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Thursday, July 3,2008

Split-state status still wrong for Montana cattle industry

by Andy Rieber - WLJ Correspondent
Split-state status still wrong for Montana cattle industry In light of Montana’s recent loss of brucellosis Class Free status, the Montana Stockgrowers Association (MSGA) would like to reiterate its opposition to split-state status as a means for managing brucellosis in Montana. Members adopted policy opposing regionalization for brucellosis in December 2007 at the MSGA Annual Convention after the first brucellosis case was discovered in a herd near Bridger. Ranchers have worked hard to effectively manage brucellosis. Earlier this year, for the first time ever, the entire U.S. achieved Class Free status. The cattle industry has spent almost 75 years and nearly $2 billion to eradicate brucellosis from our cattle. Now, our herds are facing increased threats from infected wildlife in the Greater Yellowstone Area (GYA). Our organization has a number of concerns about split-state status. Let’s look at the facts: Montana could not have completed an application for split-state status in time to prevent the entire state from losing Class Free status. Establishing regional classifications within a state is a complex and detailed process requiring resources for monitoring and controlling cattle movements, which Montana lacks. Even if Montana were to make application, there is no guarantee that the U.S. Department of Agriculture Animal Plant Health Inspection Service would accept a proposal for split-state status since this type of scenario has never been used to manage brucellosis. Several state veterinarians have declared that they will not accept different classifications for Montana and will apply the lower classification restrictions to all cattle exported to their state. Split-state status does not eradicate the disease nor does it prevent transmission of brucellosis from wildlife to livestock. Aside from our practical concerns about the implementation, maintenance and enforcement of two classification areas in Montana, philosophically, MSGA does not support geographically isolating ranchers according to problems they experience. We believe that the industry’s integrity and future depends on uniting producers against common threats. Sacrificing some for the short-term gain of others only serves to weaken these goals and the industry’s foundation. Cattle producers must remain united on all fronts against brucellosis to protect the livelihood, stability and heritage of our industry. As we have learned with other natural resource and wildlife issues, what begins as a small problem for several producers soon expands to impact the entire state. Our primary concern is that if split-state status is implemented, there will be less incentive for Montanans to work together to attain the ultimate goal: complete eradication of brucellosis in the GYA. MSGA feels that instead of wasting limited resources on a proposal that will not prevent cattle ranchers from facing increased testing and restrictions, Montana should focus on regaining Class Free status for the entire state. Instead of trying to divide the cattle industry with impractical and imprudent ideas like split-state status, Gov. Schweitzer needs to take decisive steps that help Montana ranchers deal with diseased wildlife. A first step would be signing the Memorandum of Understanding (MOU) for the Greater Yellowstone Interagency Brucellosis Committee, which is responsible for developing tools and criteria to eliminate brucellosis in GYA bison and elk. The MOU was signed by both the Department of Agriculture and the Department of Interior, and has been sitting on Schweitzer’s desk for three years. Schweitzer’s failure to sign this MOU has left disease management in limbo and allowed brucellosis-infected wildlife to contaminate Montana’s cattle. Split-state status it is not a viable, long-term solution to our brucellosis problem. We cannot afford to waste any more time or resources on so-called "quick fixes." We must work together to regain our Class Free status and rid the GYA of brucellosis, once and for all. — Steve Roth, President, Montana Stockgrowers Association

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Thursday, July 3,2008

Can cattle be selected to reduce pinkeye incidence?

by Mark Mendiola - WLJ Correspondent
Can cattle be selected to reduce pinkeye incidence? Pinkeye has long been a costly nuisance to cattle producers. Eye infections sometimes lead to partial or complete blindness in one or both eyes. Reduced beef production in the form of lowered weight gain, milk production, body condition, and, eventually, even poorer reproduction can result from eye infections and lesions. One of the culprits that initiates and spreads eye problems between herds and among herdmates is "pinkeye," or more properly called Infectious Bovine Keratoconjnctivits (IBK). An excellent Oklahoma State University fact sheet about the prevention and treatment of "pinkeye" is available online at: http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2689/VTMD-9128web.pdf. Iowa State University (ISU) animal scientists analyzed field data from ISU herds and cooperator herds in 2003 and 2004. They sought to estimate the genetic measurements that could aid in the selection of cattle resistant to IBK. They found a decrease in weaning weight of 20.9 pounds per calf infected with pinkeye. The analysis of the field data revealed an estimate of 0.18 for heritability of resistance to pinkeye. This estimate is considered to be of low to moderate heritability, which indicates that slow to moderate progress can be made based on selection for IBK resistance. It does mean that, over time, if we select replacements from cows that are not prone to having eye problems (especially pinkeye), we should be able to gradually reduce the incidence of pinkeye in our herds. They also studied the immune components involved in eye disease defense mechanisms. Tear samples were collected from the eyes of 90 calves in 2004 in order to quantify immunoglobulins (commonly called antibodies). The result of this analysis indicated that as the amount of Immunglobulin A in the tears increases, the likelihood of infection and/or the severity of infection decreased. This information would suggest that properly fed, properly immunized cattle, with a strong immune system will be more resistant to pinkeye. — Glenn Selk, Oklahoma State University Cattle Reproduction Specialist

