. steers which brought an average of $141. Country auctions were also strong last week as a result of a good mixture of positive news, from continued good grazing conditions in many areas keeping cattle on grass to the run in contract trade. For example, at Oklahoma City, OK, compared to the prior week, feeder cattle and calves sold firm to $2 higher, with some instances of $3-4 higher on 500-650 lb. steers. According to market reports, demand was extremely good for light receipts. Meanwhile, to the north in West Plains, MO, steers under 450 lbs. and heifers under 500 lbs. were $2-5 higher. Heavier weights sold steady to $2 higher, with the advance mainly on weights over 600 lbs. In particular, steers over 800 lbs. and heifers over 700 lbs. sold $2-3 higher on moderate to heavy supply and good demand. According to market reports, some producers in the area are selling calves somewhat lighter than usual because of a lack of recent rainfall. In Hub City, SD, feeder steers and heifers sold mostly $2-3 higher on a light test, typical for most markets in the north and western portions of the country where runs were still seasonally light last week. Hot, dry conditions in the northern Plains are also preventing some cattle producers from moving cattle. There have been several consecutive weeks of hot conditions from Idaho and Montana east through the Dakotas and into the upper Midwest. Farther west, along the coast, and particularly in California where producers have been suffering the impact of a very dry year, sale prices remain strong for offered cattle. In Cottonwood, CA, last week, stocker and feeder cattle under 600 lbs. were $1-2 higher, while those over 600 lbs. sold steady. According to market reports, smaller and single lots sold for prices $7-10 below top offerings.

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Thursday, December 20,2007

Tyson posts larger-than-expected profit

by WLJ
Tyson Foods Inc., the world’s largest meat processor, reported a bigger-than-expected profit for its third fiscal quarter last week and raised its profit forecast for the year as it rebounds from last year’s losses. Tyson credited higher average sales prices for chicken, beef, pork and prepared foods, export growth and a cost-cutting program that is ahead of a target of saving $200 million this year. Those factors more than offset higher feed prices for animals, boosted by demand for corn for producing the alternative fuel ethanol. Analysts said chicken, Tyson’s second largest business by sales after beef, drove the quarter’s gains on higher profit margins under the cost-cutting program, higher shelf prices in stores, and export demand led by China. Springdale, AR-based Tyson said that it earned $111 million, or 31 cents a share, for the three months ended June 30 versus a loss of $52 million, or 15 cents a share, a year earlier. “I feel great about the progress we’re making,” chief financial officer Wade Miquelon said in a conference call. For the quarter, sales rose to $6.96 billion from $6.38 billion a year earlier. Tyson raised its forecast for the fiscal year ending in September to between 82 cents and 92 cents per share from an April estimate between 65 cents and 90 cents. It was the third profitable quarter after three quarters of losses last year that yielded a net loss of 17 cents per share in fiscal 2006, which ended last September. Export sales jumped 31 percent to $661 million, including a $70 million increase in chicken leg quarters to China, other Asian markets, Africa and the Middle East. CEO Richard Bond said antibiotic-free chicken launched in the U.S. market in June is already a hit among consumers and retailers and promises to boost growth in fresh chicken sales. Sales and operating income improved from the previous quarter and from a year ago in all four segments—chicken, beef, pork and prepared foods. Bond said the cost management program launched last year had already beat its goal of saving $200 million this year, helping reduce general costs by 12.4 percent for the first three quarters. Bond said he expects more than $250 million in savings this fiscal year from the effort. Tyson said the volume of meat sold fell, as expected, after the plant closings and because of higher prices for its products. But the average sales price for all its meats increased, allowing it to book higher revenues. Feed costs were higher as corn soared because of demand to make the alternative fuel ethanol. Tyson said in its chicken business, the second largest segment by sales after beef, net grain costs were up $113 million in the quarter from a year earlier.

