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Monday, May 2,2005

Beef Bits

by WLJ
McDonald’s reports a 42% profit McDonald’s Corp., the world’s largest fast-food chain, reported that better sales in Europe and continued momentum in the U.S. lifted first-quarter profits 42 percent. Net income for the January-through-March quarter was $727.9 million, or 56 cents per share, compared with $511.5 million, 40 cents per share, a year earlier. Results included a gain of $179 million, or 13 cents per share, due to a decreased tax rate and a charge of three cents per share because of a shift from share-based compensation to mostly cash-based. Revenues at the Oak Brook, IL-based company were $4.8 billion, up nine percent from $4.4 billion in the first quarter of 2004. Drop in Japan sales BSE related Sales at restaurants and coffee shops in Japan in fiscal 2004 through March 31 fell 2.4 percent from the previous year on a same-store basis, the Japan Food Service Association told Kyodo. The association attributed the fall to a sharp drop in the number of customers at Japanese fast-food restaurants serving “gyudon” beef-on-rice bowls, and “yakiniku” grilled beef restaurants that have been affected by Japans import ban on U.S. beef after the discovery of BSE in the U.S. But on an all-store basis, sales increased 1.6 percent with a rise in the amount spent per customer, more than offsetting a dip in the number of customers. Outback CFO quits; Q1 income up Bob Merritt, who joined Outback Steakhouse Inc. as chief financial officer in 1990, announced his retirement, effective May 27, citing recent accounting regulations that unduly burden corporate accounting and finance departments. On a more positive note, Outback reported first-quarter net income of $51 million, up from $47.8 million in the same period last year. The restaurant chain's total revenue for the first quarter jumped 12.8 percent to $895.1 million in the first quarter. Rancher’s Choice targets fall open The president of producer cooperative Rancher's Choice Beef said last week he hopes to have a packing facility up and running in Dauphin, Manitoba, by late fall. About 300 producers turned out at a Rancher's Choice annual meeting last Monday to find out when the plant will start slaughtering cattle. The group has raised close to the $16 million needed to build the slaughter facility, and about 20,000 cows have been committed to the plant, according to Rancher’s Choice president David Reykdal. Despite lobbying efforts, the Canadian government has not contributed any cash to the slaughter plant. However, a representative for the federal government at the meeting hinted some money could be on the way. Ruth’s Chris plans IPO Ruth's Chris Steak House Inc., based out of Metairie, LA, plans an initial public offering according to a filing with the U.S. Securities and Exchange Commission. At the end of December there were 86 Ruth's Chris restaurants, including 10 outside the United States. Thirty-nine restaurants were company-owned while 47 were franchisee-owned. For fiscal 2004, the restaurant chain brought in $192.2 million in revenue and had operating income of $23.3 million, compared with revenue of $167.8 million and operating income of $15.5 million in the previous year. The company said it does not intend to pay dividends on its common stock. Nebraska Beef to hold union elections The National Labor Relations Board has ordered Nebraska Beef, Omaha, NE, to hold a new election to decide if its workers want union representation. The United Food and Commercial Workers Union had challenged an election held in 2001, charging that management intimidated workers that voted down union representation by a wide margin. After a series of hearings, NLRB agreed with the union and ordered that new elections be held this spring. No specific date for the elections has been set. CKE Restaurants profitable According to CKE Restaurants Inc., which owns Carl’s Jr. and Hardees, company-wide fourth quarter net income rose to $7.1 million, a $58.8 million increase over the prior year’s net loss of $51.7 million. Hardees and Carl’s Jr. same-store sales increased 4.4 percent and 4.9 percent, respectively, for the fourth quarter. For the entire fiscal year 2004, net income grew to $18 million, an increase of $71.2 million over the prior year. Same-store sales increased 7.7 percent and 7.0 percent at company-operated Carl's Jr. and Hardee's restaurants, respectively, for the year. CKE has a total of 3,166 franchised or company-owned restaurants in 44 states and in 11 countries, including 1,014 Carl's Jr. restaurants and 2,034 Hardee's restaurants. © 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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Monday, May 2,2005