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Friday, June 27,2008

Cattle markets lower on surging corn futures

by WLJ
Cattle markets lower on surging corn futures Skyrocketing grain futures put a damper on fed cattle futures last week, which through Wednesday had traded mostly steady for near-term contracts. The futures are still well ahead of the current cash trade, which has been enough to encourage yards to keep their pens full. All near-term fed cattle futures were down late in Thursday’s trade, with June contracts dropping 5 cents lower to $98, August losing 55 cents to $103.85, and October contracts moving 60 cents lower to $111.27. The reopening of beef trade with South Korea, along with expectations for higher protein prices in coming months has helped maintain confidence in cattle markets as the year moves forward, though the decline in the Choice-Select spread still remains as a cause for concern. The situation negatively impacts feeders, who are already operating in the red as a result of high grain prices. "Market analysts and cattlemen will likely point to various reasons for the counter seasonal decline in the spread during the first five months of the year," noted market consultant Steve Meyer. "In our opinion, the main culprit is the deterioration in food service demand at the same time when feedlot inventories were larger than a year ago." Meyer also lays partial blame on the attitude of feeders and their tendency to keep cattle on feed for longer. "It did not help that feedlots were holding on to cattle as long as they could in hopes of getting a better deal and, in the process, putting a bit more fat on their animals, thus boosting the choice beef supply," he explained. "Currently the spread is back to more ‘normal’ levels and we suspect that the spread will get a bit larger going forward as feedlots have fewer head on feed and as they try to turn them a bit faster..." As evidenced by the latest cattle on feed report, cattle supplies are not expected to grow anytime soon, and analysts say that when looking at current feeder cattle price premiums to fed cattle, a significant herd reduction is doubtful anytime soon. Wachovia Capital Markets analyst Dan Vaught explained in a conference call last week that cattle markets typically hold up well during recessions, as consumers buy more retail meat for eating at home rather than dining out. Though a severe cutback in cattle supplies are unlikely, says Vaught, these consumer trends should help keep prices strong going forward. "In my opinion, we are not going to see a big cutback in cattle supplies this year. Any decrease will be demand-driven, not supply-driven," he said. Packers were reluctant to do cash business early in the week, preferring to hold off until later rather than meet early asking prices, though there were signs on Thursday that significant trade could develop if packers showed interest in bidding higher. DTN analyst John Harrington noted that, "buying interest does seem to be improving with early bids around $94-95 in the South and $150-153 in the North. Asking prices are holding at $98-99 in the South and $155-158 in the North. We could see trade develop today if packers are willing to show enough money, though aggressive cash business may be more likely on Friday." Indeed, while trade volume remained at a standstill at midday Thursday, buying interest seemed to be slowly improving. At least one regional buyer in the North who offered to "call in" at $155, with the best bid from a major packer in the North being $152. The South remained at a virtual standstill with buyers waiting until Friday before showing serious interest. Beef cutouts jumped significantly higher, with Choice gaining 92 cents to go to $164.62, and Select going $1.41 higher to $159.60. Light to moderate box movement was seen early, with 56.08 loads of choice cuts, 57.57 loads of select cuts, 22.55 loads of trim, and 37.82 loads of grind. Thursday’s slaughter total of 127,000 brought the week-to-date total to 508,000, which was 5,000 head above one year ago. Feeder cattle Luckily for most producers, last week’s cash trade for feeder cattle didn’t suffer the same blow that the futures market did, as near-term feeder cattle futures all lost as a result of higher corn futures. June corn contracts finished Wednesday up 17.4 cents, which was enough to scare August feeder cattle futures down 92 cents, closing at $112.55. A bullish cattle on feed report and a shrinking supply of quality feeder cattle has motivated feedlots to keep their pens full, and prices have started rebounding from the corn price scare of previous weeks. Feeders continued last