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Thursday, December 20,2007

Feedlots push fed prices higher

by WLJ
Cattle feeders last week gained the upper hand in cash trade and were working to move the market higher despite more slippage in the boxed beef market. Last Thursday, although no trade had occurred by mid-day, packers were beginning to increase bids to levels closer to asking prices. In Nebraska, mid-day trade developed last Thursday at $92 live and $145 dressed basis last Thursday, $3 mostly $3 higher than the prior week. However, many feedlot managers were betting they could go higher, and were sticking firm to asking prices of $93-94 live and $146- 147. In the south, asking prices were in the $93-94 range. Full trade was expected to develop at $91-92 live and $144-145 dressed. Despite trading lower early in the week, live cattle contracts on the Chicago Mercantile Exchange, followed the cash market higher last Thursday with the spot month contract leading the way. August contracts rose $1.15 at mid-day to reach $93.45. October contracts gained $1.05 to trade at $96.52, while December live cattle gained 72 points and February tacked on 52 points, trading at $99.32 and $99.65 respectively. Cutout prices last week rose after some good, early week beef clearance at the wholesale level. Last Tuesday packers managed to move about 400 loads of Choice and Select product out the door, although it took a 50 cent drop in the cutout to get it done. Demand remains high for beef at the consumer level although, price is a significant factor in the ability to get it sold despite the looming Labor Day holiday. Many grocers have been featuring beef alternatives in advance of the holiday including seafood, pork and poultry as a result of low margins in beef at prices consumers find attractive. Last week’s early fire sale could help add to the amount of beef features for the upcoming holiday. By last Thursday, the Choice boxed beef cutout stood at $143.65, while Select gained slightly to reach $139.99 at mid-day. Packers, who had been cutting back harvest levels in previous weeks increased chain speeds again last week despite per-head losses estimated at $11.15 by HedgersEdge.com last Thursday. Slaughter volume for the week through last Thursday was estimated at 500,000 head, above the 491,000 head slaughtered the prior week, but below the 510,000 head harvested during the same period a year earlier. Total beef production remained slightly behind the previous week however, compared to last year, beef production was nearly 18 million pounds less than the total for the same period. That is a direct result of the lighter average carcass weights this year. Although average weight, estimated at 1,275 lbs. live and 784 lbs. dressed, both remain below last year, which during the same week was 1,277 live and 785 dressed. Analysts note that each additional pound added to the weekly average is the equivalent of 1,000 head of cattle. Currently the additional production adds drag to the beef cutout, however, if the export picture improves, as many market analysts believe it soon will, that extra production could be quickly absorbed. Last week, it was expected that the South Korean Agriculture Ministry would make an announcement regarding the lifting of the country’s de facto ban on beef imports from the U.S. Likewise, the push for Japan to increase the age limit for imported beef to 30 months could also bear fruit soon. Those two important markets for U.S. beef could easily add several dollars to the beef cutout in short order. Since exports to Mexico have started declining this year, additional market access will become critical to packers and feeders alike who are looking at rising input prices this fall and winter. Cattle feeders, in particular those who haven’t or can’t lock in corn prices for the winter could see their main feed source fluctuate wildly in price as harvest approaches. Recent corn field surveys have shown wildly variable yields across the country. Growers in the eastern portions of the Corn Belt have been hurt by dry conditions this year and recent rains in much of the Midwest have also taken a toll on the crop. It will be increasingly important for cattle feeders to keep an eye on the corn market as harvest approaches. Feeder cattle Northern Livestock Video Auction (NLVA) kicked off last week with a 35,226 head sale, where very good demand was seen, with prices higher than the previous month’s sale on almost all classes of cattle. Steers in the 600 lb. range sold for $118-$125, mostly for Oct.-Nov. deliveries. Eight-and nine-weight yearling steers went for $105-115 on good demand. NLVA manager Ty Thompson said he was pleased with the sale’s offerings and buyer reception. “There were a lot of good quality cattle that went through, and prices were good all the way around. Mid-to-lightweight steers were $3-4 higher than last month’s sale, and the heavier yearling steers were usually $2 higher compared to last month. The only thing that was steady were the heifer calves, but they weren’t down. We also sold about 2,000 bred cattle, and had some of those heifers going for as high as $1,450, with the younger cows bringing $1,200,” Thompson said. Thompson said that drought didn’t have too much of an adverse effect on the demand, but that flooding did. “A lot of these cattle were going to the Oklahoma area, maybe Kansas or Texas. Good moisture in those places was creating good demand for