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Thursday, December 20,2007

Fed cattle trade expected over $1

by WLJ
There was only very light fed cattle trade last week as of press time. In the northern tier fed cattle market, there were a few thousand head traded at $160 dressed basis, which was about $5 higher than the prior week’s sharply higher weighted average. However, in the remainder of cattle feeding regions, ask and offer prices were still well apart. Fed cattle in the southern tier were expected to trade in a range of $100-101, as much as $1-2 higher, although it appeared likely that packers would wait until last Friday to replenish what were thought to be relatively short supplies. The last fully established market for fed cattle was the previous Friday, March 9. Live sales traded at $98-99 in the southern Plains. In the North, live sales traded at $97-99, with dressed sales at $155. Erica Rosa, agricultural economist for the Livestock Marketing Information Center (LMIC), said last week that good management at the feedlot level has contributed to the current run up in live cattle prices. “Cattle feeders are in a good position right now and the market is a reflection of that. The rise in prices is a combination of feeders doing a good job of controlling inventory and a lot of light-weight placements last year, which cattle feeders can better manage for market timing,” Rosa said. “Cattle feeders have been watching the rising prices in wholesale markets and are realizing that there hasn’t been an increase in buying by packers or a reduction in kill-level.” That’s put feedlots in a solid position to hold out for better money as the market moves toward its normal seasonal peak sometime in March or April. Although she declined to speculate about where or when the market may reach its peak. “We are going to see the wholesale prices drop off. Packers are going to need to move some product. Cutout prices are up right now, but the movement is low,” she said. “LMIC is predicting that we won’t see these prices continue through the summer. We expect to see the normal seasonal decline. In the meantime, I think there will only be hand-to-mouth buying.” The fed cattle markets were heavily influenced by the rise in boxed beef prices last week, which spent the week above the $160 level, its highest rise in nearly two years. Packers were willing to return some of their positive margins to feedlots in exchange for the light supply of market ready cattle. The predicted drop in quality cattle, as a result of tough winter feeding conditions, appears to be impacting the current market. That is translating into a shortage of high grading cattle, causing packers to hunt for enough supply to meet current market demand for Choice product. The Choice cutout last Thursday closed the day at $166.63, down 90 cents from the prior day but up more than $8 from the previous Thursday. Select was up 64 cents for the day, ending the day’s trading session at $156.62. Packers reduced their harvest to just 123,000 head last Thursday, down 3,000 from the prior week and 1,000 below year ago levels. For the week through last Thursday, packers had harvested a total of 492,000 cattle, down from 495,000 for the same period the previous week, but up from 480,000 a year earlier. Rosa said another factor in the market run up in recent weeks is the big drop in carcass weights from historical highs reached last year. She attributed the decline to a combination of the weather during the past three months and the high price of corn. Average live weights have declined from an average of 1,282 lbs. during the same week last year, to an average of 1,277 last week. Carcass weights have shown an even greater decline. Last year, carcass weights averaged 783 lbs. Last week, carcasses averaged just 768 lbs. However, despite lighter weights, kill levels are running above year ago totals, so actual beef production is ahead of last year on a week to week comparison. Last week, production totaled 483.7 million pounds, according to USDA estimates. During the same week in 2006, production reached just 481 million pounds. The rise in production over last year is mostly a result of packers trying to take advantage of currently favorable margins despite lackluster movement at the wholesale level. That means much of the current production is being held in cold storage waiting for a future buyer at what could be a fire-sale price as packers look to ship some product. Despite the movement of fed cattle prices over $1 last week in the cash market, the futures markets weren't able to sustain the momentum in the spot month. Rosa said the contract market had been pushing hard all week last week to move past $100 in the spot month, however, after topping out at $101 during last Thursday's session, the contract turned lower before the bell, closing down 92 points at $99.05. The remaining live cattle contract months on the Chicago Mercantile Exchange ended the session last Thursday mixed. June closed 67 points lower at $95.75 and August shed 37 points to close at $92.80. October and December were both 27 points higher, closing at $96.45 and $96.17 respectively. Feeder Cattle Feeder cattle markets showed another sharp increase last week for the second week in a row. The increase in fed cattle prices, coupled with the significant increase in the Chicago Mercantile Exchange index from $100.80 the previous week to $103.92 as of