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Thursday, December 20,2007

Montana finds first 2007 case of equine West Nile

by WLJ
Montana’s first clinical cases of West Nile virus (WNV) in horses this season have been confirmed in Blaine and Phillips counties, according to Montana acting State Veterinarian Dr. Jeanne Rankin. Neither horse had been vaccinated against WNV. The virus is spread through the bite of an infected mosquito. Mosquitoes become infected by feeding on infected birds. The virus does not appear to spread from horse to horse or from horse to person. Person to person spread, though extremely rare, may occur by means of organ transplants or from infected mothers to their infants through breastfeeding. Horses appear to be affected by WNV much more often than any other domestic animals. Infection can cause encephalitis, affecting the nervous system, and can cause severe complications and death in horses. The disease also affects humans. Many horses infected with WNV do not develop any illness, but of horses that become ill, about one-third will die or need to be euthanized. Although WNV has been documented in the U.S. since 1999, the first case of WNV in Montana was confirmed in a horse in Yellowstone County in 2002. During that season, 134 equine cases were reported in 26 Montana counties and 38 of the horses died or were euthanized. In 2003, WNV was confirmed in 193 horses in 34 Montana counties. A total of 70 horses died or were euthanized. Only 17 of the 193 confirmed horse cases were fully vaccinated. In 2004, WNV was confirmed in 11 horses in seven Montana counties and five horses died or were euthanized. Only one of the 11 horses was fully vaccinated, and that horse survived. In 2005, WNV was confirmed in 10 horses in eight Montana counties. A total of four horses were euthanized. None of these horses were vaccinated. In 2006, WNV was confirmed in 26 horses in 11 Montana counties. A total of seven died or were euthanized. None of these horses were vaccinated. Montana also confirmed two human cases of WNV in 2002, 228 cases in 2003, six cases in 2004, 19 cases in 2005 and at least two cases in 2006. To diagnose WNV in equines requires a serology test that can be conducted at the Veterinary Diagnostic Laboratory in Bozeman, MT. Clinical signs of encephalitis in horses include loss of appetite and depression in addition to any combination of weakness or paralysis of hind limbs, muzzle twitching, impaired vision, incoordination, head pressing, aimless wandering, convulsions, inability to swallow, circling, hyperexcitability, or coma. “These are also clinical signs of Western and Eastern Equine Encephalitis, viral diseases that affect the nervous system and can cause severe complications and death in horses,” Rankin said. In addition, rabies cases may also present with similar neurological signs and should always be considered as a differential diagnosis. These diseases also affect humans. Vaccination and mosquito control continue to be recommended as methods to help protect horses against the virus. For mosquito control, thoroughly clean livestock watering troughs on a regular basis, remove any potential sources of water in which mosquitoes can breed, dispose of water-holding containers such as discarded tires, and do not allow water to stagnate. If possible, horses should be stabled inside from dusk to dawn to reduce contact with mosquitoes. “There are USDA licensed vaccines available to help prevent equine cases of WNV encephalitis. For horses not previously vaccinated, two initial doses given three to six weeks apart are recommended,” said Rankin. Following the two initial doses of vaccine, the vaccine manufacturers also recommend an annual booster and some veterinarians recommend two boosters each year, particularly in high-risk areas. Combination vaccines are also available. Combination products provide protection against multiple diseases including West Nile virus, Eastern, Western or Vene-zuelan equine encephalitides, and tetanus. For horses that contract WNV, an equine-origin antibody product that aids in the treatment of horses is also available. Supportive veterinary treatment such as anti-inflammatories, administering fluids, and the use of a sling to keep the animal upright have also been used in equines diagnosed with WNV. Horse owners are encouraged to contact their local veterinarian for more information regarding WNV vaccine and treatment. More information is also available at the Montana Department of Livestock website at www.mt.gov/liv.

