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Thursday, December 20,2007

Export demand supports market

by WLJ
The early fed cattle trade last week occurred at prices which analysts expected to be the seasonal low. Nebraska feedlots reported selling 10,000 head of fed cattle last Wednesday at $83.25-$84 live and $133 dressed. Colorado feedlots reported selling 1,000 head of fed cattle at $84 live and Iowa feedlots reported selling 200 head of fed cattle at $135 dressed. There was very little live trade in the southern Plains as of last Thursday, however, analysts were calling for live trade in the $85 to $86 range as a result of packers being short bought the previous week. Packers, for their part, were expected to begin slowing chain speeds from the prior week’s levels in an effort to stay out of the market as long as possible as well as providing some support for the beef cutout values which, last Thursday, were also nearing the expected seasonal bottom. However, the slowdown had yet to begin by midweek. Week to date harvest through last Thursday was 507,000 head, up 2,000 from the prior week and 3,000 head more than the same week in 2006. The Choice cutout last Thursday was hovering at $139.40, up 11 cents from the prior day. Select cuts gained 37 cents to trade at $132.24. Movement at the wholesale level was still relatively slow however, and it appeared that additional discounting could be in the works before buyers jumped back into the market to contract their product now that most have fulfilled their July 4th holiday needs. Export buying remains one of the bright spots in the beef market right now and is helping to support prices in the face of lackluster domestic demand. Some of that evidence was visible in the sagging middle meat prices, which packers were discounting last week in an effort to keep product moving out of cold storage. Chuck and shoulder cuts, in the meantime, were strong as buyers in Asia continued to demand more beef from the U.S. The lifting of the export ban which Korea had placed on six U.S. plants should add support to the beef complex. Another high note for the market is continued strength in the ground beef and boneless beef segments which are seeing strong demand for product ahead of the holiday.  Shipments of trim and grind were strong throughout the week and the 90 percent lean was still going strong at $137.43, compared to $130.28 last year, while the 50 percent trim traded at $55.71 compared to $38.47 on the same day in 2006. Cow carcass cutout values were trading at $111.83, which was down from early June, but still more than $6 above year ago levels. On the Chicago Mercantile Exchange (CME) last Thursday, contract prices moved higher across the board, rebounding from an early week sell-off following USDA’s cattle on feed report. The bearish report weighed heavily on deferred contracts after placements were reported higher than industry expectations, at 13.5 percent above May 2006.   The spot month contract gained 162 points during the session to close at $86.92, while August rose 90 points, ending at $90.15 and October added 132 points to close the day at $94.45. Feeder cattle While there are tight supplies of fed cattle ahead in the short-term, fall and winter fed cattle contracts lost ground early last week as a result of in increase in the number of cattle moving into feedlots earlier than expected from herds in the southern states. That, in turn, could impact prices paid this fall for feeder calves which have been very strong despite $4 corn prices, particularly when compared to steer prices the last time corn prices spiked. In 1997, 650 lb. steer prices dipped below $60. Thus far, early contract prices for feeder cattle have been reportedly good and video sales are also proving to be strong in advance of some of the season’s largest sales coming in July. University of Iowa Agricultural Economist Shane Ellis said he expects prices for fall calves to be lower than 2006 levels, however, he said prices will remain well above the 10-year trend line. “Third quarter prices are expected to be 5-10 percent lower than a year ago, Fourth quarter feeder cattle prices, on the other hand, will be similar to those of last year after harvest corn prices dramatically increased,” Ellis said. “Finally, beef feeder cattle supplies may be slightly lower this year, with fewer beef cows calving than a year ago. This may also help offset some of the weaker feeder cattle demand created by higher feed costs. In conclusion, cow/calf producers should see yet another profitable year. However, it may be advisable to use some form of marketing strategy that will mitigate the risk of increased corn prices.” Futures contract prices indicate that prices will remain strong into the fall marketing season and moved higher, following live cattle contracts in last Thursday’s session. August feeders jumped 120 points, closing the session at $109.77, while September gained 132 points, ending at $110.42, and October rose 130 points to finish at $110.40. The sharpest rise of the day came on the November contract which ended the day at $110.70, 147 points higher than a day earlier. Meanwhile, cash auction market prices last week rebounded slightly in many areas. The CME index showed feeder cattle prices averaging $108.40 last Thursday. In El Reno, OK, last week, feeder steers and heifers sold for steady money on good demand after a bounce in the futures market. Steer and heifer calves sold $2-4 higher than prior week’s light test, with several reputation brand calves included in the day’s supply. Continued rainy weather has prolonged the grass season and created very good demand for stocker cattle. Meanwhile, at the market in Oklahoma City, OK, feeder steers and heifers were called steady to $2 lower, while steer and heifer calves sold steady. According to market reports, the bulk of feeder receipts at OKC continue to be number one and two crossbred cattle coming from out of state. Demand was called moderate, at best, for feeders and good for calves despite the absence of some northern buyers last week. Farther north, in West Plains, MO, last Tuesday, steers and heifers were unevenly steady, selling from $2 lower to $2 higher throughout the day, with a full advance noted on better quality calves when the market reached its full potential after a slow start. Yearling demand remained good most of the day with several load-lots being absorbed rather handily in spite of the week’s sharply lower fed cattle trade and continued pressure on the cattle board and stronger grain futures. In Loup City, NE, market reports indicated moderate demand for a very short list of yearlings and fall calves, as well as several load lots of Holstein steers. Cattle quality and condition were reportedly average, with fairly good buyer turnout. In addition to the regular list of feeder buyers, there were several people looking to fill out pastures with grass cattle. While in Hub City, NE, compared to the previous week, feeder steers and heifers sold $2-3 higher on offerings consisting of mostly load lots of high quality feeders from reputation consigners. In the western states, prices were also mostly steady to higher last week. In Prescott, AZ, steer and heifer calves and yearlings were reportedly selling for steady money. While prices in Madras, OR, moved lower in a light test of the market. Prices for 500-600 lb. steers were in a range of $104-111, while those in the 600-700 lb. class were mostly $99-105, down $7-8 from the previous week.