Feds slump on futures turnaround

by WLJ
— Questions arise on marketings data. — Feeders, stockers still rallying. After showing signs of getting ready to eclipse $95 live, $152 dressed early in the week, last week’s cash fed cattle market wound up with only moderate trade happening through Thursday at prices barely steady to $1 softer, compared to the previous week. Approximately 50,000 head traded in Nebraska on Wednesday at mostly $149 dressed, $92.50, compared to mostly $149-150, $93 the previous week In southern feeding areas, trade was nonexistent with packers still bidding only $90-91, compared to producers’ asking prices of at least $96. Analysts with the Texas Cattle Feeders Association said they thought that $94 would probably get cattle traded for the week. Market analysts said last week’s cash market turnaround was indicative of how much influence the futures market has over the cash cattle market. After hitting a contract high of $94.05 on Monday, the April contract was back down to $92.45 at the close of business Wednesday. Thursday saw the April contract remain mostly steady with Wednesday’s settle price. Sources at the Chicago Mercantile Exchange (CME) told WLJ last Thursday that the turnaround in the April contract was almost solely related to packers not increasing their bids to levels at least steady with the majority of the previous week’s trade. Those same sources said packers ignored USDA’s April 1 Cattle-on-Feed Report, and that there might be more captive supply cattle ready for immediate processing. In addition, Andy Gottschalk, analyst with HedgersEdge.com, said he was very skeptical of how accurate USDA’s March marketings figure was, and there was probably more near-term slaughter-ready cattle available than the on-feed report indicated. “There is absolutely no correlation between USDA’s (marketing) numbers and the actual slaughter volume for March,” Gottschalk said. “Slaughter data is an actual known head count, as where marketings are derived from a survey. Those surveys could be less than entirely accurate.” Packer demand for live cattle might start to wane over the next week or two as slaughter volumes started to show a decline last week. Between last Monday and Thursday, 471,000 head of cattle were processed by packers, 5,000 head below the week prior and 36,000 fewer than the same week last year. For the week ending April 23, 600,000 head of cattle were processed, 14,000 head more than the week previous. In addition, market analysts said that was about 25,000 head more than the minimum number of cattle needed to meet current beef demand. Slaughter weights also continued to be much larger than a year ago, meaning fewer cattle are needed to produce a similar amount of product. For the week ending April 23, the average slaughter weight was 1,227 pounds, compared to 1,192 the same week last year. The average carcass weight was 748 pounds, compared to 726 in 2004. Other indicators appeared to be positive for the cash market. However, the futures movement on Wednesday trumped those other factors. Last week’s boxed beef market was very bullish, with both prices and volumes being called “very impressive” by market analysts. Through midday Thursday, Choice beef had gained $4.45 for the week, while Select had increased $4.56. Movement was called well above average with Monday being the only day during the first four days of last week where under 350 loads were moved. Retailers were starting to purchase beef supplies for the projected demand increase normally associated with Mother’s Day, which is May 8 this year. Eastern retailers are also still banking on unseasonably large spring beef demand due to consumers being “cooped up” at home for a longer- and “stormier-than-normal” winter weather season. Calves, yearlings stronger Despite most cattle feeders being disappointed in last week’s fed market developments, most sellers were still reporting $35-60 per head profits. That helped strengthen feeder markets another $1-2 last week. In addition, extremely wet weather permeated most central and northern cattle grazing regions and that spurred stocker operator interest in weaned calves, especially heifers. Seven-weight and lighter steers were up mostly $2-5 higher, compared to several weeks previous, while some $8-10 gains were reported on heifers. The one area that is still being reported as dry and in need of some moisture is the Southwest. Several auction barn reports from Texas and Oklahoma reported stocker cattle being mostly steady to $2 higher. In addition, volumes of cattle offered in those areas are being called 15-20 percent larger than a year ago. After starting out slightly stronger on Monday, last week’s nearby corn futures lost 10-12 cents over the next few days. May corn went below $2.04 Thursday. That news helped spur interest from cattle feeders in heavier calves, analysts said. In addition, while there was uncertainty surrounding USDA’s March feedlot marketings number, there was more credence put in the drop-in feedlot placements over the same month. “Placement figures for last month showed that feedlots may need to stock up on more cattle that will be ready for market come this fall, particularly starting in October,” said Reed Marquotte, M&Z Livestock Analytics. The CME feeder cattle index, for 700- to 850-pound steers, was at $111.78 last Wednesday, up approximately $1 from the previous Wednesday. — WLJ © 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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Monday, May 2,2005