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Thursday, December 20,2007

Water, water everywhere raises risk of livestock disease

by WLJ
Rushing water, stagnant ponds, or even the dry stages after wet periods can lead to outbreaks of livestock disease. Mosquitoes and biting flies, capable of carrying and transmitting diseases, thrive in the damp weather, and naturally-occurring anthrax can take a toll on livestock and wildlife when pastures dry after prolonged wet periods. Horse owners should take precautions against mosquito-transmitted diseases by having their animals vaccinated against West Nile Virus and the reportable diseases Eastern and Western Equine Encephalitis. “If you wait until cases of ‘sleeping sickness’ occur in your area, you may have waited too long to vaccinate,” said Dr. Bob Hillman, Texas state veterinarian and head of the Texas Animal Health Commission (TAHC), the state’s livestock and poultry health regulatory agency. “You need time for the vaccine to do its job, which is to build the animal’s immunity to a particular disease,” he said. “Vaccine can provide the best disease protection possible, but it’s also crucial to keep up with booster shots, as recommended by the vaccine  manufacturer or your private veterinary practitioner. In 2006, 111 horses were confirmed to have West Nile Virus in Texas. So far this year, the disease has been confirmed in one horse, located in Willacy County.” Three cases of Potomac Horse Fever, which is not a regulatory disease, have been confirmed in Kerr County by the Texas Veterinary Medical Diagnostic Laboratory. Potomac Horse Fever, first detected in Maryland in l979, is not typically found in Texas. Clinical cases usually are found near rivers, streams, ponds or canals. The infection involves tiny flukes that are parasites of water snails. The flukes hatch their offspring into the water, and these are then picked up by aquatic insects that molt into flying insects, including caddis flies and mayflies. Horses can become exposed to Potomac Horse Fever when they eat or drink anything contaminated with the insects. Kerr County equine veterinarians are urging all owners to call their practitioner if equine animals exhibit signs of Potomac Horse Fever, which can include a reluctance to eat, fever, diarrhea, colic or inflammation around the hoof. Treatment includes antibiotics and supportive care. Biting flies can mechanically transmit equine infectious anemia (EIA), sometimes called “swamp fever.” This incurable disease, for which no approved vaccine exists in the U.S., is a regulatory disease. TAHC regulations require horses and other equine animals to have a negative test for EIA within the previous 12 months before entering the state, or going to events, assemblies, trail rides, undergoing change of ownership, or entering a breeding farm. The most commonly known test for EIA is the “Coggins” blood test. The incidence of EIA has dropped dramatically since l997 when 750 equine animals in Texas were found to be infected. Since January 2007, only 29 infected animals have been detected. “EIA-infected horses can develop severe anemia, fever and swelling. In severe cases, EIA can kill the animals, but many times, the infected animal has few signs of disease,” noted Hillman. “Prevent EIA transmission by avoiding blood-to-blood contact between infected and ‘clean’ equine animals. Disinfect medical instruments and tack, and control flies. Biting flies carry blood from one animal to the next on their mouthparts, and they play a key role in the mechanical transmission of EIA.” Infected equines must be maintained at least 200 yards away from other equine animals, euthanized, or sent to slaughter. “In the past, untested equine animals could be sold for slaughter through a livestock market. At the slaughter plant, blood samples were collected and sent for laboratory testing. Now that Texas equine slaughter plants have been closed, we can not ensure that horses moving to plants in other states or countries are tested. Therefore, we are requiring all horses to have a current EIA test, even when being sold for slaughter,” said Hillman. Rain, followed by hot weather can coax the invisible bacteria Bacillus anthracis to the surface, a situation that has occurred on a ranch in Tom Green County where 17 head of cattle and a number of white-tailed deer have died. “Anthrax in Texas occurs nearly every year, and it is a reportable disease to the TAHC. If we know an outbreak is occurring, we can let ranchers in the area know that it’s time to vaccinate their livestock. There is no preventive treatment for wildlife,” said Hillman. Anthrax naturally occurs worldwide and in many states of the U.S. Disease outbreaks have been reported in Minnesota, South Dakota and Canada this year. When an anthrax-infected animal dies and isn’t properly burned, the bacteria will infiltrate the soil and lie dormant (but not spread) for many years. Under ideal weather and soil conditions—a cool, wet spring, followed by a hot, dry spell—the bacteria will resurface on grass and forage. The disease cycle starts again when another animal ingests the resurfaced anthrax bacteria. TAHC regulations require that an infected animal’s carcass, manure and bedding be incinerated. This prevents wild animals from being exposed to the disease, and it kills the bacteria, preventing another site where the anthrax bacteria can resurface. Hillman urged ranchers to wear gloves and long sleeves when preparing the burn site and to avoid moving the carcasses, if possible. Exposure to anthrax carcasses could cause a handler to develop a black skin lesion that requires prompt medical treatment. “There is no need for vacationers or hunters to worry about naturally occurring anthrax. Just don’t touch or handle sick or dead animals, and don’t pick up bones or shed antlers. We usually advise hunters not to hunt feral or wild swine in the area during an anthrax outbreak. Feral swine may root around carcasses of anthrax-killed animals, becoming exposed to the bacteria but not contracting the disease.” Hillman advised swimmers to avoid ponds or streams if dead animals are nearby. The same advice goes for pets, too. By the time hunting season starts, he said, cool weather usually puts an end to anthrax cases. “Always harvest only healthy-looking animals, and, as a routine practice, wear gloves when processing meat,” he said. “In Texas, it is often ‘feast or famine,’ drought or flood,” said Hillman. “With each of the conditions, there are concerns about livestock health. So, while ranchers enjoy the lush grasses the rains have produced, they may have to control pests to lower disease risks. However, I don’t know many ranchers who would choose last year’s drought over some extra vigilance this year.”