week to seek out those cattle which are heavier and will spend fewer days on feed, especially those quality cattle with good preconditioning programs and health records. "The best demand was noted for the heaviest feeders (which were responsible for most of the steady trends) as feedlots search for ways to limit expensive days on feed," explained USDA market reporter Corbitt Wall. "Feeder cattle prices are on the verge of inverting as cost-of-gains surpass the value of the cattle. This could change the way we view feeder markets if heavier cattle yield a higher price/cwt than lighter weights and fleshy cattle have more value than those in thin condition, which could be hard for buyers to swallow." Some demand exists for lighter-weight feeders to turn out on grass, but due to the increased attention on heavy cattle, prices for light feeder calves have been suffering, with demand slowing for these cattle where prices remain steady. "Calf demand is suffering as backgrounders have lost interest in feeding commodity feed to calves and those that exclusively graze calves have already turned their cattle out," said Wall. "Midwestern farmer-feeders usually pick up the calf market this time of year, as they mostly have their crops planted and are looking for a summer project. But, these producers are banking on selling corn this year and many in the flooded regions are not sure how much corn they’ll have anyway." Fed cattle contracts, which have reached near their historic highs, have helped to re-boost the confidence of those seeking feeder cattle for cash, but Wall says that it may not matter how much live cattle are worth if feedyards can’t find some way to cut their cost of gain. "These lofty price levels look promising to cattle feeders but a profit will still be very difficult to obtain if they have to grind $7.50 per bushel corn," he notes. "Most commercial feedlots have been implementing at least some level of by-product feeds in their ration to cut costs. Increased competition for these feedstuffs has caused prices to escalate as Distiller’s Dried Grains increased by as much as $25 per ton this week alone." Last week’s sale at the Oklahoma National Stockyards saw receipts of 8,556, and compared to the week previous, feeder steers and heifers sold $2-3 higher. Steer and heifer calves were not well tested, but the few weaned calves available sold near steady. Demand was good for all classes except unweaned new crop calves, which found narrow outlets. The run continued to include significant numbers of plainer cattle from outside of the area, and also included were several shipments of light, No. 2, thin-weaned calves that found fairly good acceptance. Steers weighing an average of 723 lbs. sold for $111.17, while 725 lb. heifers brought $102.96. The Joplin Regional Stockyards near Joplin, MO, received 5,973 head last week, where steers were $1-3 higher. Heifers under 650 lbs. were steady, with weights over 650 lbs. steady to $2 higher. Demand was moderate to good for the moderate supply. Several load lots of yearlings were in the offering. Steers weighing 722 lbs. sold for $111.77, while heifers weighing 732 lbs. sold at $102.26. A total of 1,862 head were received at last week’s Winter Livestock Feeder Cattle Auction in Dodge City, KS, where compared with the last week, steers weighing 800-900 lbs. went $3-5 higher. Heifers weighing from 500-700 lbs. were steady to firm. There were not enough cattle in other classes and weights for an adequate market test, though a steady to firm undertone was noted. Feeder steers weighing 722 lbs. sold at $113, while heifers weighing 680 lbs. were good for $105.27. There were 3,200 head received last week at the Bassett Livestock Auction in Bassett, NE, where good quality weaned fall calves and yearlings coming off of grass made up the bulk of the consignments. Due to no sale the previous week, a market trend was not established. Demand was strongest for 800-900 weight cattle. Steers weighing 716 lbs. sold for $119.15, while 733 lb. heifers brought $109.41. Last week’s sale at the La Junta Livestock Commission Company in La Junta, CO, saw 1,032 reported receipts, with feeder steers and heifers steady to $1 higher. Demand was noted as good for the cattle offered, with 793 lb. steers selling for $104, and 713 lb. heifers going for $101.50. The Stockland Livestock Auction in Davenport, WA, received 540 head last week, not enough for an accurate trend. However, a firm undertone was noted. Buyer demand was noted as moderate to good for most classes of feeder cattle. Buyers paid $99.48 for 718 lb. steers, while heifers weighing an average of 728 lbs. sold for $94.71. — WLJ