Forced sales of livestock have tax implications

by WLJ
Dry weather conditions in parts of the U.S. over the past several years and continuing this year have caused forced liquidation of breeding livestock and early sales of market livestock. Livestock producers who have been forced to sell livestock or are considering selling because of abnormally dry conditions may receive special consideration for federal income tax reporting purposes, says Tim Petry, North Dakota State University Extension Service livestock marketing economist. "Furthermore, a number of tax law changes important to livestock producers became effective through the American Jobs Creation Act (HR 4520) in October 2004," Petry says. Income tax reporting for forced sales of livestock because of drought or other weather-related conditions may be handled in two different ways, according to Internal Revenue Service guidelines. The first provision applies to all types of livestock and allows postponement for reporting income from forced sales for a year. "For example, the normal business practice for a cattle producer may be to background calves after fall weaning and market them the next February," Petry says. "If, due to drought conditions and lack of feed supplies, the calves are marketed at weaning in October, the income may be postponed until the next year. Only sales in excess of normal qualify for the deferral." The drought must have caused an area to be designated as eligible for assistance by the federal government. However, the livestock does not have to be raised or sold in the exact designated area, such as a particular county, but only in close proximity. The other IRS provision applies to the forced sale of draft, breeding and dairy animals, but excludes poultry. If these animals are sold due to a drought, the sale may be treated as an involuntary conversion. "Producers can choose to postpone reporting the capital gain from forced sales as long as similar animals are repurchased in the future," Petry says. "For example, a sheep producer normally markets 25 cull ewes a year, but in a drought year is forced to sell 50 head. Only the additional 25 head that will be replaced later are eligible for the involuntary conversion." Two important provisions were included in the 2004 revised tax law. First, the replacement period has been extended from two to four years and is retroactive back to the 2002 tax year. Second, if it is "not practical" for the producer to reinvest in the same class of livestock, other property (except real property) used for farming or ranching qualifies as replacement property. "The IRS tax code is complex, so livestock producers considering marketing livestock at abnormal times due to dry conditions should consult with their tax adviser," Petry says. "Other tax management tools such as income averaging also should be considered." — WLJ © 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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Monday, April 25,2005

Beef Bits

by WLJ
Lone Star’s first quarter mixed Lone Star Steakhouse & Saloon Inc’s first quarter net income fell less than one percent as sales increased nearly three percent. In a press release April 18, the Wichita-based restaurant chain said net income for the quarter fell to $10.9 million, or 49 cents a share, from $11 million, or 46 cents a share, a year earlier. Sales rose to about $165.4 million form $160.6 million a year ago. Restaurant costs and expenses rose to about $136.9 million from almost $133.6 million a year earlier. Argentina exports jump Argentina exported 130,904 metric tons of beef during the first quarter of 2005, Senasa, reported last week. Exports are up 40 percent from 93,324 tons during the same period a year ago. First-quarter sales totaled $276 million, up 35 percent from $203 million a year ago. More countries have opened their doors to Argentine beef after previously closing them because of concern about hoof-and-mouth disease (HMD). Argentina has not has an outbreak of the disease since September 2003. Argentina sold 14,098 tons of processed beef for a total of $36 million. The main buyer of processed beef was the U.S., accounting for 6,933 tons or $17.7 million. The U.S. has kept a ban on fresh Argentine beef since early 2001, when Argentina had a widespread outbreak of HMD. The Foreign Agricultural Service of the USDA has forecast Argentina's 2005 exports at 700,000 tons. Cargill to buy processor Cargill Limited and Better Beef Limited recently announced that the two companies have reached an agreement for Cargill to purchase beef processing and related assets operated by Better Beef Limited, headquartered in Guelph, Ontario. “This combination has broad benefits and is a natural fit," said Bennie deJonge, founder and president of Better Beef Limited. Two overcome by manure fumes Two farmers were reported in critical condition after apparently being overcome by manure gases over the weekend. Dwight Johnson, 52, of Andover, IA, was found on his cattle farm April 16 in an underground manure tank that had four inches of liquefied waste inside. A farmhand, Justin Faur, 23, of Clinton, called 911 for help and then followed him inside the tank in an apparent rescue attempt, Clinton County Sheriff’s deputies said. Both were listed in critical condition at University Hospitals in Iowa City. Stewart Melvin, an engineering consultant and former farm safety engineer at Iowa State University Extension Service, said a buildup of hydrogen sulfide in manure can overcome people who climb down or fall inside the tank. Canadians prepare for Korea trade Canada Farm Direct has lined up a preliminary deal for 400 metric tons of beef per week to South Korea once the country allows imports of Canadian beef to resume. The company said all indications point to a resumption of trade in the near future. The signing of the formal contract between Canada Farm Direct and the Asian company is expected in June. Canada Farm Direct has also yet to buy beef processing facilities in western Canada. Japanese consumption growing Japanese beef consumption rose five percent during February, to 61,814 metric tons, according to Meat and Livestock Australia. The increase in beef consumption in Japan was said to be largely a result of a 15 percent increase in imported beef consumption. While 35,413 metric tons of imported beef was consumed during February, domestic Japanese beef consumption fell six percent to 26,401 tons. The decline in demand for domestic beef was attributed to the increased supply of imported beef on the market, which pushed imported beef prices down. Overall, Japanese beef consumption is still significantly lower since the ban on U.S. beef in 2003. Arby's adds new beef sandwich Arby's has added two deli-style sandwiches to its Market Fresh line, including a corned beef Reuben. The company has credited its Market Fresh line of sandwiches, wraps and salads, introduced in May 2001, with boosting its overall sales performance. New Zealand exports slide New Zealand’s beef exports for the first quarter of 2005 totaled 110,000 metric tons, down 14 percent. While New Zealand’s beef exports to Japan and Korea were at record levels—up 13 and 15 percent, respectively—shipments to the U.S. dropped 24 percent, the third lowest level since 1989. The decline in exports was largely the result of uncertainty surrounding the reopening of the Canadian/U.S. border, combined with the limited availability of female cattle, wet weather and an early Easter. © 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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Monday, April 25,2005