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Thursday, December 20,2007

Beef Talk: The J game–vaccinate

by Kris Ringwall, North Dakota State University
The Dickinson Research Extension Center is getting ready to ship some calves. A quick review of the vaccination efforts at the center notes that the calves were vaccinated for viral and bacterial invaders in the spring during branding. The calves will be vaccinated again prior to weaning and at weaning. The development of a vaccination program involves consulting with a veterinarian. The goal is to prepare calves so they will be better able to withstand the rigors of weaning, marketing and subsequent comingling at the new feed yard. There are many products that produce the “desired response” when administered according to label directions. The phrase “desired response” is a mouthful. Although memory can be very misleading and, over time, the relevancy of older thoughts and technology can change, the term “J” always comes to mind when a “desired response” is sought for a particular vaccination program. Back in graduate school days, actually back before much of the molecular genetics world was known, the J game was at work. The reason for the J game was to add diversity to living organisms so they could respond to the many viral and bacterial invaders that are constantly trying to put us down. That doesn’t include several other pathogenic classes of organisms that are not our friends. The terms were simpler and perhaps easier to understand. One of the more interesting, yet difficult, sessions utilized a text titled “Biochemistry” by Lubert Stryer. This particular edition, published in 1981, provides some understanding of what the “desired response” looks like. The “desired response” is a functional protein given the broad name of “antibody.” These antibodies, more appropriately called immunoglobulins, are not easy to visualize. One immunoglobulin is generally drawn schematically as a Y. The Y is not just J genes, it actually has several components. Within the Y are two types of chains, heavy and light. There are five types of heavy chains and two types of light chains. These chains may seem simple, but are not. Within the chains, some parts are called constant, which means they change little in how they are made up and some parts are called variable, which means they can vary. The variable chains contain amino acid sequences that are not the same and do not remain constant. This variance adds increased diversity to the structure of the various antibodies. If things are not complicated enough, there are the “J” genes that join the variable and constant segments of the light and heavy chain, in other words, the J game, all adding to the confusion of the ‘desired outcome’ when a set of calves are vaccinated with a particular vaccine or antigen. Without going out on a limb too far, if a producer actually figured all the different ways an antibody can be configured, in other words, how many different ways could you combine the constant, variable and J regions of an antibody, the answer would be in the billions. Sorry if this is confusing, but the bottom line is still true; vaccinate your calves to produce antibodies that will protect them against the handful of commonly known viral and bacterial invaders and then manage your calves so that they will prepare themselves to produce a good antibody response against all those invaders that are not named. The world is not a simple place, but calves are geared up to survive, especially when all the right tools are put in their toolbox. Good luck! And, if you thought tagging calves is difficult, tagging is nothing compared with antibodies.