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Friday, June 27,2008

Beef Bits

by WLJ
Tenderness may soon have test Depending on the outcome of research being conducted by USDA’s Agricultural Marketing Service (AMS), claims of "tender" beef may soon have to be verifiable, according to AMS Livestock and Meat Marketing Specialist Kerry Smith. The agency is busy working on the feasibility of setting objective standards of tenderness, and has had four subcommittees working on key elements of the issue since March 2007. Several universities, representatives from industry, other government organizations, trade groups and retail professionals have all been included in the process. By July, AMS plans to have an updated Web site where interested parties can follow the progress of the initiative at www.ams.usda.gov/sat. Carl’s Jr. shifts menu, will open in China Carpinteria, CA-based Carl’s Jr. restaurants will soon have stores opening in China, after CKE Restaurants announced that it is partnering with BreadTalk Group Limited and Aspac F&B International to open 100 franchised Carl’s Jr. restaurants in the country over the next eight years. Beijing and Shanghai will see the openings of the first stores sometime before March of 2009, with locations in the municipality of Tianjin and the provinces of Zhejiang and Jiangsu to follow. The plan comes on the heels of Carl’s Jr.’s announcement that it will be placing the Prime Rib Six Dollar Burger on its menu in a move which goes against the fast food industry’s recent reliance on value menu items. The new premium burger is a part of the chain’s line of "meat-as-a-condiment" offerings. Hallmark supervisor takes plea deal Daniel Ugarte Navarro recently pleaded no contest to charges of animal cruelty stemming from an undercover investigation which showed Navarro and another employee abusing non-ambulatory cattle at the Hallmark/Westland Meat Packing plant in Chino, CA. The case ultimately led to the largest meat recall in U.S. history. Another worker pleaded guilty in March to three misdemeanor counts and was sentenced to six months in jail. Navarro faced five felony and three misdemeanor counts and up to eight years in prison, but pleaded no contest to two felony counts of animal cruelty and two misdemeanor counts related to illegal moving of crippled cows. Under the terms of his plea deal, he will face a sentence of 210 to 365 days in jail when he returns to court in August. Cold storage report sets record USDA’s cold storage report for May 2008 set a record for the decline in total pork stocks: the draw-down of 85 million pounds topped the previous record of 52 million pounds set in 2005. Total pork stocks, at 567 million pounds, still is 15 percent above stores from May 2007, but 13 percent below the level of just a month earlier. Meanwhile, total beef in cold storage is about flat with levels of a year ago and a month ago. Overall, total meat of all types in cold storage is 10 percent above levels of a year ago, but 8 percent lower than a month ago. Poultry, meanwhile, is stacking up more quickly. Chicken stores in May, at 754 million pounds, were 23 percent above levels of a year ago, and even with the month earlier. Shoppers trading down beef grades, cuts As food shoppers "trade down" to cope with higher food prices, they will likely purchase cheaper cuts of meat and lower beef grades, a retail food consultant said on recently. These cut and grade trade downs can be expected in addition to some shoppers choosing cheaper proteins pork and chicken over beef, Willard Bishop Managing Partner Jim Hertel said during a Webinar on the future of food retailing. Hertel predicted food inflation as high as 7 percent to 11 percent annually for at least the next two years, as increased global protein demand, reduced global grain production and biofuels competition for feed inputs such as corn continue. Red meat production at record high for May U.S. commercial red meat production totaled 4.22 billion pounds in May, up 4 percent from the 4.08 billion pounds produced in May 2007, USDA said in its monthly Livestock Slaughter report. Beef production, at 2.38 billion pounds, was 4 percent above the previous year. Cattle slaughter totaled 3.14 million head, up 3 percent from May 2007. The average live weight was up 19 pounds from the previous year, at 1,251 pounds. Pork production totaled 1.82 billion pounds, up 3 percent from the previous year. January to May 2008 commercial red meat production was 21.0 billion pounds, up 7 percent from 2007. Accumulated beef production was up 4 percent from last year, pork was up 11 percent from last year, veal was down 11 percent and lamb and mutton production was down 4 percent.