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Thursday, December 20,2007

Idaho Beef Council announces 2007-’08 officers and budget

by WLJ
Kim Burton Brackett, a cow/calf producer from Castleford, ID, was recently elected chairman of the Idaho Beef Council for the 2007-2008 fiscal year beginning July 1. Brackett, who also represents the Idaho CattleWomen on the council, will lead the eight-member board representing Idaho beef producers in overseeing Idaho beef checkoff programs. Laurie Lickley, a cow/calf producer from Jerome, was elected vice chairman, and Jay Theiler, a cattle feeder representative from Boise, was elected secretary-treasurer. Other 2007-’08 Idaho Beef Council board members include outgoing chairman Dan Hinman, a cattle feeder from Caldwell, ID; Brenda Richards, a cow/calf producer from Murphy, ID; Lynn Keetch, a dairyman from Montpelier, ID; and new directors Tom Dorsey, a dairyman from Caldwell, ID; and Dan Schiffler from Jerome, ID, representing livestock markets. Working to help coordinate state and national beef checkoff programs, Brackett and Hinman also represent the Idaho Beef Council as directors to the Federation of State Beef Councils. Theiler serves as a U.S. Meat Export Federation director, and Lickley is a member of the national Beef Promotion Operating Committee. At 33, Brackett is the youngest Idaho Beef Council Chairman in the organization’s 40-year history. She says she is looking forward to working with the people involved in the beef industry and organization. “We are fortunate to have a staff of tremendous talent and dedication and our board of directors is a strong, well-rounded and forward thinking group of individuals all committed to promoting beef throughout Idaho.” she said. “I believe the beef checkoff is more relevant now than ever,” Brackett added. “As a producer, I view checkoff programs as one of the strongest tools for increasing profits in our operation. Checkoff dollars are essential in presenting a positive beef message to consumers. We must continue to educate consumers about the nutrient value and safety of beef. Increasing consumer demand for beef increases the value of our product, which means a larger bottom line for producers.” Idaho beef checkoff collections are expected to be $1,650,000 for the coming year, with an approximate net instate income of $759,150 after Cattlemen’s Beef Board remittance and collection fee paid to state brand department.   Planned program expenses for 2007-’08 are $234,251 for promotion programs including consumer advertising, retail and foodservice promotions, promotional events and July Beef Month; $129,300 for consumer information programs including youth and adult education programs and events, as well as media and health professional outreach; $91,180 for beef safety and product enhancement research; $36,565 for industry information including producer education programs, the Idaho Beef Quality Assurance Program, beef industry information and public relations; $36,000 for producer communications including producer publications and media, annual report and producer meetings; $40,960 for support of international marketing efforts through the U.S. Meat Export Federation; and, $173,000 for support of national programs including outreach to higher population states through the Federation of State Beef Councils. The 2007-‘08 budget reflects increased funding and focus on nutrition programs and health professional outreach, and supporting programs for higher population states and developing international markets. There is also strong focus on retail and foodservice programs as well as research and new product development and promotion.