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Thursday, December 20,2007

BEEF talk

by Kris Ringwall, North Dakota State University
Now is the time to plan for preconditioned calves The time is fast approaching in the annual cow/calf cycle when thoughts shift from production to marketing. Now is the time to start thinking about preparing calves for market. One might say this is old hat by now, but it really isn’t. The need to provide protection for calves, whether one weans them at home or sells them right off the cow, is a vital part of successful management. At the Dickinson Research Extension Center, the calves receive vaccinations for infectious bovine rhinotracheitis (IBR), bovine viral diarrhea type I and II (BVD), bovine respiratory syncitial virus (BRSV) and bovine parainfluenza 3 (PI3). These viral agents typically are present and can negatively affect calves. Protection from these viral agents is available as a combination vaccine containing all four agents (thus the common saying, four-way) in various product formulations from several vaccine companies. Killed and modified live products are available but need to be administered according to the well-displayed, easy-to-read labels the companies provide.   In addition to the viral agents, the primary bacterial agents that have a likelihood of being present are pasteurella haemolytica, pasteurella multocida and hemophilus somnus. Just as in the viral agents, several formulations combine the bacterial agents with other viral vaccines or common clostridial vaccines. The clostridial vaccines are started at branding and, generally, are the first vaccination the calves receive. Why the thought or expression “old hat?” Well, the discussion of calf vaccination has been front and center in educational programs for well over the average of today’s career. Most veterinarians and animal scientists employed today have grown up with these very effective tools in the tool chest, which primarily are very improved and effective vaccines. The precursor, at least for me, was the North Dakota Beef Cattle Improvement Association’s (NDBCIA) Green Tag program. Recently, I reviewed the Green Tag program brochure that was produced for NDBCIA in the late 1980s. The educational piece says, “Preconditioning includes a complete health management program which prepares the calves to better withstand the stress and adjustment they need to undergo when they leave the home farm or ranch in route to the feedlot. Calves are castrated in most cases, dehorned, vaccinated against common shipping and feedlot diseases, treated for grubs and lice and had the opportunity to accustom themselves to water troughs and feed bunks. Additional practices are encouraged, which include implants that stimulate the natural growth processes, complete herd health programs within the cow herd and strong relationships with professional veterinarians and animal scientists.” Those details are important today, so one could assume not much has changed. The main principle remains protecting calves. This protection for calves is paramount. The protection plan needs to start with a strong calf vaccination program, followed by a pre-weaning vaccination protocol and vaccination again at weaning. With improved vaccinations available and more vaccination programs readily attainable, it is very important that producers follow the labels and protocols developed by the vaccine producers. The end result is calves that can withstand the rigors of life without mom and adapt readily to whatever system the calf ends up in. This is important for everyone connected to the beef production cycle: the calf, the producer, the feeder and, ultimately, the consumer. The NDBCIA has long touted the need for good herd health to sustain the continued production of high-quality meat protein for the consumer. A good vaccination program is a major component of attaining that goal. What’s in your veterinary case?