Letter

by WLJ
Science scrutinized Dear Editor: The Canadian border debate is not helped by resorting to epithets and name calling. Swift’s CEO John Simons’ letter of April 11 labels those who oppose reopening the border as “a group of protectionist, anti-free trade ranchers…a group of fringe ranchers” who are rife with “hypocrisy” and out to “line their own pockets.” This is neither debate nor discussion. Science does not agree on most issues, and we accordingly should always be wary of those who seek to cloak themselves in the sacred robes of “science,” as much in the Canadian debate as well as in questions such as global warming. The fact is that “science” is rarely of one accord and does not have an anointed spokesman. Mr. Simons’ “science” does have one gaping hole. His central contention is that there “is no scientific evidence that cattle under 30 months show evidence of BSE” and that cattle under 30 months are “younger than the scientifically proven onset of BSE....” The fact is there have been 20 confirmed BSE cases globally in cattle under 30 months of age. If Mr. Simons means that one who seeks to “line their own pockets” is seeking to be profitable, then I plead guilty as a cow/calf producer to such conduct, just as much as Mr. Simons seeks to maintain his company in a position of profitability. We can disagree over trade issues, science and the meaning and value of “free trade.” Name calling and labels, however, do not further the discussion. That our interests may be inimical does not mean that we cannot carry on discourse, debate and dialogue with a degree of comity. Sincerely, H. Jay Platt St. Johns, AZ © 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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Monday, April 25,2005

Spring beef prices rally feds $2-3

by WLJ
— Taiwan purchases taking effect. — Fear of late spring front-end problems. Stronger boxed beef prices, packer profits, a projected jump in spring beef demand and a $1.50-2 rally in nearby live cattle futures helped spike cash fed cattle prices mostly $2 last week compared to the week previous. Northern tier trade revved up Wednesday with approximately 45,000 head trading in Nebraska at mostly $93-93.50 live, $150 dressed. Southern trade broke loose the next day with producers selling most of their cattle around $94 live, out of a range of $93-95.50. Kansas and Texas trade was expected to total 40-45,000 each by the end of the week. The most visible bullish market indicator last week was the $3 jump in boxed beef prices last Monday through Thursday. Choice boxed beef was at $158.36 per cwt as of noon Thursday, while Select was up almost $142. Volumes were also called very good last week as cash traded volume was only under 300 loads one day over the first four days of last week, and that was Monday with 298 loads of all type of product being shipped. “Product is starting to be procured for Mother’s Day and in the eastern third of the country the amount of disposable income available for food during the spring is 10-15 percent more than history would show,” said a Midwestern meat broker. “Between the very inclement weather this winter and gas prices deterring any travel plans the past few months, money has been set aside for spring activities, of which picnicking and grilling are popular and could be even more so this year.” In addition, news last week that Taiwan started allowing U.S. beef back across its borders helped spark boxed beef movement from processors to exporters. Taiwan is allowing boneless beef from cattle 30 months and younger that were processed after April 16. Reports indicated that the first air shipments of U.S. beef would leave for Taiwan late last week. Before Taiwan’s ban because of BSE being confirmed in one cow in Washington state on Dec. 23, 2003, the Pacific Rim country was the sixth largest export destination for U.S. beef. Packers were starting to show positive margins again, with last Wednesday’s range being between $10-15 per head, and additional gains expected through the end of the week. Several sources thought packer profits late last week might get up to $25 per head. Processing volumes last week were stronger than the previous few weeks and was resulting in packers needing to come to the table for cattle that might be needed for slaughter spots the following Monday or Tuesday, analysts said. Packers slaughtered 475,000 head of cattle last Monday through Thursday, up 13,000 from the same period the week previous. Analysts were projecting a 600,000 head slaughter week, which would be the first time in several months. Average slaughter weights were still up 25-30 pounds compared to last year at this same time. However, analysts said the rate of decline in both live slaughter and carcass weights over the past several weeks have packers anticipating a need for more cattle down the road, particularly with Taiwan reopening to U.S. beef and the northern border remaining closed to Canadian cattle. For the week ending April 15, the average slaughter weight was 1,232 pounds, compared to just over 1,260 pounds during the first week of March. Carcass weights were down to 751 pounds as of April 15, compared to 765 pounds in early March. Live cattle futures helped rally the cash market a little bit early in the week, as the nearby April contract gained $1.50 from the end of the previous week to last Wednesday. The April contract got up to over $91.50, after closing the previous week at $89.80. “Futures traders are thinking a downturn in the market is inevitable, it’s just a matter of when,” said one source with the Chicago Mercantile Exchange (CME). “As soon as the cash market happened, the bears took back over here.” Calves, yearlings mixed Auction barns across the country were starting to report mostly steady prices being paid for calves and lighter weight stocker cattle, $2-3 gains for 600-800 pound feeder cattle and steady to $1 softer prices on heavier feedlot placements. While pasture conditions are still considered better than normal for most areas of the southern half of the U.S., Southwest and southern Plains auction barns said they are starting to see a need for more moisture to help extend grazing seasons longer than normal. As a result, stocker operator demand for calves and other light weight cattle has subsided. Feedlot demand for six- to eight-weight steers was called very active, as those cattle are projected to be ready for market after the normal summer lull in the fed market passes. Heavier feedlot-replacement cattle were struggling last week on the forecast that this summer will show a normal seasonal lull in the fed market, and that additional beef trade with the Pacific Rim—particularly Japan and South Korea—continues to look unlikely before the fourth quarter of the year. The supply of heavier feedlot placement cattle is projected to jump a little more than the past few years because of more wheat graze-out cattle forecasted through the end of April and the first two weeks of May, Southwest extension specialists said. According to Brent Snyder, market analyst with the Texas Cattle Feeders Association, the margins of cattle feeders selling fed cattle last week were varied with some producers reporting slight profits and others still reporting losses. “It’s very much a hit or miss on whose making a profit or still reporting losses on these cattle,” Snyder said. “A lot of these cattle were on feed longer because of the wet winter and some of the other expenses that fluctuated higher.” Of particular concern from an expense standpoint was the spike in fuel costs associated with transportation, power and feed processing. The CME feeder index, for 700-850 pound steers, was $101.90 last Wednesday, about 60 cents higher than the same day the previous week.