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Thursday, December 20,2007

USDA announces CRP re-enrollment opportunities

by WLJ
Agriculture Deputy Under Secretary for Farm and Foreign Agricultural Services Floyd Gaibler recently announced that more than 14,000 agricultural producers and landowners may be eligible to re-enroll their land in the Conservation Reserve Program (CRP) continuous sign-up if their contracts expire on Sept. 30, 2007. “More than 300,000 acres enrolled under these contracts are scheduled to leave the program at the end of September,” said Gaibler. “Re-enrolling these acres is an important conservation decision because continuous sign-up contracts involve some of the nation’s most environmentally sensitive land.” Of the 300,000 acres eligible to leave the program, about 71,800 acres are in major corn producing states (Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska and Ohio). Farmers and ranchers with general sign-up CRP contracts that expire Sept. 30, 2007, and that did not take advantage of the last year’s re-enrollment or extension offer, also may be eligible for the continuous sign-up. Farm Service Agency officials at USDA Service Centers began notifying general sign-up CRP contract holders last month of this possibility. In addition, producers with land eligible for the continuous sign-up may, in some cases, be eligible for the special incentives of CRP’s Farmable Wetlands Program. This year marks the 10-year anniversary of the beginning of the continuous sign-up for CRP. Environmentally desirable land devoted to certain conservation practices may be enrolled in CRP at any time under continuous sign-up. Offers are automatically accepted provided the land and producer meet certain eligibility requirements. Offers for continuous sign-up are not subject to competitive bidding. Continuous sign-up contracts are for 10 to 15 years. CRP is a voluntary program that helps farmers, ranchers and other land-owners plant long-term, resource-conserving covers in exchange for rental payments, cost-share and technical assistance. These practices reduce erosion and improve wildlife habitat, water and air quality. For more information about CRP, visit your local USDA Service Center or online at: www.fsa.usda.gov.

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Thursday, December 20,2007

Leopold Conservation Award presented to San Isabel Ranch

by WLJ
The Wisconsin-based conservation organization Sand County Foundation, in partnership with the Colorado Cattlemen’s Association (CCA) and the Colorado Agricultural Land Trust, presented its Leopold Conservation Award last Monday to the San Isabel Ranch. “We view the Leopold Conservation Award as an important investment in private lands’ conservation,” said Dr. Brent Haglund, Sand County Foundation president. “The $10,000 that accompanies the award wouldn’t go very far as a direct investment into a conservation project. But by using it to highlight the outstanding stewardship of the San Isabel Ranch, we indirectly support hundreds of thousands in everyday improvements by other private landowners who make measurable and lasting improvements in water quality and wildlife habitat.” The San Isabel Ranch, located in Westcliffe, CO, has a 135-year history of agriculture. The success of the ranch can largely be attributed to the late Dr. Ben Kettle and his wife, Bet. The operation is now run by the Kettle’s daughter, Sara Shields, and her husband, Mike but Bet is still very much involved. The Shields place high value in adding natural materials back into the soil. Natural materials are added during winter feeding, and feed ground is chosen based on nutrient need of the soil and plant population. The accumulation of organic material allows the Shields to plow the land in the spring to nourish new plant life. They also use a rest/rotation method of grazing which is timed to balance plant growth with livestock grazing. The Shields’ water management practices include two projects in collaboration with the Natural Resource and Conservation Service. The first is a water delivery system that allows water to reach areas in need of irrigation. The other involves the creation of a drainage system to relieve a meadow of stagnant water. The Shields uphold the idea that economic success can exist alongside environmental sustainability, which is something Ben and Bet Kettle understood long ago. “I find no controversy between good conservation practices and good ranch management,” Bet Kettle said. “No family ranch endures into the fourth generation without sustained conservation efforts. We take care of the land and the water. That care rewards us in business and in quality of life.” The Leopold Conservation Award is presented annually in Colorado by Sand County Foundation and CCA. This year’s award was presented by Sand County Foundation Director Ed Warner, June 18, 2007, at the CCA Annual Convention at the Sheraton Resort in Steamboat Springs. For more information, visit www.leopoldconservationaward.org, e-mail Traci Eatherton at traci@coloradocattle.org, or call 303/431-6422.