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Thursday, December 20,2007

Fed cattle trade $2 higher

by WLJ
The standoff between packers and feeders ended a little earlier last week than it has in nearly a month. Trade got underway last Thursday $1-2 higher in Nebraska at $128 dressed basis with live bids at $80. In the southern Plains, Texas trade began at $80-80.50 which was fully $2 higher than the prior week. Packers, who, according to HedgersEdge.com, were losing in excess of $10 per head last Thursday, chose to cut kill levels early in the week or close plants rather than continue operations while losing money. There were some reports of plants being dark at mid-week and harvest levels on Wednesday were only 100,000 head, down 26,000 head from the previous week. Harvest levels as of Wednesday were 42,000 head below the previous week and 24,000 below 2005. It appeared that the reduction in harvest was preventing packer losses from increasing significantly by boosting Choice and Select boxed beef cutout values. Packer margins improved by midweek from Monday’s losses which were estimated by HedgersEdge.com at $18.25 per head. Cutout values also improved. Thursday’s Choice cutout value increased 49 cents to $140.70. Select cutout values rose $1.23, to $126.67, narrowing the spread to $14.02 on moderate demand and light to moderate offerings. The next major boost to the market is expected to come from advance purchases for the Labor Day holiday in September and the boost from school lunch meat purchases. Those two events could begin to add support to the market in the next couple weeks. The combination of the two events will likely support both the suffering middle  meat complex and the end and trim meat markets. Extremely hot temperatures and rising gasoline prices are driving down consumer demand for high-priced beef products and demand at the retail level continues to slide. A 31 percent jump in fuel prices over last year has increased average annual fuel spending by $400 per year, according to Department of Energy estimates. According to Ron Plain and Glenn Grimes, University of Missouri agricultural economists, the effect has been a slump in beef demand and prices. For the first six months of the year, consumer demand for beef has fallen 4.4 percent. Grime and Plain said that increase in fuel price is cutting spending on meat purchases. As a result, prices have also fallen 9.6 percent since the end of June for Choice product. Select product has fallen 6.4 percent since June 30, 2006. “The good news continues to be that fed live cattle demand for this six-month period was up 3.5 percent from a year earlier,” they said. Cow carcass values have also fallen from last year and the number of cows being slaughtered as a result of the drought indicate prices will continue lower for at least the near-term. However, the consumer’s unwillingness to pay higher prices for middle meats is driving them to lower priced cuts from cow carcasses. In particular, the grind products are improving. Week to week prices for the 90 percent lean increased more than $6 last week. As of Thursday last week, the overall cow carcass cutout value rose more than $4 from the prior week, boding well for the cow processors. Last week’s live cattle contract trade on the Chicago Mercantile Exchange (CME) was mixed as traders looked for some firm direction. In all, though, the market set a record for live cattle open interest on Tuesday last week as more fund money poured into the already volatile market. Last Wednesday when fed cattle trade failed to develop as expected, live cattle contracts turned down sharply. The August contract traded down 82 points, closing at $82.92. October contracts were also lower on the day, dropping 72 points to $87.57. Thursday last week, however, saw a comeback as all but the August contract closed the day in positive territory. August live cattle was down 22 points, to $82.48. October live cattle contracts were up 37 points to close the day at 87.95. The basis between live cattle trade and contract trade last week was causing some alarm that there could be some deliveries taking place unless there is convergence of the two prices. If that happens, contract traders could find themselves holding onto the actual animals in the next couple weeks. Feeder cattle The recent mid-year cattle inventory report showed the drought has taken its toll on the expansion of the U.S. herd which could mean some better than expected returns next year. The growth in the beef herd was smaller than expected at only 1.1 percent above last year, meaning there will be fewer calves available for cattle feeders. This tighter than expected supply, particularly now that export markets are coming back online, could translate into improved profitability late this year and next. Currently, cow/calf producers are expected to remain profitable for the next two years. Last week, prices were very near last year’s levels and, in some cases, above 2005 levels. According to Dillon Feuz, agricultural economist at Utah State University, the average price paid last week for 500- 600-lb. feeder steers in Kansas livestock markets was $129.19 which is $6.07 more than the same week in 2005. Prices for feeder steers in the 700- 800-lb. range were $6.27 above 2005 prices at $117.27. Nebraska markets, where calves continue to be weaned early as a result of drought, saw prices in both classes only slightly above 2005, according to Feuz. Last week, however, prices in most feeder cattle markets were mostly mixed. In Amarillo, TX, compared to the previous week, feeder steers under 600 lbs. were steady to $3 higher, with no comparable sales available on offerings over 600 lbs. Feeder heifers under 600 lbs. sold steady to $2 lower on active trade and moderate demand. In Oklahoma City, OK, compared to last week, feeder cattle were $1-3 higher. Steer calves $1-3 lower. Heifer calves steady to $2 higher. Demand very good for all classes of feeder cattle. Demand moderate to good for calves despite the continued high heat and extremely dry conditions. In Joplin, MO, compared to the last week, steers and heifers under 700 lbs. were steady to $2 lower, over 700 lbs. sold steady on moderate demand and supply. Dry, hot weather had returned to the four state area, with a heat advisory in effect at the time of the sale. According to market reports, there were noticeably more light, new crop calves in the offering, as producers look for ways to conserve forage and stock water as dry conditions cause more early weaning. In Nebraska markets last week, the averages for steers weighing less than 700 lbs. were steady to $4 higher, steers over 700 lbs. trended steady to $2 lower. Heifer offerings trended mostly steady with a weak undertone. Demand was reported to be good to very good, especially for yearlings. Farther north in Hub City, SD, a good run of feeder steers and heifers sold steady to $2 higher. Most advance came on reputation light fleshed yearlings off grass.