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Monday, April 25,2005

Western Wanderings: Remembering Bill Tackett

by Jerry York - WLJ Field Representative
Recently the Livestock Marketing Association announced that during this year's World Championship Livestock Auctioneer Contest it would present a Rookie of the Year Award in the name and memory of Bill Tackett. Bill Tackett was a friend of mine, and he was a great auctioneer. Bill passed on in September 2001. I first met Bill in 1974, when I made my first trip to Ruidoso, NM, for the All American Futurity and Sale with Mack Jones. Following that, I had the pleasure of working in front of him at future Ruidoso sales and at the Keeneland Thoroughbred sales in Kentucky. Bill was as smooth as silk, and his chant was as easy to listen to as it was for him to do. It seemed as though all he had to do was sit down and open his mouth, and it just rolled out. Bill was born in Arkansas and lived most of his life in Oklahoma. He started selling when he was 17 years old and as a young man he sold seven sales a week including Exeter, Lamar, Springdale, Hominy and Coffeyville as well as others. As he gained experience, the horse world took notice and he became a highly sought after auctioneer for such prestigious sales as Ruidoso, Keeneland, and Heritage Place, selling Quarter Horses and Thoroughbreds. Bill loved to sell, and, even with the schedule he kept, he found time to work small local sales, selling everything from purebred cattle to jars of honey brought to the sales yard by the weigh man. A rancher friend of Bill's was on the seats one day and declared in a loud voice, "Well, I saw him selling million dollar horses in Kentucky last week and a jar of honey at Pryor auction this week." That was Bill. He loved selling, and he was so good at it. A friend of Bill's, Smokey Hand, wrote a poem about Bill and the last few lines are "Whos the World Champ...We'll never know, 'cause he didn't have time to go. From the Queen of England to Johnny Brackett, The Gentleman's Name? Mr. Bill Tackett." I have no doubt that if Bill had ever taken the time to enter the World Champion Livestock Auctioneer contest, he would have won it hands down. So the word is out. Whoever wins the first Bill Tackett Memorial Rookie of the Year Award, you have some big boots to fill and a sterling reputation to uphold. Wander, wander: Recently I wandered down to Reno to help with the IL Ranch Horse Dispersal and had a great time. The horses from this famous ranch were sold under the management of two Idaho horsemen, Terry Russell and Jeff Peck. There were over 100 head of horses in the sale and the majority of them were ridden through the sales ring. This took a number of good cowboys to accomplish and, as you can imagine, there was some excitement as all of this took place. With that many ranch horses there is bound to be a few that just have to express their individuality. The morning of the sale was a nervous time for all of us involved in the sale, as a spring snow storm clogged the interstate the day and night before, and on the morning of the sale a bad accident closed the highway and traffic was being rerouted. We started a little late to accommodate those stuck in that mess, but when we started auctioneer Rick Machado rolled through the horses in front of a large crowd in good time. When the last horse went through the ring, there was a loud sound of relief and the sale averaged an impressive $2,519 on 121 head of horses. Congratulations to Terry and Jeff on a great job of getting the horses ready and making it all happen and to all of the proud new owners of "an IL horse". More wandering: Following a successful cow sale for Dwight Mebane, Western Stockman's Market, Famoso, CA, Rick Machado, Jimmy Settle and I stopped by Jeff Oswood's Stallion Station in Porterville, CA. Jeff was gracious as always and spent some time with us showing us the stallions he is standing and some of the mares in his care. Oswood will breed some 400 mares this year for his clients and has earned a reputation for getting an extremely high percentage of the mares settled. That evening I was invited to a pre-Western Video Market sale at the home of Richard and Nancy Stober, just outside of Madera, CA. It was a class party, and anyone that knows the Stobers would know what I mean. The guest list was like a Who’s Who in the livestock industry, and everyone lucky enough to attend had a great time. I have known Richard for a long time, and first got acquainted with him in the late seventies when he came back to Denver to manage the Denver Livestock Market. Richard is a familiar figure at all of the livestock events on the West Coast and has been involved in every aspect of the cattle business as well as wielding a pretty mean auctioneer's gavel. Thanks Richard and Nancy for your wonderful hospitality. Until next time, I'm going to keep wandering the west where you will meet only the best.