last Thursday, were major contributing factors. With the fed cattle market on the rise, feedlot owners are able to pay higher prices for feeder calves to begin filling pens. “I think what's happened is that the futures market (for fed cattle) has rallied to a point that feedlots feel very comfortable purchasing feeder cattle at a higher price,” said Colorado feedlot owner Steve Gabel. “We can market against a higher contract price if the futures market is indicative of that.” The futures price for corn is also a contributing factor as the May futures corn market price has fallen to $4.05 per bushel. Although experts say the decrease in corn prices do not necessarily warrant the significant increase in feeder cattle prices, Gabel says that it is a factor worth considering. “I think that feedlot owners are constantly watching their cost outputs,” he said. “With grain futures decreasing, cattle feeders can buy the grain today at a lower cost than anytime over the last six to eight weeks.” Another factor that is influencing feeder cattle prices is the combination of moisture and the increase in temperatures, especially across the southern states, that has caused pastures to green up. This has motivated cattle buyers to purchase younger, thin cattle, with intentions of turning them out to pasture. In Billings, MT, feeder steers reportedly sold for $4 to $5 higher when compared to the previous week. Feeder heifers sold for $3 to $5 higher. Demand last week was good on all weights of feeder cattle. Steers weighing 550 to 600 lbs. sold steady averaging between $114.75 and $129. Heifers weighing an average of 560 lbs. sold for an average of $105.25. Heavier weight steers weighing 700 to 750 lbs. called for $100 to $105 while their heifermates sold for an average of $96.25. When compared to the previous week, feeder cattle sold steady to $3 higher in Torrington, WY. There were some instances of $4 to $6 higher on five and six weight heifers. The demand at the auction was moderate to good with more than 3,500 head sold. Five weight steers averaged $134 and the heavier offerings, steers averaging 726 lbs., sold for $104.71. Heifers weighing 523 lbs. averaged $116.21 while the heifers weighing in at 720 lbs. called for $100.85. Just south in Sterling, CO, with over 1,100 head consigned, feeder steers and heifers sold $2 to $5 higher than the previous week. Stocker calves headed to grazing programs sold with a definite higher undertone noted. Buyer attendance was good with very good demand on all classes of cattle. Steers averaging 511 lbs. sold for $129 while the heavier steers, weighing an average of 739 lbs. called for $103.78. Heifers averaging 543 lbs. sold for $108.38. Eight weight heifers sold for $90. In Amarillo, TX, feeder steers and heifers under 500 lbs. were steady while consignments over 500 lbs. were $2 to $3 higher. Demand and attendance was good in spite of the wet weather conditions. Steers weighing between 500 and 600 lbs. averaged $112 with prices going as high as $131. The heavier steers, between 700 and 800 lbs. called for an average of $104.50. Heifers weighing 500 to 600 lbs. sold for an average of $109 and seven to eight weight females called for an average of $96.75. Oklahoma City, OK, had another large run this week with over 11,000 head consigned although the quality was not a high as the previous week. In spite of lower quality consignments, feeder cattle were still steady to $2 higher with stockers reportedly selling for $2 to $5 higher. Demand was very good, especially for thin grazing cattle. Oklahoma saw almost two inches of much needed rain last week and pastures are beginning to green up nicely. Thin 440 lb. steers sold for as much as $141 while heifers that were similar in type and kind called for $120.50. Thin yearlings averaging 619 lbs. sold for an average of $121.97 and their heifer counterparts called for $105.15. Fleshy, yearling females at the same weight sold for an average of $94.13. Further east in Joplin, MO, just under 10,000 head of feeder cattle were consigned to their weekly sale. Steers under 800 lbs. were $2 to $5 higher while steers over 800 lbs. called for $1 to $3 higher. Heifers were $1 to $3 higher with the exception of heifers under 400 lbs. which were $3 to $5 higher. The demand was good. Five to six weight steers called between $123 and $134. Heifers weighing 300 to 400 lbs. sold for $122 to $129 while the heavier females, weighing between 700 and 800 lbs. sold for an average of $94. In Ogallala, NE, feeder calves sold for $2 to $8 higher. Demand was active on all weights of cattle. The best offering of steers were steers averaging 677 lbs. and they called for an average of $112.67. Their heifermates sold for an average of $107.05. Steers weighing an average of 873 lbs. were also well represented and they sold for $102.62 while heifers that were of similar weight called for $95.10. Jamestown, ND, had a relatively large run with over 2,100 consignments. Feeder steers and heifers sold $1 to $3 higher. There was good demand for all classes of feeder cattle. The majority of steers averaged between 600 and 800 lbs. The steers weighing an average of 643 lbs. called for $116.65 and the heavier consignments, averaging 814 lbs., sold for $100.86. The majority of heifers averaged between 585 and 750 lbs. Females weighing an average of 586 lbs. sold for $105.47, and heifers that weighed 737 lbs. called for an average of $94.93.