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Thursday, December 20,2007

Beef Talk

by WLJ
August 8, 2005 Too often in the beef cattle industry, producers slip into the business-as-usual mode and life moves forward. That penchant for the status quo, however, is about to end. The future for beef cattle production no longer is going to be business as usual. The current case in point is documentation of the source and age of calves. A common response as cattle are sold is to add the phrase “source and age verified.” A few words can mean a lot or, if not appropriately stated, can imply more than what actually can be verified. To verify something, according to Webster, means to confirm or substantiate in law by oath, or establish the truth, accuracy or reality of the stated event. When held to specific requirements, a common approach is to audit the data that is in use to substantiate the verifiable event. An audit, again according to Webster, is a formal examination of an organization or individual’s accounts or financial situation, or a methodical examination and review. These are not words to take lightly. The typical action in today’s markets, in preparation for future source and age verification requirements, is to ask for a form of animal identification. This verification can include an electronic identification tag, a premises identification number or a 911 emergency response address, plus an assurance of written records substantiating source and birth data for the calves being sold. This information also should be placed in a working national database, along with permission to access the data by the cattle buyers. Given the historical appreciation of stated facts within the concept of selling cattle, claims may have been made. These claims are ignored due to the inability to substantiate the claim. Often repeated sales lingo is “the calves have all their shots.” In reality, this phrase means nothing because the buyer generally revaccinates newly arrived cattle to assure the calves are vaccinated. Seller accountability throughout the marketing process never existed. The net result was a tendency to speak prior to thinking and the words may have stretched the truth on some groups of sale calves. The cattle business is not going to be the same. These new processes involving the transfer of ownership are increasingly connecting the ability to verify statements made at the time of sale back to the cow/calf producer. Furthermore, subsequent sale of the calves does not release the cow/calf producer from the original claim, in this case source and age verification. The caution is simply this: Don’t state cattle can be source and age verified unless the statement can be substantiated by records. These records need to be auditable. The impact on cow/calf producers is that, upon request, a producer will need to provide the required records to verify that an individual calf was in fact born at a certain location on a certain date within the operation. A simple notation on a calendar or in a notebook is a stretch, especially when a producer is asked to state unequivocally several months after a sale that a particular calf in question actually is the calf that was born within the operation and within a certain range of calving dates. The answer to the question of source and age verification, at least in an auditable sense, implies the keeping of accurate cattle inventories within the operation. These inventories must be accessible and the cattle traceable. Yes, the mere fact the calf was identified individually implies you know and can prove the answer to the question. Can you? May you find all your NAIS-approved eartags. — Kris Ringwall (Kris Ringwall is a North Dakota State University Extension beef specialist, director of the NDSU Dickinson Research Center and executive director of the North Dakota Beef Cattle Improvement Association. He can be contacted at 701/483-2045.)

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Thursday, December 20,2007

Comments

by WLJ
August 8, 2005 With all the attention being paid to bovine spongiform encephalopathy (BSE) and the resumption of live cattle trade with Canada, several other items of importance to the industry have “flown under the radar.” It was interesting to note that USDA released its mid-year cattle inventory report in late July to very little fanfare. In addition, there was surprisingly very little reaction to the news that herd expansion continues on a nationwide basis. According to the report, there are 33.8 million productive beef females across the country and another 9.05 million head of dairy cows. Both of those figures were a full one percent larger than the same figures last year. In addition, five million replacement beef heifers were said to be held back by producers as of July 1, four percent more than last year. Three percent more dairy replacement heifers were also noted. I found the report fascinating and it propelled me to ponder whether or not cattle producers are starting to expand their herds a little too prematurely. I don’t ask that question because export markets are still closed to U.S. beef, because that will change in the very near future, probably within the next two months. Nor does the reopening of the border to Canadian cattle bother me much. What perplexes me about the desire to expand herds right now is that a majority of the West is still trying to recover from five to seven years of drought, which means pasture and rangeland is still in the process of getting back to “normal” production levels. In talking with extension personnel and rangeland specialists across the country, there is a fear that stocking rates are growing at a rate beyond sustainability and that drought in several of those areas is just a couple dry weeks away from recurring. This past winter, spring, and even very early summer, were abnormally wet and by mid-June a lot of climatologists were indicating the drought across most of the western U.S. appeared to have subsided to very minimal levels. In some states, those experts said the drought no longer had any foothold. However, in its Aug. 2 “Drought Monitor” report, the National Oceanic and Atmospheric Administration indicated that Oregon, Washington, Idaho, Montana, Wyoming, western and southern Nebraska, eastern Colorado, and parts of New Mexico and Arizona appear to be firmly entrenched in drought conditions again. A lot of that deterioration was the result of those states being hit by one of the hottest and driest Julys ever. In the case of Wyoming, Colorado, Nebraska and New Mexico, this past July was the second hottest and third driest on record. While USDA didn’t provide a regional or state-by-state breakdown of cow distribution, market analysts indicated that a lot of the expansion happened in the states mentioned above. Now questions are arising about whether or not there will be enough pasture, grass and other forage to sustain those increased cow numbers. The desire to expand one’s interest in the cattle business is understandable, particularly for those producers who have spent their lifetime in the industry and rely on cattle as a primary source of income and financial stability. However, if the resources aren’t there to support those animals, then there is a major problem. Are things better than they have been since the very late 1990s? Absolutely—grazing prospects are much better than they have been the past five, or more, years. However, producers still have to remember that it takes a lot more than one or two wet seasons to get back to normal, and right now normal appears even further away than just six weeks ago. How quickly things can change for the worse. It never seems to work that way when it comes to improvement. — STEVEN D. VETTER