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Monday, April 18,2005

All markets move higher

by WLJ
Fed cattle trade was stronger last week on very light trade volume. Northern Plains feeders started trading Wednesday afternoon establishing the live market at $149 dressed while Southern Plains feeders were holding the line at $92, which is where most live trade occurred. The fed markets were generally $2.00 higher over the bulk of the prior week’s trade. Only 66,000 head traded on the national scene as of Thursday afternoon. Meat traders are having a difficult time trying to figure the market out and have adopted a hand-to-mouth buying pattern. There was some light featuring at the major grocery stores last week, and some retailers are only featuring beef as a “percent off” the regular price rather than a fixed price because of the erratic meat markets. Retailers can offer better features with poultry and pork products rather than beef. Slaughter volume has been marginal with only 582,000 head passing through packing plants during the week ending April 5. The industry should start to see slaughter volume grow, but that will be difficult because finished cattle just aren’t there. Last week daily slaughter was slightly softer with 462,000 being processed through Thursday 8,000 head below the pace the week before. The latest packer margin index showed packers earning $7.00 per head on an average buy of $90.48 and an average production cost of $91.07 Perhaps the most interesting development in the market is the Choice-Select spread, which is at $16.64. It’s normal to see the spread widen at this time of year, but it has happened very quickly and is wider than normal. The cutout would also suggest that Choice product isn’t getting any greater value, but Select is being discounted more. The latest choice cutout was at $155.51. And Select was at $138.87. These meat markets have a softer tone to them as boxed beef movement is moderate and erratic. The cow beef cutout was at $116.47 down several dollars from a couple weeks ago. And the 90 percent lean product was also down $10.00 from a couple of weeks ago. With lighter cattle and fewer Choice cattle, there is much less fat on the market; 50-50 trim has gone ballistic and is trading at $92.03 where a normal trade range would be in the $40s. Jim Rob at the Livestock Market Information Center (LMIC) said that a more normal pattern of imports is resuming on the lean beef, which has put pressure on the component used for hamburger production. We may have seen the slaughter cow and bull market top out last week, when some $70 slaughter cows were reported. Carcass weights were starting to make their seasonal down trend. The LMIC reported that from January through early April, Federally Inspected (FI) cattle dressed weights averaged nearly 15 pounds above a year ago. Some of the year-to-year increase in average cattle weights has been due to heavier cow weights coupled with relatively small cow slaughter. Slaughter steer and heifer weights also have been above a year ago. But, so far this year cattle weights have been rather normal from a seasonal perspective. By late March, FI steer dressed weights averaged 806 pounds compared to 796 pounds last year, a yearly increase of 10 pounds. For the same period, averaged dressed weights for steers were only 3 pounds heavier than the prior five-year average weight of 803 pounds. On a weekly basis, steer weights have seasonally declined most every week this year. Last year, steer weights bottomed out in late April and should post a yearly low in late April again this year. At the end March, FI heifer dressed weights averaged 747 pounds, 14 pounds heavier than 2004’s and around 4 pounds heavier than the prior five-year average. On a weekly basis, heifer weights have declined on average 2.5 pounds per week since the beginning of the year. Feeder cattle Feeder cattle and calf prices were stronger than the prior week. A limited supply of yearlings is keeping feeders very aggressive on buying replacements. The latest feeder cattle index was at $110. Feeder steer prices last week at Oklahoma City were steady to $2 higher with exception of seven weights, which were up to $4 higher than last week. Feeder heifers were steady to $1 higher and stocker cattle were steady with seven days earlier at Oklahoma City. Stocker cattle are probably close to their seasonal high for the year. However, all replacement type young animals are expected to continue very strong. When the Canadian border opens to live cattle the prices of feeder and stocker cattle are likely to be pushed lower. But the border is not likely to be opened for at least two months and may be longer. The court system moves quite slow, said Ron Plain, economist at University of Missouri. Jim Robb at the LMIC said that lightweight cattle prices have surged to new all time highs. Most of the recent price spike-up can be attributed to producers buying lightweight cattle for spring/summer grazing programs. In the Southern Plains and Southeast, many of the lightweight cattle for pasture have already been purchased and most of the recent price strength was in the Midwest and Central Great Plains where pasture green-up will begin in the next few weeks. Lightweight cattle prices have posted the largest increases. In the Southern Plains, for the first quarter of 2005, the year-to-year increase in 500- to 600-pound steer prices was $19.39 per cwt. over a year ago (18 percent). For the quarter, the annual price increase for 700- to 800-pound steers and slaughter steers was $14.92 (17 percent) and $8.82 (11 percent), respectively. Besides good grazing in most of the U.S., with notable exceptions in parts of the Northern Plains and Pacific Northwest, fundamental support to feeder cattle and calf prices has come from several sources. The key sources of price support include: 1) cyclically tight feeder cattle supplies; 2) rather strong slaughter steer prices; and 3) large year-to-year declines in corn and other feedstuff prices. On a quarterly basis, lightweight feeder (under 600 pounds) cattle prices are forecasted to set an all time record high in the second (spring) quarter of 2005, eclipsing the levels set last summer. Calf prices will likely remain strong for the balance of the year, but are forecast to be below 2004's by the fourth quarter of the year. Still, U.S. operations are expected to receive calf prices this fall that are the second highest ever for that quarter. But, 12 percent below a year earlier. For calendar year 2005, cash calf prices are forecast to be above 2004's, setting a new all time high. They are also forecast to set the annual high for this cattle cycle. Feeder steers (700-800 lbs.) prices are expected to remain strong in 2005 with annual average prices slightly below 2004’s. Red ink for cattle feeders will limit upswings in feeder cattle prices for the balance of 2005 and will likely keep prices below 2004’s for the last half of the year. In the Southern Plains during last summer’s quarter, 700-to 800-pound steer prices averaged over $117.00 per cwt., a price level will likely not be eclipsed again this cattle cycle, said Robb. After strong year-to-year increases for slaughter steer prices in early 2005, the balance of the year will bring slight increases, at best. For the remainder of the year, slaughter steer prices are forecast to mirror the normal seasonal pattern, setting seasonal lows this summer. Of course, uncertainty on the international trade front hangs over the outlook. Slaughter steer prices are forecast to average in the mid- to upper-$80s per cwt. in the second quarter, down $1.00 to $4.00 from the first quarter average. Prices will follow the seasonal trend this year, bottoming out in the third quarter, averaging in the low $80s per cwt. For the fourth quarter, prices may struggle back up to the mid-$80s. A very strong first quarter could pull the annual average slaughter steer price for 2005 slightly above 2004’s. — WLJ © 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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Monday, April 18,2005