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Thursday, December 20,2007

BEEF talk

by Kris Ringwall, North Dakota State University
Someone you should get to know—your waste management professional Change in the world of livestock is not new and comes in many forms. Today, the most obvious is the little spots that are starting to show up on the hillsides as spring calving gets under way. The spring sun certainly brings a new light to the operations and it doesn’t take much time for the newborn calves to take advantage of the weather. These are good changes because the inventory is growing again. Along with inventory growth comes the opportunity for additional revenue. Great news for producers, but you quickly notice the term “revenue” was noted. Revenue was used for a reason. Revenue and profit are two different things. The careful guidance of inputs and outputs ultimately will determine what side of the profit or loss column the numbers end up on after expenses are subtracted from revenue. Expenses are something that all operations need to deal with. If one thing seems for certain, expenses (costs) seem to go up progressively. Not only do the same old things seem to cost more, there also seems to be more things on the list that need to be part of the operation. A good example is the ever-pressing need to better understand waste management concerns and the associated costs of dealing with impacts on the environment. Unlike the welcomed change in inventory through new calves, managerial changes related to waste management and associated nutrient management programs seem to be set aside. However, spring is a good time of year to get a better handle on the operation’s current impact on the environment and find out if there are some concerns that need to be addressed. For most operations, business as usual will be the more likely answer to the question, but putting off the question because of feared ramifications does not negate the need to ask the questions. The basic question still begs an answer. Is the cattle or other type of livestock operation an animal feeding operation? Is the size of the operation large enough to be considered a confined animal feeding operation? Does the operation affect the waters of the state? Are there other impacts that could be negated with managerial changes? Has the operation grown to the point that managerial practices now have more impact? These questions are not unlike a pain in one’s side. One could ignore the pain and hope life will go on. Perhaps it will, at least for a while. However, if the pain does not subside, eventually one needs to consult with professional, well-educated people to find an answer. Sometimes the answer is simple, such as cinching one’s belt too tight. A simple mental adjustment that one does not fit into a size 32 waist anymore not only makes life more pleasant, but also brings a level of acceptance of where life is today. In a few cases, the answer is more difficult to accept. That pain in the side may be linked to some difficult issue that needs to be aggressively confronted in order to have some assurance of a future. There is no question that not finding an answer is inappropriate. In regard to the future of any livestock operation in North Dakota, or any state for that matter, do not delay. Ask the question and call for some professional help. In North Dakota, North Dakota State University’s Dickinson and Carrington Research Extension Centers have professionals ready to help your operation get a handle on environmental issues. Teresa Dvorak is available at the Dickinson Research Extension Center at 701/483-2348, ext. 108. Ron Wiederholt, Carrington Research Extension Center, can be contacted at 701/652-2951, ext. 112. Scott Ressler, North Dakota Stockmen’s Association, is available at 701/223-2522. These professionals are there to serve you, so don’t delay asking the question. Are you an animal feeding operation and what is it that you need to do? The stockmen’s associations and university Extension Services in all states should be able to offer the same services as North Dakota.