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Thursday, December 20,2007

Kay's Korner

by WLJ
August 8, 2005 Wow, has the USDA ever got a bad rap over its BSE measures, particularly its testing program. If you believed some of the critics, you’d think a BSE epidemic was lurking beneath the surface and was ready to overwhelm the beef industry, if only USDA would admit it. Nothing could be further from the facts. To date, USDA’s enhanced BSE surveillance program has tested more than 426,000 of the cattle that are most likely to harbor BSE. That’s 61 weeks since the program began. Just one animal has tested positive for BSE. One case out of 460,000 doesn’t exactly suggest an epidemic. Nor does it suggest that USDA is doing anything less than a superb job in testing all most at-risk cattle in the U.S. Before USDA launched the enhanced testing program on June 1, 2004, it tested 8,992 cattle for BSE from January to May. That was 428 cattle per week. All samples went to USDA’s National Veterinary Services Laboratory (NVSL) in Ames, IA, where they were tested using the so-called gold standard IHC (immunohistochemistry) test. NVSL’s experience in using the IHC test was one reason why USDA decided to continue using this test as the confirmatory test on samples that might be deemed inconclusive under the enhanced program, which uses the Bio-Rad rapid test for initial testing. USDA then began its enhanced program. Understandably, it took USDA and the accredited laboratories involved in the program several weeks to come up to speed. Test samples initially were only 1,000 or so a week. But the program began to blossom as more samples came from various sources and labs got their testing techniques perfected. After 61 weeks, the program had tested an average 6,986 samples per week. The tests didn’t average more than 6,000 per week until Week 19. So, achieving that weekly average is nothing short of remarkable. It’s even more so when you consider that the average number of tests per week is 16 times larger than before the program began. Yet, none of this has deterred USDA’s critics. All they have focused on is the fact that USDA found its first domestic case of BSE after a sample was retested, and the fact that a hard-working country vet forgot to send in a brain sample for three months. Again, to believe these critics, you would think USDA’s BSE testing protocols were in disarray. I see things differently. USDA was exceptionally open (it has used the word “transparent”) in explaining the circumstances of these two cases. It explained in great detail exactly what happened, the rationale for its action on each occasion and what it was doing in light of what had occurred. Regarding the sample that was retested in June and was deemed positive, I would make a couple of points. USDA and Ag Secretary Mike Johanns were obviously blind-sided by their own Inspector General who ordered the retesting. The question still remains unanswered as to whether the IG had the authority to make such an order. That question gets to the heart of what occurred regarding this positive test, much more than whether USDA’s testing protocols were okay. Ordering the retest did not invalidate what USDA had been doing up to that point. I mentioned earlier how NVSL had been using only IHC tests in its testing prior to the start of the enhanced surveillance program. No one questioned then whether that was sufficient or not. So why was there such criticism of the retest? Well, it involved a sample that turned out to be positive. But the critics had savaged USDA even before this result was known. Perhaps the real answer is that consumer activist groups for months had been hammering away at previous Ag Secretary Ann Veneman about BSE, including testing. When she resigned, they transferred their attention to USDA’s Inspector General, one Phyllis Fong. Lo and behold, a few months later she orders the retest. Remember, these are the same activist groups that have campaigned for years for Americans to eat less beef. As for the non-definitive sample, how can USDA be held responsible for the fact that a vet forgot to send in a sample? It didn’t even know the sample existed until it suddenly turned up. Contrary to what USDA’s critics claimed, there was no breakdown of USDA’s testing protocols. I happen to think USDA’s enhanced BSE testing program has been a remarkable achievement, especially when you consider the logistical challenges of collecting and testing so many samples across such a huge area. Rendering plants, plants that handle dead or dying cattle, beef processing plants, producers and others have played an important role in providing samples. The labs have done a great job in testing them. USDA’s management has been exceptional. It deserves credit for making this vital program such a success. — Steve Kay (Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533; Petaluma, CA 94953; 707/765-1725. His monthly column appears exclusively in WLJ.)

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