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Thursday, December 20,2007

COMMENTS

by WLJ
July 4, 2005 It’s official; the U.S. had its first domestic case of bovine spongiform encephalopathy (BSE). Now we’re on the inside of this BSE circle looking out. We can’t say that it was an imported cow and that we don’t have any BSE in the U.S. We’ve got one. It’s unfortunate; but now we have to deal with it and move on. There has been a tremendous amount of speculation in regards to USDA’s handling of the issue. I suppose that when this cow was initially tested last November, USDA felt pretty confident that it was just a routine follow up on a false positive and that the immunohistochemistry test (IHC) was the absolute end-all best test. One thing we can be confident about is that the USDA testing protocol, for the most part, did work. The cow never made it into any feed or food supplies; even the pet food company wouldn’t use her. She was incinerated, unlike the Washington cow that did go into the supply. I’ll say one thing about USDA and that is they do have a little explaining to do. They were accused of making several protocol mistakes on this one, and several others prior to Ag Secretary Johanns taking the reins. It is somewhat perplexing that USDA had some holes in its testing protocol. You’d think, under the circumstances, that they would have treated this situation almost the same as nuclear waste—no room for error. There is a lot of finger pointing at the Animal Plant Health Inspection Service (APHIS) on their handling of this. Perhaps there is a need for change regarding who is responsible for what, and how this BSE testing is handled overall. When it comes to the packing plant, you have APHIS on the back door and the Food Safety Inspection Service (FSIS) on the front door. Experience has shown us that government agencies don’t play well with each other; cooperation doesn’t seem to be in their vocabulary. It may be time to take this BSE testing issue private, which the industry has already discussed for beef grading. And the only reason I mention that is USDA is indeed having a real credibility problem. I do have to give Mike Johanns a pat on the back for taking USDA’s issues head on, and it’s clear he has a tiger by the tail. Last week, USDA finally came clean on the origin of the cow. It was a 12-year-old Brahman cross cow from a Texas herd. The cow was born and lived its entire life on one ranch. They are now starting to look for the herd mates and her offspring. Not much information has been available about the feeding history of this animal. It’s going to be difficult for USDA to find the herd mates on a 12-year-old beef cow, seven months after the fact. This entire episode is going to aid the proponents of a mandatory animal identification system by adding fuel to help justify their cause. Ironically, the same agency that botched up the BSE testing is going to administer the national ID program. I would have to imagine that those in the Canadian cattle industry are starting to gloat a bit. Their contention has always been it’s not if the U.S. gets a case of BSE, it’s when. It would seem appropriate to change the tune of this issue and support the idea that we have detected one cow in 388,000 tests. This month we will have several federal courts take a look at live cattle imports from Canada, which is only about BSE. I would think that any discussion about live cattle imports and BSE may have just hit a brick wall. Now the term North American beef has a little more meaning and winning back export markets may take a bit longer. Taiwan stopped imports the day of the BSE announcement. All of a sudden, the BSE standards recommended by the World Animal Health Organization (OIE) look pretty reasonable. And honestly, the market showed absolutely no reaction to the BSE announcement. There will be some politicking on this one in Congress, which is unfortunate. It’s very clear that we in the beef industry are the only ones that are having a problem with BSE. Consumers don’t seem to be concerned, and neither should you. — Pete Crow

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Thursday, December 20,2007

GUEST OPINION

by WLJ
July 4, 2005 Country-of-origin labeling (popularly known as COOL) for beef and other meat products remains a controversial and divisive issue in the beef industry. A mandatory COOL program is scheduled to take effect in September 2006, but funding for that program is now seriously in question. An alternative to mandatory COOL is House Resolution 2068, also known as the Meat Promotion Act, which was recently introduced in the U.S. House of Representatives. Cattlemen favor COOL in some form––on that point, most of us are in agreement. But some proponents of mandatory COOL seem to go way beyond the desire to distinguish the quality and characteristics of U.S.-raised beef from beef raised in other countries. They would have consumers believe that if beef does not carry a “Raised in the USA” label, it may or may not be safe. Nothing could be further from the truth. The top priority for all cattlemen should be to assure consumers that all beef offered for sale in the U.S. is absolutely safe, or it will be removed from the meat case. I am as proud as anyone of the quality of the beef we produce in the United States, but I don’t need to frighten consumers into choosing it over foreign-raised beef. Consumer confidence is essential to growing beef demand, and we cannot undermine that confidence by implying that only “some beef” is safe, while some may or may not be. Supporters of mandatory COOL also overlook the fact that the vast majority of imported beef sold in the U.S. won’t fall under the mandatory labeling requirements that they tout so proudly. In fact, the overwhelming majority of imported beef consumed in this country is purchased through food service outlets, and therefore will not be labeled under the program set to take effect in 2006. So in the average grocery store meat case, over 90 percent of the beef offered for sale will carry the USA-origin label. Do I really need an expensive, mandatory program to distinguish my product from less than 10 percent of the beef with which it competes? How is that serving the interests of U.S. cattlemen? In fact, product differentiation is where I part company most strongly with proponents of mandatory COOL. Because such a large percentage of the imported product will be exempt and the vast majority of the product in the retail meat case would carry the U.S. label, mandatory COOL will just homogenize our brand and make it meaningless. Worse yet, we’ve paid for it (because the cost of business will be pushed down to the cow/calf operator) instead of getting paid for it. For adding value to our product by producing higher-quality, source-verified cattle, we should receive a return on our investment instead of being stuck with added cost. The success of many voluntary branded beef initiatives, that tout not only quality but also source identification, should be a signal to our industry that a mandatory solution is not needed. Our country was founded on free enterprise, not socialism or isolationism. We need to let the free market system in this country decide the value of origin labeling. As a cattleman who takes great pride in the beef I raise, I want to appeal to consumer’s desire for a quality product, rather than pander to unfounded fears about food safety. I also want the ability to be innovative and to differentiate my beef from other products—both foreign and domestic. I therefore feel that the voluntary measures proposed in the Meat Promotion Act offer a superior alternative to the costly, mandatory COOL requirements scheduled to take effect in 2006. — Marshall Edleman Editor’s note: Marshall Edleman is a cattleman from Willow Lake, SD, and a member of the National Cattlemen’s Beef Association.