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Thursday, December 20,2007

Cash market tops $1 again

by WLJ
Lower corn adds to feeder prices. For the second time this year, cash prices topped the $1 level last week. Packer buyers raised the stakes, bidding cash fed cattle prices $4-5 higher on a dressed basis in Nebraska and the western Corn Belt. Additionally, prices were $3-4 higher on a live basis last Thursday in the southern tier where buyers paid $100-100.50 live basis. Volume was reportedly good in all regions, with more than 70,000 head trading hands through last Wednesday. The jump in market prices, coupled with a decline in corn and the likelihood of continued upward gains in the cash market, spelled good news for feedlots last week. After months of tough close out margins, things are definitely looking up for cattle feeders as the market heads into its seasonal peak. Growing consumer demand for beef and the current state of feedlots will lend itself to a good pricing structure for some time to come. Last week’s higher trade came reportedly as a result of packers being short-bought in most areas rather than significant gains in the cutout or positive packer margins. Margins were estimated by HedgersEdge.com to be in the red last Thursday, with packers losing $9.40 per head. Although cutout values are rising seasonally, and expected to surpass $165 on the Choice, they remain below last year’s levels. Last Thursday, Choice cutout values were reportedly $157, a gain of 67 cents over the prior day. Select was up 92 cents, trading at $148.16. Packer harvest was also below last year’s level, with 117,000 head slaughtered last Thursday, 3,000 head below the previous Thursday and 7,000 fewer than the same day in 2006. Through last Thursday, packers had harvested 473,000 head, 11,000 fewer than the same period a week earlier. For the week, the industry was expecting a total harvest of approximately 614,000 head, well above last year’s number of 583,000 head during the same week. However, some of the downward pressure of heavy slaughter volume has been alleviated by lighter live cattle weights this year which are currently averaging 16 lbs. less than the same time last year. Cow slaughter numbers are also running ahead of last year. The recent dairy herd buyout by Cooperatives Working Together of 54,000 head will add numbers to the already high cow harvest and further downward pressure on the cow cutout values. According to University of Missouri Agricultural Economists Glenn Grimes and Ron Plain, short forage supplies and higher prices are believed to be the major reasons for the larger cow slaughter which has short-circuited the growth in the cow herd for at least some time, they said. “For the year through the week ending March 10, total cow slaughter was up 13.4 percent from a year earlier. Dairy cow slaughter was up 12 percent and beef cow slaughter was up 14.6 percent from 12 months earlier,” Grimes and Plain said in their weekly market report. That higher than average harvest dropped the cow beef cutout value to $105.08 last Thursday, compared to the same week last year when cutout prices were $114.33. The 90 percent lean last Thursday was trading at $126.05, down from more than $145 a year ago. In comparison, the 50 percent lean is trading well above last year’s level at $73.37, compared to just $45.24 a year ago. The higher cash market last week also lent itself to boosting the futures market. Traders on the Chicago Mercantile Exchange (CME) pushed prices higher across the board last Thursday during the holiday shortened week. The spot month April contract was the biggest gainer during the session, rising 140 points to settle at $100.45. June live cattle issues gained 77 points, closing the day at $96.32 and August contracts rose 72 points to end the session at $94.32. Feeder cattle Feeder cattle have been trending higher since late January and last week proved to be no different. The CME index gained 96 cents, to $108.02 last Thursday, up from $105.54 the week prior. On Monday and Tuesday last week, corn traded limit lower, as a result of a USDA plantings report well above industry expectations. The substantial decrease in the corn market, both in cash and futures, was a significant factor in the continued increase of feeder cattle prices last week. Additionally, feedlots which purchased feeder steers at a lower price months ago have been enjoying increased fed cattle costs in recent weeks. This, coupled with the expected decrease in cost-of-gain in the short-term, has allowed cattle feeders to spend more money in an effort to fill feedlots. “I think the feedlots started making a little bit of money over the last two or three weeks for the first time in several months,” said Dillon Feuz, professor of agriculture economics and livestock marketing and farm management specialist at Utah State University. “They were able to purchase feeder cattle at a discounted price for some time. Now, they are taking those animals to market and are receiving a good price for them. The break in corn prices is allowing feeders to take a position on lower corn futures and is probably lowering their break-evens when compared to last winter,” he said. Feuz adds that he expects corn to be very volatile over the next few months as the 90 million proposed acres will likely change as a result of weather. “There is a chance that we will see more fluctuation in corn acres over the next few months and the feeder cattle market will probably become jittery as well,” he predicted. In auction markets last week, however, the tone was higher almost across the board. In Billings, MT, feeder steers under 600 lbs. sold mostly steady when compared to the previous week and those ranging from 600 to 650 lbs. were $3 to $5 higher. Steers weighing over 650 lbs. were steady to $2 higher. In fact, steers averaging 700 lbs. sold for an average of $100.25. There was good demand on all classes of steers and heifers. In Sioux Falls, SD, feeder steers and heifers over 700 lbs. sold mostly $1 to $2 higher. Last week's offering displayed more attractive quality and larger drafts than the previous week. Buyer attendance was reportedly good with good demand. Steers averaging 742 lbs. sold for a median price of $106.88. Heifers in similar weight and flesh conditions, averaging 719 lbs., brought an average price of $98.77. Much like the previous week, fleshy cattle were discounted. Heifers that averaged 717 lbs. and were in fleshy condition sold for only $92.14. Valentine, NE, had a light offering of replacement quality heifers with a steady undertone noted. Demand was good as nearly all of the feeder cattle were females of replacement quality. Heifers averaging 659 lbs. sold for $102. A large lot of replacement quality females, averaging 714 lbs., sold for $119. In La junta, CO, steers and heifers were mostly steady on the kind offered. There were instances of $2 higher on steer calves of quality. Yearling feeder steers were steady to $2 higher in calves over 800 lbs. Yearling heifers in a light test remained steady. Trade was moderate to active and demand was good. Steers weighing between 620 to 635 lbs. sold for an average of $119.50 while the yearlings which averaged 825 lbs. were worth $104.50. Heifers averaging 520 lbs. sold for $117 and females averaging 820 lbs. sold for $96. To the east in Salina, KS, over 4,400 head were sold last week. Feeder steers ranging between 400 and 850 lbs. sold steady to $1 higher and those between 850 and 1,000 lbs. were steady to $1 lower. Feeder heifers weighing 350 to 600 lbs. were $1 to $2 lower and those weighing between 600 and 900 pounds remained steady in comparison to the previous week. Five-and-one-half weight steers averaged $129 but a lot of steers averaging 554 lbs., which were value added, were worth $136.50. Eight weight steers averaged $102. Five weight heifers averaged $115 while the heavier females, averaging 850 lbs., sold for an average of $93.95. Oklahoma City, OK, sold almost 7,000 head again last week. Feeder and stocker steers were steady to $2 higher. Feeder and stocker heifers were $2 to $3 higher. Demand was very good for all classes. Steers weighing between 500 and 550 lbs. averaged $131.31 and their fleshy counterparts sold for only $125. Heifers of a similar weight were worth $119.54. In Abilene, TX, feeder steers and heifers under 500 lbs. were $3 to $5 higher. Trade was moderate and the demand was called good. Five weight steers called for $115 and their heifermates sold for an average of $97.50. Yearling steers were worth between $118 and $128 and heifers $103 to $109.