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Friday, June 27,2008

Farmers prepare for higher fuel costs

by DTN
Farmers prepare for higher fuel costs Central Iowa corn and soybean farmer Charles Helland usually waits until closer to fall before securing his fuel needs for the season, but this year he’s planning to firm up fuel needs in the next week or so. "In the past, fuel costs haven’t varied that much from the beginning of summer to the end, so it wasn’t much of an issue,"" said Helland, who farms with his brother Mike near Huxley, IA. "But in these markets, who knows how high the price of diesel will be come fall?" Early-bird buying isn’t the only new habit for farmers. Helland also has been adding fuel storage so that he can time his fuel purchases and store all his needs. "We had two 1,000-gallon tanks and we added another 1,000-gallon tank a couple years ago. We also have a 500-gallon portable tank and two other 500-gallon tanks at other locations," Helland said. However, adding storage isn’t the answer for all growers. "We’ve seen producers increase from 500- to 1,000-gallon tanks and also replace old tanks for environmental reasons or to protect their investment," said Kevin Lange with Heartland Co-op Energy in West Des Moines, IA. "But for the average farmer, with all the containment and fire marshal regulations, to increase to over 1,000 gallons of storage is usually not cost effective." That can be true even for large producers. "Our goal was to have enough fuel storage to be able to buy a semi load of fuel at a time. But that didn’t work in some locations," said Gregg Halverson, CEO of Black Gold, a chip potato producer based in Grand Forks, ND. "We farm in 10 states, and each one has different environmental rules and regulations. You might end up spending a dollar to save a penny," he said. "We looked into installing bigger fuel tanks at one farm in Indiana, but once you get above a certain size, containment and set-back regulations can be cost-prohibitive. It would have cost us $150,000 in containments and set-backs to add more fuel storage at that farm. We said, ‘Forget it.’" The price of fuel has caused us to rethink our business model, Halverson said. "Now, we’re evaluating production sites as to how close they are to terminal use as opposed to looking at the most perfect production site with the best soils, and rainfall or irrigation." Brett Crosby, a cow/calf and irrigated sugar beet, malt barley producer in Cowley, WY, is looking at a more creative risk-management solution for his fuel costs. He has invested in the Deutsche Bank Oil (DBO) index fund and is working with Kansas State ag economics professor Kevin Dhuyvetter to see how closely that fund tracks diesel fuel. "For most farm operations, selling a regular heating oil futures contract is not an option because one contract is equivalent to 42,000 gallons of diesel fuel. Most farmers have about 1,000 to 2,000 gallons of fuel storage," Crosby said. "Right now, DBO tracks very well with the price of oil. For every dollar that oil has gone up, DBO shares have increased 37 cents. One share of DBO is equivalent to 11 gallons of diesel fuel," Crosby said. "If farm operations are worried about how to protect against rising fuel costs and need 1,000 to 2,000 gallons, they could buy 100 to 200 shares of DBO. The advantage is producers can buy in small increments and they don’t buy on margin." DBO shares currently are trading around $50 per share. On caveat is that "the fund is not accurate enough as a hedge for a move of 10 to 30 cents per gallon for diesel, but it can hedge a producer against a move of $1 or $2 per gallon," Crosby said. "I’ve hedged my fuel needs with DBO shares only to a small extent," he said. "And I haven’t advised anyone else to invest because I want to make sure there are not pitfalls out there in which the fund wouldn’t track well with oil prices. Right now it looks like a solid hedging tool. You can buy the shares with any brokerage. I have an Ameritrade account and it took 30 seconds to fill my order. I bought DBO shares a couple of months ago. Obviously, I’m looking brilliant now. But we’ll see what happens when the market gets more volatile." Cash buyers face the risk that energy prices could go substantially higher, but the possibility that crude oil could plunge below $120 or even $100 a barrel over the next few months is slim, pointed out Phyllis Nystrom, energy department manager of Country Hedging, a subsidiary of co-op giant CHS. She recommends that farmers and dealers manage some of their fuel risk by exploring the use of over-the-counter options or something like Country Hedging’s CHI Compass capped-average contract, which establishes a maximum price. High premiums for those products have discouraged farm operators from taking advantage of those offerings in the past, she said during a June 17 DTN webinar on the topic. But considering the extreme volatility in the market today, some operators may want to rethink that objection. The Energy Information Agency forecasts that cash diesel prices alone could run $4.72 per gallon, up almost $2 per gallon from their 2007 average this summer. If such wide price fluctuations continue, the premiums for put options could be inexpensive insurance. Many farmers uncomfortable with over-the-counter options still use forward pricing as their main risk management tool for fuel. "We’re seeing a normal amount of forward contracting," said Mike Derickson with CHS. "Some producers are unsettled by the high price levels, so they’re buying as needed. For the most part, we’ve seen stable forward contracting in the past two years. Fuel prices are usually highest in the spring when refineries are taken down for maintenance, but there tends to be a dip in prices in the early summer," Derickson said. Unfortunately, that Memorial Day-early June dip of 18 percent to 20 percent has yet to materialize this year. "I tell my producers, since it’s hard to predict what will happen, the best thing to do in today’s economic environment is to keep your barrels full, forward contract some of your fuel needs and stay open on some of your needs," advised Heartland’s Lange. Randy Hertz of Hertz Farm Management in Nevada, IA, added that it is good risk management to have some fuel in inventory, but you also need to protect yourself against theft. "You have to put a lock on your fuel tank or have a switch inside the shop that turns on the pump. You also have to guard against inventory slippage from unauthorized use, such as by teenagers, neighbors or anyone else. The main thing is to make it inconvenient for people to steal your fuel," Hertz said. "Fuel still ranks under fertilizer, seed and rent costs, but when you go through a more than 4,000 gallons and diesel is over $4 per gallon, we try to not pay any more than we have to," said Iowa farmer Helland. — DTN