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Thursday, December 20,2007

Fed market begins rebound

by WLJ
July 9, 2007 With the exception of some light trade volume in Nebraska at $135-136, prices $2-3 higher than the prior week, most trade looked to be at a standstill until either late Thursday or Friday. Southern Plains traders were able to improve the market two weeks ago despite lower money being paid in the north. The result could mean that the summer low is in and upward trade is ahead. In fact, last week, most market analysts were calling for trade to move $1 higher. The last established market prices were $83-84 live in Nebraska with dressed sales at $133. In Colorado, live sales traded at $87 with dressed sales at $133. In the western Corn Belt, live sales traded two weeks ago at $83-84.50 with dressed sales at $133, while in Kansas, live sales traded at $87 with dressed sales higher at $136-137.50. And in the Texas Panhandle, live sales were at $87.   The boxed beef cutout was also starting to show signs of having reached its bottom at least for the near term. Post-holiday buying was expected to spur the cutout to better prices late last week. In fact, the recovery appeared to be starting even before the Fourth of July holiday. Last Tuesday, the Choice cutout rose 86 cents, to move above the $140 level. However, by mid-day Thursday last week, it had dropped 44 cents, falling back to $139.98. Select also lost ground, sliding back 15 cents to $133.47. Slaughter volume for the week was still 3,000 head above last year’s level at 378,000 head, but well behind last week’s volume of 507,000 head because of the holiday. Slaughter volumes remained strong and packer margins, according to HedgersEdge.com, at $11.10 per head are providing incentive to keep chain speeds at current levels. The short kill last week could help support the boxed beef market, particularly if the holiday beef movement proves to be strong as expected. There are tighter supplies of fed cattle ahead and that could also cause wholesale buyers to come to the table in an effort to secure supplies against the higher futures prices later this summer and into fall. What remains to be seen is whether packers will be willing to play along.   Futures markets last week also moved higher as a result of several factors including a slip in corn, a surge in feeder cattle prices, and improving cash fed cattle. The August contract gained 72 cents, settling at $90.70, while October rose 62 points to end the session at $95.37. December added 37 points, closing at $96.12 and February 2008 live cattle issues finished the day’s trading up 27 cents at $97.20.   Cow slaughter and cutout prices remain strong despite what has been heavy volume during the first half of the year. Cow slaughter last Thursday was 23,000 head, running in line with the average for the past several weeks. According to Livestock Marketing Information Center (LMIC), during May, federally inspected cow slaughter was 477,000 head compared to 416,000 head in May 2006. Of that total, beef cow slaughter was 286,000 head, 47,000 more than the same month last year and 17 percent higher than the five-year average. Dairy slaughter was up 17 percent from May 2006, but 1 percent below the five-year average.   “In the second week of June, (federally inspected) cow slaughter was estimated at about 130,000 head, essentially unchanged from a year ago. For that week, U.S. beef cow slaughter was 1.3 percent above 2006’s while dairy cow slaughter declined about 1.4 percent,” the LMIC report said. “Unless weather conditions improve, severely dry conditions in the Southeast and West regions of the U.S. will further contribute to beef cow slaughter numbers this summer, however on a national basis, total cow slaughter is expected to decline in the second half of the year.” However, despite the high volume, cow beef prices remain strong as grind product continues good clearance levels at the wholesale level. The cow beef cutout gained $1.41 last Thursday, to trade at $115.85. The 90 percent lean was also higher at $144.37 and the 50 percent was at $57.01. The strength of the market is likely tied to the lackluster movement of feedlot beef. Higher consumer prices for food and fuel have been cutting into discretionary spending