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Thursday, December 20,2007

West Coast market buys Superior Livestock Auction

by WLJ
It was disclosed last week that Superior Livestock Auction has sold the nation’s largest livestock video auction. The sale will include Superior Livestock Auction, Superior Stampede, the Internet marketing division and Superior Productions, which produces purebred sales and other special events. Superior was sold to Dwight and Helen Mebane of Woody, CA. The closing is to be completed sometime prior to June 1. It was announced that Richard Stober will become the new general manager for the company. The Mebanes are a third generation ranching family with operations in California and Oregon. They are also partners in a Friona, TX, feedlot and own and operate Western Stockman’s Market in Famoso, CA. Stober has extensive experience in all phases of the livestock industry. He has managed several livestock auction markets and is also an auctioneer. Both Mebane and Stober said that they are excited about the future and are proud of Superior’s accomplishments in the past. Superior and Mebane assure that the transition will be smooth and that no changes in personnel or business practices will occur. Jim Odle, Buddy Jeffers and John McKinley will attend the special summer auctions to assist the new owners in the transition.

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Thursday, December 20,2007

More federal land access proposed

by WLJ
for. April 11, 2005 Many producers are seeking access to federal land when burdened by drought or lack of private land for expansion. Other producers feel their state property taxes are too high. Congressman Chris Cannon, R-UT, addressed both of these issues by introducing H.R. 1370, the Federal Lands Asset Inventory Reform Act (FLAIR). FLAIR would require the Secretary of Interior to perform a comprehensive inventory of all federal land assets. Cannon believes this will assist with better federal land management and also identify surplus, unneeded or vacant properties that the government would no longer have any interest or reason to own and transfer this surplus to the state. This type of a national movement is long overdue in Cannon= s opinion, since nearly one-third of the land in U.S., more than 670 million acres, is designated as federal land. Cannon said that the Bureau of Land Management alone has more than three million acres that have been identified as surplus and suitable for disposal. From a tax perspective for the state, Cannon said that this means states that host the government have a severely diminished tax base and cannot fully meet the demands of the federal government to fund law enforcement, environmental compliance, health care and education, as well as other mandates. Cannon did note that the federal government compensates the loss of tax revenue through the Payment in Lieu of Taxes program (PILT), but he said Congress has consistently failed to fully fund the program. For example, this year= s PILT funding request of $200 million is $26 million less than last year and is $150 million short of full funding. Last year was the highest ever funding for PILT, and the program was still over $100 million short, according to Cannon= s estimates. A The result is taxpayers pay more in local property taxes to make up the shortfall,@ said Cannon. If the FLAIR Act is approved by both the House and the Senate, then states would be able to disperse taxes across a broader land base, thus reducing property taxes. President George W. Bush= s 2006 budget contains a proposal that is in line with Cannon= s agenda. The proposal asks for a review of federal lands in the District of Columbia to determine if they would have more value if owned by the District. A I applaud the president for initiating an inventory of surplus federal land to be taken over by the District or the private sector,@ said Cannon. A Especially in the private sector, such real estate can produce jobs and generate tax revenues for the District.@ Cannon illustrated his theory of lost revenues using D.C. as an example. He said, in the District, where 26.3 percent of the total acreage is owned by the federal government, an estimated $400 million to $1.1 billion a year is lost in tax revenue to federal ownership of these lands. And, Cannon said, D.C. is a small problem compared to the western states. In Cannon= s home state of Utah, federal ownership runs approximately 66.5 percent. Utah and eleven other western states rank above D.C. in percentage of federal land ownership. Cannon noted that Nevada is 90 percent federally owned, while California is approximately 50 percent federally owned and nearly two-thirds of New Mexico and Arizona are owned by the federal government. Cannon is chairman of the Congressional Western Caucus. The Congressional Western Caucus is a bicameral organization of nearly 60 members of Congress from the West who want to sustain a vibrant Western economy for present and future generations. From a management viewpoint, the congressional supporters also hope the FLAIR Act will help the federal government gauge its land holdings. A The federal government really does not have an accurate assessment of what it owns, so it is tough to believe that the government can effectively manage the land if they don= t know where they are at or what they are being used for,@ said Cody Stewart, executive director of the Congressional Western Caucus. Cannon agreed, saying that the fire hazard has gotten out of control due to lack of management and that federal grazing lands are in terrible shape, as compared to privately owned lands. Cannon also said, A The president should ensure that the federal land inventory he ordered last year is completed and that ownership of surplus and under-utilized land is transferred to the states. This will bolster Western economies by giving them more tax revenue and job-creation opportunities.@ In the meantime, Cannon is asking that the president support a fully funded PILT program, so that rural communities can begin to support the services for which they rely on these payments. To complement this legislation, Stewart said the Western Caucus is also supporting a bill that would set up a mechanism whereby the government would attempt to acquire additional lands in a state that has more than 25 percent in federal ownership and a bill, which is yet to be introduced, that deals with the impacts that federal land has on education. Stewart encouraged producers to contact their congressmen and express support for these pieces of legislation. C Sarah L. Swenson, WLJ Associate Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Thursday, December 20,2007