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Friday, June 27,2008

Grant extended to eradicate scrapie in Colorado sheep and goat herds

by WLJ
Grant extended to eradicate scrapie in Colorado sheep and goat herds The Colorado Department of Agriculture has received a grant extension by USDA to help sheep producers with the cost of testing their herds for scrapie susceptibility. "The Department began this program in September 2003 and it has been extremely successful," said assistant state veterinarian, Dr. Keith Roehr. "A genetic test can detect resistance to scrapie so we are very happy to have this grant to help protect Colorado’s sheep industry." Scrapie is an infectious, and fatal, disease of sheep and goats, which causes a degeneration of the central nervous system resulting in a variety of behavioral and locomotive changes. The disease is a member of a family called Transmissible Spongiform Encephalopathies (TSEs). In 1947, the first case of scrapie was diagnosed in the U.S. in sheep originating from Britain via Canada. Scrapie costs the sheep industry between $20-25 million per year, but resistance to the disease in sheep can be determined by a genetic test. The grant funds will pay for half of the testing costs on a total of 500 rams and 200 ewe lambs. The Rocky Mountain Regional Animal Health Lab performs this test for $13.75 for the first 10 samples and $11 per additional animal. Through the cost share program within the federal grant, the cost is reduced for the producer by half. Producers who want to participate in the program must have all sheep tagged with an official premises identification tag. Premises identification tags are available by calling toll free 866/USDA-TAG. "Producers are required to tag goats due to Colorado’s loss of commercial goat status," continued Roehr. "If Colorado is to receive that status again, we must remain vigilant in protecting our herds from this disease." Educational outreach to sheep and goat industries is another important factor for the grant; meetings are being planned across the state to help educate livestock owners about scrapie and how to protect their herds. Additional details on the meetings will be sent at a later date. To register for genetic testing or to set up a meeting, contact Ed Kline at 303/249-0685. — WLJ

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Friday, June 27,2008

Wheat not yet cost-effective corn alternative

by DTN
Wheat not yet cost-effective corn alternative Amid fears that flood-induced acreage losses will push corn prices even higher, livestock producers are considering their options to find the least-cost feed rations for their herds. For now, wheat prices are too high to be considered a cost-effective alternative for corn, but that could change as flood damage is assessed and corn acreages losses calculated. "How this all turns out in the end will depend on what happens with the corn crop and the price of corn," said Gary Vocke, ag economist for USDA’s Economic Research Service. "We don’t know the result of all this flooding, what will be the consequences," he said. "Only after the water goes down will we be able to get a clear understanding of what happened." USDA has increased the feed and residual wheat use from only 60 million bushels last year to 255 million bushels this year, but Vocke attributed last year’s small number to high export demand and high prices. "Wheat was priced above the price of corn, so unless wheat was very, very damaged, producers would not feed it," he said. "This year, we expect our exports to be down and we have larger supplies, so we expect there will be some feeding." Still, cost will be the determining factor in any livestock ration. The hard red winter wheat grown on the Plains is still priced too high to work its way into livestock rations; however, a huge crop of soft red winter(SRW) wheat grown in the South and Southeast has pressured prices in those states and may be working its way into feed rations for pigs and poultry, Vocke said. Bill Dicke, a nutritionist for the feedlot consulting service Cattlemen’s Nutrition Services LLC, said he has heard some discussion of changing portions of cattle rations from corn to wheat, though he has not yet seen any changes. "It’s all price-related, and wheat isn’t necessarily that low in price," he said. "When producers can purchase wheat for the same price or below the price of corn, then it will go into rations, especially if greater supplies after harvest lead to lower prices." He noted that wheat does have several advantages over corn. First, it’s less costly to process than corn, and second, wheat starch is more digestible than the starch in corn, a characteristic that makes wheat a good fit in a ration with dried distillers grain, which has most of the starch removed during the ethanol-making process. However, there hasn't been a lot of research or work done in that area, he said. One concern producers may have about wheat is that they need to have several months’ supply. "If producers are going to feed wheat, they need to be able to know they can feed it for several months," he said. "You don’t want to jump in and out with wheat if you are feeding higher levels; you need to be more careful to adapt cattle to wheat than other ingredients." Galen Erickson, associate professor and beef feedlot Extension specialist at the University of Nebraska-Lincoln, said that wheat is digested rapidly and works fairly well as part of beef finishing rations. But because of the rapid starch digestion, producers may face some risks if wheat constitutes more than 35 to 50 percent of the diet on a dry-matter basis. Erickson said he expects that higher corn prices will likely lead to an increase in the price of all other alternatives, such as wheat, barley and grain sorghum. "All of these grains are interchangeable, at a price. Therefore, when one is priced competitively, as a general rule the usage increases, which leads to an increase in price," he said. So just what can livestock expect in regards to wheat prices and markets? DTN Analyst Elaine Kub said the SRW trade has really devolved into two completely different markets: the bullish futures market and the bearish cash market. Kub said it would be unlikely for wheat prices to fall below corn future prices, even assuming the most bullish supply-and-demand picture for corn and the most bearish supply-and-demand situation for SRW. "That’s because there are speculative traders who will always expect—and act to maintain—a premium for wheat prices over corn," Kub said. "We are seeing that now as Chicago wheat futures trade over $9 a bushel, even during a bearish harvest season, while corn futures are at $7.40." To get a real feel for corn and SRW demand from consumers, one has to look at the cash markets where the difference in prices is historically low. That is more in line with the real supply and demand of those markets, Kub said. To some degree, wheat should always have a fundamental premium over corn, simply because it provides slightly different nutrients, but as wheat's abundance becomes more widely known in the northern half of the Corn Belt, those cash prices will be expected to continue to drop. "I would not be surprised if cash corn bids overtake cash SRW bids, especially in localized regions where SRW production is widespread and the corn is getting shipped west to delivery points or ethanol plants," Kub said. "However, we may have a month or more before the average SRW bids soften to something under $7 per bushel. Already, we can see the weakest basis levels—$2.50 or as much as $3.41 under the July futures contract—in the regions where harvest has gotten under way." — DTN