and it is likely that people will opt for ground beef when it comes time to summer barbeques. Feeder cattle Feeder cattle prices last week found additional strength as a result of a sharp decline in corn prices following the release of USDA’s corn acreage report. The survey showed that corn growers responded with greater fervor than anticipated to the skyrocketing prices. According to the National Agricultural Statistics Service (NASS), the actual number of acres planted was 2.7 percent higher than the initial plantings report issued in March, and well above the average market estimate. According to projections, growers planted approximately 92.888 million acres of corn, a 19 percent increase over last year. In the same report, NASS estimated that harvested acres will top 85.4 million acres, a 21 percent increase from 2006.   NASS forecasters also increased the expected yield for the 2007 corn crop from a previous estimate of 150.3 bushels per acre to 154.1 bushels per acre, which means that this year’s crop could reach 13.7 billion bushels nationally.   According to Kansas State University Agricultural Economist James Mintert, that means that, “combined with an expected carryover of 987 million bushels, total corn supplies in 2007/2008 could reach 14.7 billion bushels. Holding corn demand constant at the levels projected by USDA back in June implies that ending stocks at the end of the 2007/2008 marketing year will be near 1.7 billion bushels, about 72 percent larger than at the end of the 2006/2007 marketing year.” The result of that bearish market news was a sharp drop in corn prices on the cash market as well as in the Chicago Board of Trade (CBOT) futures market. Last week CBOT December corn contract prices had fallen to $3.41 per bushel, compared to $3.99 just two weeks earlier. It appears there will be enough corn, barring catastrophic weather problems, to satisfy market demand through next year. The next big market mover is likely to be USDA’s supply and demand estimate due out July 12, which will include the newly revised crop plantings estimate. “Since June 25, July 2007 corn futures have declined about 25 percent. New crop 2007 futures have also fallen sharply, declining about 22 percent over the same time span. But looking further ahead, the decline in new crop 2008 futures has been smaller, totaling just 11 percent,” Mintert said. “Deferred futures contracts did not decline as much as nearby contracts, in part because of the need to keep corn prices high enough to encourage large corn acreage again in 2008. If 2007 crop yield potential continues to improve, the projected 2007/2008 ending stocks-to-use ratio suggests there is still downside price risk. But for livestock producers, strong consideration should be given to using additional corn price weakness to accumulate long-term feed requirements.” The drop in the corn market comes at a critical time for cow/calf producers and feeder cattle buyers. The largest video auction sales of the year are scheduled for the week of July 9, and the drop in corn should add extra incentive for buyers, while providing a strong market for sellers. Although there were few markets last week holding sales as a result of the holiday, the trend was upward in most regions. For example, in Amarillo, TX, feeder steers and heifers sold mostly steady, with instances or $1 higher on 700-800 lb. heifers. According to market reports, the week’s supply consisted of several load lots of Beefmaster and Beefmaster cross calves. To the north in Oklahoma City, where rain has hampered recent sales, a limited test of feeder steers and heifers sold steady to $3 higher. Steer and heifer calves were mostly steady on a very light pre- holiday run. Most cattle at the auction were reportedly carrying ample mud. However, there was good attendance despite light supply and demand was called good for all classes of cattle in offer. In Belen, NM, last week, feeder steers and heifers under 600 lbs. were in light supply and no market comparison was available, however, those over 600 lbs. were called $1-2 higher on moderate trade and demand. Meanwhile, in Salina, UT, feeder steers were mostly $1-2 lower on limited numbers, while feeder heifers were $1-2 lower on limited numbers and Holstein steers sold firm to $1 higher.