Fed cattle market remains strong

by WLJ
Cash fed cattle trade was moderate in the northern Plains by mid-day last Thursday and light in the south Plains ahead of an expected severe winter storm. Compared to the previous week, dressed sales in Nebraska and Colorado traded steady at $160 with a few as high as $161. Live sales were mostly steady to $1 lower with the prior week at $99-100. Prices last week were well above year ago levels despite the slight dip with live and dressed cattle prices approximately 20 percent higher than a year ago. In the southern Plains, prices were mostly $1 lower at $99, despite a strong surge in the boxed beef market last week. A slip in the Chicago Mercantile Exchange (CME) futures market may have contributed to some feedlots accepting lower prices despite expectations of higher cash trade this week. When the cash market moved lower, so did the contract trade. CME live cattle issues fell 257 on the spot month to close last Thursday at $97.35. June lost 215 points and August lost 220 points, closing at $92.47 and $90.70 respectively. Despite the slip in cattle cash and futures prices last week, prices for boxed beef moving into the higher demand months of spring continues to make big gains which, in turn, are improving packer margins and fueling hopes for higher cash trade in the weeks ahead.  Prices for Choice beef surged nearly $5 last Wednesday to $171.96, while the Select product gained $2.43 to trade at $159.23. The following day, both Choice and Select product continued to gain, moving up nearly 50 cents each during morning trading to $172.44 and $159.64 respectively, light demand and offerings. Packers were in the black last week as a result of those gains in the beef trade. HedgersEdge.com estimated a positive return of $39.80 per head for packers last Thursday. Those gains helped packers ramp up harvest levels over the prior week’s levels. For the week through last Thursday, packers had harvested 475,000 head, 2,000 more than the prior week and 31,000 more than the same week a year earlier. There are some mixed expectations for the USDA’s cattle on feed report, set to be released April 20. Pre-report estimates from the Livestock Marketing Information Center are for a 2.1 percent drop in the number of cattle on feed as of April 1. Placements are expected to be 4.2 percent ahead of March 2006 and Marketings 4.4 percent below year-ago levels. The numbers, if they come in as expected, will be supportive of near term price increases for the fed cattle market. The placement pattern of last fall, combined with the continued lingering effects of winter weather, is expected to be supportive of beef prices for the next several weeks as consumer demand grows going into the warmer spring months ahead. Already, there is much talk of feedlots pulling cattle forward as they continue the aggressive marketing stance in an effort to take advantage of the currently strong market. Another significant bright spot for the beef trade is the current run-up in cow prices.  Despite a dairy herd buyout and continued higher than normal cow slaughter, the cow beef cutout values remain quite strong. The cow cutout value last Thursday gained $2.90 in the morning trade to reach $113.19, well above last year’s price of $104.61. Meanwhile, the 90 percent lean rose nearly $3 to trade at $139.53 compared to last year’s price of $128.12. The 50 percent trim also continued to trade well at $98.29 in comparison to year earlier levels of $45.03. Those strong retail values have continued to support the cull cow market well past seasonal highs, traditionally reached early in the year. Current cull cow prices should have producers headed to town with any remaining cull cows to take advantage of the current situation. Feeder cattle Feeder cattle continued their upward trend as they sold for higher prices at auction markets across the western region. Again, cattle producers remain optimistic about turning cattle out on grass as we continue into spring, in spite of a spring snowstorm that swept across the western states late last week. Dr. Derrell Peel, extension livestock marketing specialist at Oklahoma State University, says although states like Oklahoma are average for total precipitation, more rain will be required. “At the current time, it appears that conditions are favorable for more summer stocker production and for renewed heifer retention and herd rebuilding,” he said. As of last Wednesday, the CME index was up from $108.02 the previous week, closing at $109.40. Even though the May 2007 corn futures increased again last week to $3.55/bu., it seemed to have minimal effect on the feeder cattle market. Peel says that total planting intentions of various crops is above 5.5 million acres this year. He says that many of those acres are currently in pasture. “It is not clear yet exactly what we are trying to do, let alone what Mother Nature is going to let us do,” he said. He says the livestock markets will be subjected to a lot of uncertainty in the coming months stemming from crop production and weather patterns as well as the day-today marketing concerns which include beef demand and trade. “In general,” said Peel, “cattle prices are fundamentally strong now and likely to remain so, but the potential for market volatility is enormous.” In Billings, MT, feeder steers and heifers were steady to $2 higher. Steers weighing 510 to 570 lbs. sold between $125 and $129.50. The heavier steers weighing between 740 and 790 lbs. were worth $95 to $99. Heifers that averaged 525 lbs. sold for $114 and females weighing 830 lbs. were worth $97. Huron, SD, had over 3,000 head consigned last week. Feeder steers and heifers sold steady to $3 higher when compared to the previous week. Demand was good with many load lots in the offering. Some of the cattle were carrying mud. Several high quality 700 lb. heifers sold as replacements. Steers averaging 591 lbs. called for an average price of $125.39. The steer offerings went well into the 900 lb. range. Nine weight steers were still worth $102.04. Heifers weighing an average of 529 lbs. sold for $117.50. Females of replacement quality weighing 731 lbs. sold for $107. In Riverton, WY, feeder cattle sold mostly steady with instances of $1 to $2 higher. Steers over 600 lbs. were mostly steady to $1 to $3 higher. Feeder heifers of similar weights were steady with instances of $1 to $5 lower on heifers weighing 750 to 800 lbs. Demand was good to moderate. To the east in La Junta, CO, all weights of feeder steers and heifers were mostly steady with quality a determining factor. Yearling feeder steers were steady to $1 higher. Steers averaging 530 lbs. sold for $134.25 and heavier steers weighing 820 lbs. called for $106. Feeder heifers averaging 605 lbs. sold for $107.50. Further east in Creighton, NE, feeder cattle trended 43 to 44 higher. The overall quality of the cattle was good, with strong buyer attendance and demand. Steers averaging 540 lbs. sold for $120.50; those weighing an average of 831 lbs. called for $105.54. Heifers weighing 525 lbs. sold for an average of $112.71 and the heavier females, weighing an average of 820 lbs., were worth $100.88. At the Oklahoma Stockyards, feeder steers were once again $1 to $3 higher. Stocker steers remained steady while feeder and stocker heifers were unevenly steady. Demand for feeder steers was very good and moderate to good for heifers and stockers. Steers averaging 532 lbs. sold for $132.86 and those averaging 832 lbs. were worth $106.49. Five weight heifers were worth $117.75 and the eight weight females called for $95. In Amarillo, TX, feeder steers and heifers were steady to $2 higher. Trade and demand were moderate. Steers weighing 540 to 565 lbs. were worth $125 to $132.50. Their heifermates sold for an average of $114.