BeefTalk: Individual tracking system not ready for prime time

by Kris Ringwall, North Dakota State University
The Dickinson Research Extension Center has been actively evaluating the many processes involved in the electronic tracking of cattle. The early prognosis is simple: The industry is not ready for the implementation of a uniform, nationally recognizable numbering system for individual animal identification as called for in the U.S. animal identification plan. This same plan, developed by the national identification development team, also identified the need for a uniform premises identification system. The implementation of the premises allocation process and subsequent utilization of the premises number seems to be on track. The center had excellent success in tracking cattle from premises to premises utilizing existing paper records available from individual producers and local brand inspectors in combination with sale transaction records available through commonly accepted marketing channels. The initial trace, from the calf's birthplace premises (premises 1) to the next owner's premises (premises 2) was 99.5 percent effective. It appears the trace from premises 2 to the next ownership transfer at premises 3 will be more difficult. The primary difficulty will be commingled and re-sorted cattle. The trace from premises 2 to premises 3 can be accomplished, but more personnel will be needed. Cattle can be traced by paper records, provided the records are accurate, legible and completely filled out. It may be very inefficient to trace cattle lots composed of multiple previous owners manually. Once the actual assignment and utilization of premises identification numbers is complete, the tracking of cattle lots from premises to premises should be quite effective. Unfortunately, as noted earlier, premises-to-premises tracking does not and will never track individual animals. The tracking of individual animals will require the implementation of additional technology and associated education throughout the industry. The center, through the efforts of the CalfAid team, actively is evaluating the current state of tracking equipment. The results are mixed and only marginally successful at any point. Two areas of concern surface immediately. The complexity of sorting through the multitude of commercial players and networks literally can bring one to tears. The problem is magnified by the careless and casual use of the term "ISO." The common reply is "yes," we are ISO- compliant. What is ISO? ISO stands for International Organization of Standardization. Therefore, as quoted from the ISO Web site, "ISO is able to act as a bridging organization in which a consensus can be reached on solutions that meet both the requirements of business and the broader needs of society, such as the needs of stakeholder groups like consumers and users." The immediate challenge the CalfAid team encountered was the lack of consensus among contributing players in the electronic identification (EID) business, with no regard for the stakeholders involved. The result is the removal of ISO-compliant EID tags that meet the open standard for mass usage in the industry and replacement with EID tags that meet the needs of individual users, more commonly called a closed system. The second challenge, given the lack of true compatibility across systems, is the lack of a defined acceptable level for transponder performance. Simply put, even if the EID tags do meet the true ISO specifications, there is no guarantee the tags can be read with any level of reliability. At least the center is not out of work. More to come. May you find all your ear tags.