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Thursday, December 20,2007

BeefTalk

by WLJ
July 11, 2005 There seems to be a growing thought that once the appropriate database is selected, along with the mandatory placement of national electronic livestock identification tags, traceback will become a reality. One probably should not contradict that assumption because, given enough might and fortitude from appropriate agencies, eventually anything can be accomplished. Since fall 2004, the Dickinson Research Extension Center (DREC) has been tracking more than 5,000 calves that originated in North Dakota. These calves have been dispersed slowly across the central part of the U.S. Present traceback statistics reveal that roughly a fourth of the calves have been harvested at a slaughter facility and about a fifth remain on their premises birthplace. The remaining calves are residing in various backgrounding or feedlot facilities. Up to now, the process of traceback has been a manual people effort. The electronic database portion of the study has not been able to track the cattle from point of origin through different premises on the way to harvest. This lack of electronic tracking underscores the reality that electronic connectivity from premises to premises is nonexistent. Zero calves have been successfully tracked electronically from birth to harvest. A total of 1,308 calves have been tracked successfully utilizing the manual, people-based system. That is not to say cattle have not been placed in electronic databases. Cattle have been entered into the larger databases; however, the willingness of all parties to enter cattle into the same database or to share data from one database to the next has not happened. One outcome of the reluctance to share database information has been manual traceback. The cattle have been traced by utilizing the existing paperwork at local marketing entities or through the brand inspection service, when available. In theory, the databases should work, but the current data, collected through the trial project at the DREC, required cooperation and communication among producers, buyers, brand offices, marketing agencies, feed yards and packers. Not a single animal was traced to the endpoint using electronic identification tags, readers or databases. The saga of the electronic identification (EID) tag has been one of difficulty. The first lesson we learned was that EID tags, if they are to work, must remain in place and not be cut out. Tags on 79 percent of those calves entered into backgrounding lots and 13 percent of those calves placed into feedlots were cut out. Our second lesson was the importance of education and compliance. Tags and readers must be compliant with the current International Standards Organizations (ISO) specifications to work effectively. In many cases, the tags were cut out because of a lack of understanding. In some cases, tags were removed because of nonstandard ISO equipment. The tags and databases do work. Current technology has provided the industry with a view of the capabilities of electronic livestock identification. Because of the need to move cattle in an organized and efficient system, the current low-frequency technology is cumbersome and not up to the speed of daily commerce. Cattle need to move in an organized and efficient system. The current efforts within the beef business seem to be headed to the adaptation of technology that will be fully dated at the time of implementation. Not much different than a snail's pace because, by the time the industry has fully comprehended what needs to be done, too much steel, wire and cement will have been set with tremendous frustration and expenses at having to redo what currently appears to work. Words of advice—Be careful and know what you are getting into when you sign the contract. May you find all your NAIS-approved ear tags. — 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
July 11, 2005 Now that we have had our first case of BSE, and the news has worn off with the markets pretty much ignoring the episode, it’s time to get back to the issues we have a chance at controlling. National identification just got a shot in the arm, since seven months passed between that old Texas cow being initially tested and confirmed positive for the disease. It would be nice to know a little bit about her herd mates and perhaps the feed mill that supplied the cake that these cows consumed, or if this was just one of those random natural phenomenons. There are a lot of questions to be asked, including if there is any further risk. Would national ID have solved the problem? Maybe yes, perhaps not. The way that most cattle producers would like to have this ID system work is on a voluntary basis, I think. Or as some would say it needs to be “market driven.” The USDA’s ID program won’t be fully implemented until 2009. And, the way USDA has been handling other items concerning the cattle industry, 2009 might be optimistic. USDA hasn’t been as accurate on items of importance as many would like them to be. Meanwhile, our friends at NCBA are about to announce their animal ID program to the industry. Surprisingly, it’s not industry specific. The interesting part of their ID program is that they don’t plan on taking any ownership of it. A consortium of users will manage the program, and it will be a not-for-profit company. One would think that one of the animal ID companies would have taken charge of the data technology or the company that is doing the Canadian program might be involved. An outfit called BeringPoint, a subsidiary of software giant Microsoft, will be the company designing the database platform. The nice thing about this program is that it’s not tag specific—you can cross-reference with brands or other visual tags. However, I don’t think a waddle will work. The program is intended to track the cattle. And, from what I understand, you can use a premise ID or not. Only when the cattle are commingled will there need to be a universal ID used. Now I suppose you have to ask yourself if this NCBA program will be good for producers. The politics of this program was a great concern, which is why it will be run by a consortium of users. The incentive behind this program is to quickly send market signals to producers that animal ID will pay. NCBA expects that their cattle feeder members will support the program. Roughly 80 percent of the fed cattle in the U.S. are fed by NCBA members. It is expected that the program will provide source verified cattle to packers who do business with McDonald’s and Walmart and a host of other meat sellers. It is hoped that will be enough to send market signals to the rest of the industry. NCBA is hopeful that the program provides enough incentive to get all producers interested in a national ID program. This program is voluntary, however, it would seem that a mandatory plan would be more effective to have 48-hour traceback of livestock. But, if USDA runs it, it could be a big bust. One other benefit of the NCBA program is cost. At its onset the USDA program was estimated to cost $500 million to get started over a period of time. NCBA anticipates the startup costs of its database to be just $2-3 million. The plan will start this October with some beta testing. Jay Truitt, NCBA’s vice president of public policy, has been working on the program for two years prior to taking over his position as head lobbyist and said the costs will come in developing the infrastructure for the program but that it can go at its own speed. No one is going to stick Radio Frequency ID readers in auction markets at the onset. Truitt said there are three objectives for the plan—traceback and source verification, meeting international market demands; and recording animal movement around the world. When developing the program, NCBA had input from all the various species groups and several auction markets, but not the Livestock Marketing Association. To some, anything with NCBA attached to it is suspect. But the idea that this plan will be run by a host of industry participants makes it easier to digest, and the fact that the industry is not going to wait around for USDA to get its program going says a lot about the goal of the program. Allen Bright, chairman of NCBA’s animal ID committee, said that this plan is for all producers not just NCBA members and that its goal is to move the industry forward. The best thing of all is that it is flexible and entirely optional. — PETE CROW