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Thursday, December 20,2007

Johanns highlights conservation side of Farm Bill

by WLJ
Agriculture Secretary Mike Johanns last week highlighted the administration’s Farm Bill proposals related to conservation. Johanns pointed out that a key theme throughout the conservation title is simplification and streamlining of programs, while increasing funding for conservation by $7.8 billion over 10 years. “In the area of conservation, we heard during our Farm Bill forums broad acknowledgment of our successes, but also suggestions to make the programs more user-friendly,” said Johanns. “We are proposing to do just that and to bolster our commitment to conservation through the largest increase in funding for any title within our farm bill proposals.” Under current law, there are six cost-share programs, all of which have separate eligibility requirements, sign-up periods, regulations and applications. They include the Environmental Quality Incentives Program (EQIP), the Wildlife Habitat Incentives Program, the Ground and Surface Water Conservation Program, the Agricultural Management Assistance Program, Forest Land Enhancement Program, and the Klamath Basin Program.  The administration proposes consolidating all six into one program under the EQIP umbrella which can address multiple resource issues. This would include a new Regional Water Enhancement Program. Funding for this newly structured program would be increased by 30 percent, or an additional $4.25 billion over 10 years. The Regional Water Enhancement Program would allow producers to use a broad range of conservation tools to address water quantity and/or quality issues on a regional scale. Mandatory funding of $175 million annually would be available to coordinate conservation solutions for working agricultural landscapes, including crop, pasture, grazing and orchard lands. The administration proposal supports re-authorizing the Conservation Reserve Program (CRP) at its current acreage level. CRP would continue to focus on retiring lands that provide the most significant environmental benefits. However, priority would be given to the enrollment of whole fields that qualify to produce perennial biomass crops for cellulosic energy production. Continuous CRP enrollment and the Conservation Reserve Enhancement Program would also continue. The Conservation Security Program (CSP) would be simplified by creating two tiers of conservation achievement, instead of three, by removing base, maintenance, and cost-share payments. CSP would be enhanced to provide incentives for higher levels of conservation practices. Under the proposal, CSP enrollment would expand from 15.5 million acres to an estimated 96.5 million acres over 10 years. CSP would also be offered nationwide on an annual basis, instead of in select watersheds. Funding for the program would increase $500 million over 10 years, which would take the program to $8.5 billion during FY 2008-2017. The three existing easement programs for working lands—the Farm and Ranchland Protection Program, the Healthy Forest Reserve Program, and the Grasslands Reserve Program—would become one new Private Lands Protection Program with a shared goal of protecting farmland and open space. Funding would be increased by $900 million over 10 years. Conservation compliance provisions would be broadened to discourage the conversion of grassland to crop production. Between 1982 and 2002 acreage in non-federal grasslands fell by 24 million acres. A ‘Sod Saver’ provision would help retain private grass and rangelands by making its conversion to crop land ineligible for farm price and income support. The Wetlands Reserve Program (WRP) would be enhanced and expanded. The enrollment cap would expand from 2.3 million acres to 3.5 million acres with an annual goal of enrolling 250,000 acres. The easement function of the Emergency Watershed Program and the WRP would be combined into one WRP. Mandatory funding of more than $2 billion would be added to the program. Likewise, the Emergency Watershed Protection Program and the Emergency Conservation Program would become one new Emergency Landscape Restoration Program. This would create a one-stop source for landowners and communities in need of emergency conservation assistance following a catastrophic event. To encourage participation in conservation programs by beginning and socially disadvantaged farmers and ranchers, the administration proposes designating 10 percent of conservation financial assistance to these groups. This will enable beginning and socially disadvantaged producers, who typically farm smaller acreage, to more effectively compete for conservation dollars. Lastly, to spur the development of ecosystem service markets that would establish a value for agriculture and forestry conservation practices, the administration would invest $50 million. These funds would be used to develop uniform standards for quantifying environmental services, to establish credit registries, and to offer credit audit and certification services. Ultimately, producers could earn credits for conservation efforts which, in turn, could be sold to achieve environmental goals such as sequestering carbon, protecting endangered species, and other measures that enhance the nation’s environment.