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Monday, April 18,2005

Beef Bits

by WLJ
Sausage recall Roger Wood Foods in Savannah, GA, is voluntarily recalling approximately 10,700 pounds of sausage products that may be contaminated with listeria, the U.S. Department of Agriculture's Food Safety and Inspection Service announced. Products subject to recall include: 1-pound packages of preferred recipe, BEEF Smoked Sausage, 2.5-pound packages of GREAT GRILLERS, smoked sausage, made with chicken, turkey, pork and beef, 5-pound packages of FAMILY PAK, Chicken, Pork and Beef Wieners, 3-pound packages of FAMILY PAK, Chicken, Pork and Beef Wieners, 4-pound packages of FAMILY PAK, Chicken, Pork and Beef Wieners. The sausage was produced on March 10, 2005, and was distributed to retail stores in Florida, Georgia, North Carolina and South Carolina. The problem was discovered through regulatory sampling conducted by the state of Georgia. FSIS has received no reports of illnesses associated with consumption of these products. Processing plant moving to SD A change in contractors will delay the construction of a Ridgefield Farms beef processing plant scheduled to be built in Huron, SD. Ridgefield is relocating from its Connecticut home to South Dakota, but cost overruns by its original contractor caused the company to delay construction. The $42 million plant, originally scheduled to open in January of 2006, will now debut four to six months late. It will employ about 300 in the slaughter and processing facilities. New BSE case in Japan Japanese officials revealed April 8 that they have found a new case of bovine spongiform encephalopathy (BSE), the seventeenth since the first case was identified in the country in September 2001. The victim this time was a female Holstein, about 54 months of age. It was found on the island of Hokkaido and was identified when it became unable to stand or walk. Tops closes three stores Tops Markets, a division of Dutch grocer Ahold, will close three more stores in Ohio and lay off 450 employees in that market. In addition to the employees at the three locations (Cleveland, Solon and Sandusky), the grocer plans to lay off butchers and bakers in other Ohio stores. The chain will keep at least one butcher in each location, but ramp up its case-ready assortment to keep labor costs down. It will also outsource some of its baking. The Williamsville, NY-based grocer closed six Ohio stores and laid off 390 in January. Smithfield undecided Responding to published reports that it plans to build a new beef plant in the near future, Smithfield, VA.-based Smithfield Foods said it has had "early, exploratory discussions concerning the feasibility of constructing" such a plant, but has made no decision as yet. State bill favors antibiotic-free meat A bill being heard by the Maine legislature's agricultural committee would order all public school systems, including universities as well as all state institutions, to give preference to suppliers who could provide antibiotic-free meat. The bill concedes that costs for foodservice would rise considerably, about 11 percent at the University of Maine and by undetermined amounts elsewhere. The Maine Farm Bureau opposes the bill, while organic groups favor it. Partnership possible Elected leaders of National Meat Association (NMA) and the North American Meat Processors Association (NAMP) met in Chicago last week to discussing how each organization could benefit from a partnership. The presidents, Tom Campanile Jordan Dorfman, said in a joint statement that they have two aims: “To better enable our members to successfully operate in the rapidly changing and challenging business environment of the 21st century; and to preserve the culture of both organizations that have each served the industry for 60 years.” They added: “We are excited about the opportunities that this partnering will provide our respective memberships. They will be the first to learn of our progress as more information becomes available.” State Fair Revives Open Beef Show for 2005 The State Fair of Virginia Open Beef Show returns September 26-29 during the Fair at the Richmond Raceway Complex in Richmond. The State Fair Open Beef show will complement the long standing State Fair Youth Beef Show, which in 2004 featured 601 head and 193 4-H and FFA youth participants. The Open Beef Show returns after a ten-year absence for two reasons: to showcase this very important segment of Virginia agriculture and to present more animals for Fair customers during the event. Information is available at www.statefair.com. © 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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© Crow Publications - Any reprint of WLJ stories, except for personal use, without permission, written consent and appropriate attribution is prohibited. 2008 Crow Publications. All rights reserved.