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Friday, June 27,2008

Small businesses search for next generation fuel feedstocks

by DTN
Small businesses search for next generation fuel feedstocks Robert Byrnes has all the proof he needs that biodiesel from camelina, restaurant waste and animal fat is a viable fuel source. To testify before Congress on recently, Byrnes made the 1,200 mile trek to the nation’s capital without using a drop of petroleum. Byrnes, a farmer from Oakland, NE, powered his Jeep using only farm-made biodiesel. He was one of five expert witnesses testifying before the House Subcommittee on Rural and Urban Entrepreneurship on second generation biofuels and their effects on America’s small businesses. "The idea was to try and quantify the potential opportunities," said Rep. Jeff Fortenberry, R-NE, after the hearing. "We don’t want people to have irrational exuberance." Lawmakers began the hearing by highlighting the need for more alternative fuels, given that gasoline is now running at an average of $4 a gallon nationally. They also emphasized looking at feedstuffs that do not compete directly with food or livestock feed, given the battles that are now taking place politically regarding food vs. fuel. Some of the new methods of biofuel production proposed recently come from crops many farmers may consider strange. Topping the list of potential biofuel sources are camelina, jatropha and algae. "Camelina is a nonfood crop, in part because it doesn’t taste very good," said Jeffrey Trucksess, executive vice president of Green Earth Fuels LLC, before the committee. A relative of the mustard seed, camelina can be grown all over the country, and may provide an alternative biofuel that doesn’t dent the world’s food supply, Trucksess testified. Farmers can work the crop into a rotation with their normal planting schedule, seeding fields with camelina every third year instead of leaving their fields fallow. "It fits in well, and you're not competing for wheat acres," Trucksess said. Trucksess also discussed plans to launch 50 trial acres of jatropha in Texas. Jatropha is resistant to drought and pests, and its seeds can be ground up to produce oil. Biofuels could prove to be a $22-billion industry in Texas alone, and create up to 100,000 jobs, Trucksess said. Algae could prove to be another nontraditional cash crop for farmers. Because algae doesn’t waste energy creating roots, it can absorb a much higher percentage of photons from the sun, said Tom Todaro, CEO of Targeted Growth and Sustainable Oils. "I’m pretty confident that help is on the way," Todaro said. "Well before the time oil depletes, biofuels really can make a significant impact." However, there are a few obstacles to harnessing this new energy source. Algae goes through two distinct growth stages. During one stage, it grows significantly, but doesn’t produce much of the feedstock necessary to create biofuels. During the second stage, it makes the feedstock, but doesn’t grow nearly as much. The trick is getting it to just grow first, and then getting it to just produce oil, Todaro said. Another issue is that algae’s enormous energy potential could be too much of a good thing and attract foreign competitors to the renewable fuels market. "Fifteen years from now, the biofuel everyone will be using is algae," Todaro said. "One of my big fears is that the investments made abroad are much greater than the investments that have been made here. Once you figure out how to do it, it’s deployable everywhere," he added. — DTN