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Thursday, December 20,2007

BEEF talk

by Kris Ringwall, North Dakota State University
Life does not come easy Perhaps the absence of sunlight may be dragging the day down. However, the knowledge that this will pass and brighter days are ahead certainly should reinforce the positive. Tramping through snow (dearly needed moisture), while attempting to get an assessment of the current calving scenario, is never easy. There are times when reports of twins and triplets certainly boost the available calf numbers, but the loss of any calf is always significant. The greatest impact is standing over a lifeless calf wondering what else could have been done. This business we call the cow business and our struggles to come out to the good, despite all that Mother Nature can throw at us, can weigh heavily on our shoulders. Some of the more dramatic scenes in many of the popular medical shows on TV capitalize on our human emotion as the scene goes to the ultimate degree to keep life going. The gallery, not only those watching, but all who are present in the scene, add to the impact of the lost hope, agony and ultimate defeat, as the doctor looks at the clock and says, “Let’s call it.” For those out saving calves, the audience is pretty sparse unless one counts the snowflakes. If one is lucky, the ranch cat or dog is not far away. However, more than likely, it’s just you, the cow and the dead calf. The cow, even though she soon will be ready to take on an orphan calf, ponders what is wrong with the lifeless calf as this not so welcome human intercedes. Life must go on, but that does not make the job easy. The masses, all those pending consumers, never get the point that somewhere, sometime, someone brought a life into this world that ultimately provides our tomorrow. A great moment, but not all the moments are great. If one is not careful, the whistle in one’s voice that is so prevalent when the first calves hit the ground is long gone. The smell of soiled coveralls, the feel of perpetual dampness and the ultimate stickiness of things best never served on a plate tend to grind on even the most optimistic producer. One certainly does wonder just what is good and what is bad. If we turn to some typical commercial herds that are involved with Cow Herd Appraisal Performance Software and the North Dakota Beef Cattle Improvement Association, the percentage of calves that die, based on the number of full-term calves born, is 3.35 percent. In other words, for every 10,000 calves, 335 die. One could say that is acceptable, if one accepts that death is inevitable, at least at some time. If one looks back on the last five years, the percentage of calves that died prior to weaning was 3.80 percent in 2001, 3.48 percent in 2002, 3.57 percent in 2003, 3.04 percent in 2004 and 2.85 percent in 2005. Granted, most of these calves died during calving and that is, what it is. The bottom line, one can’t despair, but nevertheless, for every 10,000 calves born, there are 335 returning to Mother Nature sooner than we would like. The 10,000 calves would be a couple of good sale days at a typical livestock auction in the fall. As the trucks line up to haul the calves off, it would take, given a typical weight of 562 pounds around weaning time, 112 trucks loading around 50,000 pounds of calf to haul the calves to their next destination. As for the 335 dead calves, four trucks would remain empty. Chin up, the calves that make it will have a good start on fresh grass. Life does not come easy.

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Thursday, December 20,2007

Ethanol plant emission rules relaxed

by WLJ
The Environmental Protection Agency (EPA) took a major step to stimulate ethanol production by issuing a rule last week allowing ethanol plants to operate with fewer environmental rules and less air pollution equipment. The agency rejected pleas by clean-air advocates and increased the amount of nitrogen oxide, sulfur dioxide and other pollutants that will be allowed before an ethanol plant is considered a “major air emitter,” a category that requires more stringent regulation. The change will increase the threshold for installing the best air pollution control equipment from 100 tons of pollution annually to 250 tons. It will also allow ethanol plants to avoid counting emissions from vents and other minor plant sources when tabulating those thresholds. The new rule would not apply in urban areas already dealing with air quality problems. EPA spokeswoman Jennifer Wood said the rule was designed to make sure that all forms of ethanol production and the distillation of alcohol for human consumption “are treated equally under the Clean Air Act.” Up to now, most ethanol plants have been treated like chemical manufacturers for purposes of air pollution regulation. The ethanol industry and its backers in Congress pushed hard for the new rule and the White House, a staunch supporter of biofuels, helped make the case for the change. National Corn Growers Association said the rule is beneficial to his members and a reflection of a trend toward larger plants. Many local and state air-pollution officials opposed the change. They said the new rule will make their tasks more difficult in controlling pollution both from new ethanol plants and current plants that will be able to expand without installing pollution-control equipment. Missouri Gov. Matt Blunt was one of two governors who formally endorsed the rule change in a letter to the EPA. The second was South Dakota Gov. Mike Rounds.

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Thursday, December 20,2007

Fed trade steady to $1 lower

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

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