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Thursday, December 20,2007

KAY’S KORNER

by WLJ
July 11, 2005 All eyes and ears will be focused on a courtroom in Seattle this Wednesday. That’s where three judges from the Ninth Circuit Court of Appeals will hold an oral hearing in USDA’s appeal against the preliminary injunction that has kept the border closed to Canadian cattle under 30 months of age. It’s anyone’s guess as to when the judges will issue their decision. There’s also great uncertainty as to how they will rule. So both supporters and opponents of a border reopening will have to endure a nervous waiting period. As I’ve sifted through the mass of legal filings the past two months (I counted at least 38 legal briefs), I can’t help reflecting on the disparity between the two sides involved, producer group R-CALF and USDA. It’s tempting to portray the fight as a battle between the little guys and the mighty U.S. government. But it’s way more complicated than that because science and the law have collided with a loud crash. In essence, the three judges will have to decide whom to believe on the science. That makes me a little concerned as I wonder how three people, even as well versed in the law as they are, can decide which side has the stronger “scientific” case. On the surface, it seems a no-brainer that USDA should prevail. On the weight of evidence I’ve read, USDA appears to have followed all the guidelines recommended by the World Organization for Animal Health (the OIE) regarding BSE. It employed world leaders in risk assessment to help make its case for the final rule that would have reopened the border on March 7. It has explained how Canada’s BSE mitigation measures are almost identical to those in the U.S. Now that the U.S. has its first homegrown BSE case, the argument is even more compelling that both countries have a similar level of risk regarding BSE (a very low level, incidentally). This appears to reinforce the argument that there’s no scientific justification for keeping the border closed. Canadian cattle and beef would appear to be as safe as U.S. cattle and beef. Arguing that Canadian cattle and beef are unsafe admits by default that U.S. cattle and beef are also unsafe. I don’t know many in the U.S. industry who believe that. Our second BSE case may not play a part in the judges’ determinations regarding USDA’s appeal. That’s because they will be focusing on the legal merits of the U.S. District Court’s March 2 opinion that put the preliminary injunction in place. But from where I sit, our BSE case at the least morally undermined R-CALF’s argument. As to timing, the key question is whether the appeals court will render its decision before another district court hearing on July 27. That’s when Judge Richard Cebull will hear arguments from the two sides over R-CALF’s request for a permanent injunction to keep the border closed both to all cattle and to all beef from Canada. Several people have asked me if Cebull might grant R-CALF summary judgment before the appeals court issues its decision. I haven’t got a definitive answer to that question but most people believe he either cannot or will not do that. So what happens if the appeals court sets aside the preliminary injunction? Presumably, the border could reopen the day after the decision. If that occurs before the July 27 hearing, Judge Cebull would be faced with the prospect of having to make a decision knowing that it would likely be immediately appealed and overturned. He’s had at least 10 decisions reversed by the Ninth Circuit since he became a U.S. District Court judge in August 2001. This record suggests he might not want to be overturned again. Conversely, should the Ninth Circuit find for R-CALF and deny USDA’s appeal, Cebull would feel legally emboldened to issue a permanent injunction. He might even issue that from the bench on July 27, as he did with the preliminary injunction on March 2. USDA would likely appeal again. But in practical terms, it would be back to “square one” in its attempt to get the border reopened. With this in mind, some members of Congress who support a border reopening have already talked about the need to develop a legislative alternative. So the whole border issue could get a lot more bloody before it is resolved. What a terrible waste of energy and money. The only pockets being filled by all this are those of the lawyers. The border will reopen at some point. At what cost to the beef industry and beef demand is the real question. — 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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