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Friday, June 27,2008

Watch for blue-green algae

by WLJ
Watch for blue-green algae Producers should be on the lookout for green to blue-green scum or a gelatinous mass on the surface of their livestock’s fresh water supplies. "Algae blooms cause major disruptions not only because of their offensive odor and appearance; they can be potentially fatal to livestock," says Roxanne Johnson, North Dakota State University (NDSU) Extension Service water quality associate. "Not all algae blooms are toxic, but without laboratory analysis, it is impossible to identify poisonous species." This scum actually is not an algae, but photosynthetic bacteria called cyanobacteria that rely on sunlight for energy. As they store energy, they create a tiny cavity of air that allows them to move up and down in the water to areas with more nutrients. As environmental conditions improve with warm weather, calm winds and abundant nutrients (particularly phosphorus and nitrogen), the bacteria numbers increase. A "bloom" of green or blue-green algae on the surface of the water may appear overnight, accompanied by an unmistakable musty, earthy or putrid odor. "As cyanobacteria break down, they release toxins that can be an irritant to human skin and potentially lethal to animals," Johnson says. Concentrations of algae develop as wind moves the toxin to the leeward, or downward, shore, where producers may find evidence of toxicity, such as dead mice, snakes and other animals near the water's edge. Toxicity is dependent on the species consuming the water, and the concentration and the amount of water ingested. Blue-green algae produce two toxins, each with different symptoms. Signs of neurotoxin poisoning usually appear within 15 to 20 minutes after ingestion. In animals, symptoms include weakness, staggering, difficulty in breathing, convulsions and ultimately death. In humans, symptoms may include numbness of the lips, tingling in fingers and toes, and dizziness. Signs of liver poisoning may take hours or days to appear. Liver toxins can cause abdominal pain, diarrhea and vomiting in humans and death in animals. Most blooms are obvious to the naked eye; however, blue-green algae can be present in water without a visible bloom, Johnson says. She advises producers to treat their water if they've previously had blooms. Treatments include using an aeration/mixing device to create turbulence in the water or minimizing nutrient levels by establishing vegetated buffer strips around the water to intercept nutrients before they reach the water. Another long-term strategy is limiting livestock’s pond or dugout access to areas that have been stabilized to prevent damage from trampling. Producers also may choose to pump water to a tank or trough after fencing the water source to keep livestock out. Johnson advises producers to clean stock tanks on an annual basis to keep algae growth to a minimum. Some producers are adding dyes, such as Aquashade, Blue Lagoon and Admiral, to nonflowing pond water to filter out ultraviolet rays. According to the products’ labels, this treatment is most effective when used early in the season for water intended for livestock consumption. It is not recommended for human drinking water. Algaecides, such as copper sulfate, are effective in killing algae blooms. However, these algaecides also can kill fish and damage the ecosystem of inland waters, Johnson says. Lethal levels of toxins may result as a consequence of algae cell walls rupturing when copper sulfate is used. For procedures on treating water, check out NDSU Extension Service publication AS-954, "Livestock and Water." It’s available online at http://www.ag.ndsu.edu/pubs/ansci/livestoc/as954w.htm. Other treatments include suspending barley straw loosely in a mesh bag in the affected pond. A study from the Center for Aquatic Plant Management in Berkshire, England, says the most effective time to apply straw is before algae growth begins because the anti-algae agents released by the straw are more effective in preventing algae growth than in killing algae already present. The straw becomes active within a month and will continue to inhibit algae growth up to six months. "While there are no quick fixes to control blue-green algae once they appear, reducing the amount of nutrients washed into ponds may eventually lessen the intensity of the bloom," Johnson says. — WLJ

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Friday, June 27,2008

Cattle producers of Washington hear USCA update

by WLJ
Cattle producers of Washington hear USCA update Nearly 70 cattle producers gathered in Moses Lake, WA to hear an industry update from Cattle Producers of Washington (CPoW) Immediate Past President Lee Engelhardt and U.S. Cattlemen’s Association (USCA) Director of Government Affairs Jess Peterson. "Today is a great day. We stand united in our work and success in getting Congress to pass mandatory country of origin labeling (COOL)," Engelhardt told the crowd. "Some said it couldn’t be done and that we were wasting our time, but we pulled together, worked with our congressional delegations and made it happen. We can’t back down from these issues in the face of adversity. We have to work the process and the system and recognize that it takes time to make things happen. It took us nearly ten years to get COOL passed, but it’s a law now. Let’s take that winning game plan and implement it with other issues. We can, and will, keep winning if we maintain our focus and unity," said Engelhardt. During his Capitol Hill update, Peterson congratulated producers for their hard work on COOL passage. "Now we must go to work promoting our new label," he noted. "USCA is working at all levels to enhance the mandatory beef checkoff program to enable a portion of checkoff funds to promote U.S. beef. Meetings with the Cattlemen’s Beef Board, with potential contractors for checkoff funds, Congress and the U.S. Department of Agriculture demonstrate USCA’s commitment to making this happen. While it may take time, USCA will not stop working towards this goal until it becomes reality." Peterson also updated the crowd on USCA’s work to address the USDA’s problematic rule to increase meat imports from Argentina. "It’s unfathomable to cattle producers as to why the Administration would trust a country like Argentina that has defaulted on billions of dollars in loans and constantly fights U.S. farmers and ranchers in the World Trade Organization. Instead of addressing these issues, the Administration is intent on rewarding Argentina with a categorization that would permit the country to create an imaginary boundary to manage an airborne disease. USDA has yet to remove this proposed rule, and USCA hopes Congress will stand up for cattle producers and introduce legislation to prevent this rule from being implemented." Engelhardt concluded the evening’s event by encouraging producers to stay engaged and unify with CPoW and USCA to keep winning on the issues. "I am proud of these associations and what is being accomplished. Let’s keep it up," stated Engelhardt. — WLJ

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