some of the lighter weight animals, with guys planning on taking delivery closer to November when they’d have good wheat to put these calves out on,” he said. “The flooding in a few places in those states kept buyers from that area from wanting to take anything on near or immediate delivery,” explained Thompson. The NLVA sale also saw sellers getting good prices for their cows, but Thompson cautioned that it’s a little early to judge the bred cattle market just yet. “With corn prices going down and cattle prices still good, people still seem more likely to take the heifers for feeding purposes rather than replacements. We’ll probably see more bred cattle go through the sale in another month and be able to get a good feel for the cow market then. It should be strong though, especially in the northern areas. There’s way more hay and standing grass than last year, and I think people are a lot more optimistic about wintering cattle in the north this time around,” said Thompson. Bret Crotts, marketing manager for Schwieterman, Inc., said that even with drought in some places of the western U.S, and flooding in some of the plains states, he expects feeder cattle to remain strong and sees nothing on the horizon to indicate otherwise. “Feeder cattle are very firm—there’s just no other way to put it,” joked Crotts. “We have seen some resistance in the $120 range, and I think we’ll continue to trade just below that level, but even some of the upturns we’ve seen in corn haven’t broken the [feeder] market. There’s an insatiable demand for feeder cattle right now, because there’s a high demand for beef. This last live cattle summer has been more or less the best ever. We’ve been trading near $1 and have stayed there consistently,” Crotts said. Crotts did have some concerns about the market, however, and said that even with prices as good as they have been, many people are still feeling a pinch. “The market is great, and that’s true—but break-even on these cattle is over a dollar in a lot of cases. The margins just aren’t there. There are definitely some packer-owned cattle or some value-added cattle out there, and in those cases the higher input costs don’t matter as much. From the standpoint of a cow/calf producer, things are great. People who run stocker operations or expose themselves to the futures market are the ones that should be taking a look at doing some things differently,” Crotts explained. The near-term outlook on feeders looks good, according to Crotts, and he said that prices are likely to stay high as long as input costs remain elevated. “We’re starting to see corn trading above the 50-day moving average, which I think is an indication of people realizing how much the USDA may have over-shot their August corn estimates. It’s quite likely we’ll see below a 13 billion bushel estimate for September. Overall, corn is probably going to trend up, and feeders are likely to follow,” said Crotts. In Oklahoma City last week, feeder steers and heifers were steady to $1 higher, with lighter weight steer and heifer calves mostly $1-3 lower. Demand was good for heavier feeder cattle and moderate for calves. Heavy rain across much of the central and eastern parts of Oklahoma caused some flooding in low-lying areas, restricting livestock movement at the sale. Due to the flooding, receipts last week stood at 5,717, compared to 7,845 the week prior. Last week in Hub City, SD, demand was good at the Wednesday sale. Compared to the week prior, feeder steers and heifers sold mostly steady to $2 lower, with good attendance and many consignments offered in load lots. Large #1 steers were at $117-123.50 for 700-800 pounders, and $110.25-121.50 for heavier eight-and nine-weight steers. South and east in Vienna, MO, last week’s sale saw a different offering compared to previous weeks, with a high percentage of weaned and vaccinated cattle, and also large numbers of reputation cattle offering proven genetics. Seven-eight weight number 1 feeder steers and heifers were steady to $5 higher, at $111.75-$120.25 and $107-110.75, respectively. Supply was heavy, but only 42 percent of feeders were over 600 lbs. In Torrington, WY, last week, demand was good for the 1,775 head total run, with most weighing over 600 lbs. The 600-700 lb. feeder steers and heifers were selling for $115.75- 118.75, and large #1 steers in the 800-900 lb. range sold for $106-110. There was a good run of 1920 head in Cottonwood, CA, last week, and prices stayed strong on 600-700 lb. steers, which were selling at $100-110.50, with heifers following at $98-105. Heavier feeders were $2-3 lower in the steers and heifers, with 800-plus lb. steers going for $98- 106.50.

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Thursday, December 20,2007

U.S. ag trade strong midway through the year

by WLJ
Conventional wisdom in agricultural circles says that what goes up—particularly commodity prices and farm incomes—must eventually come down. However, this has not been the case for U.S. agricultural exports this year, according to mid-year analysis by American Farm Bureau Federation (AFBF) economists. Trade in U.S. agricultural products is strong in 2007, and it appears likely that strength will continue as the year progresses, according to AFBF. Data for sales through the first half of 2007 and contract indications for the rest of the year indicate that the U.S. is setting yet another agricultural export record in 2007–for the fifth year in a row and for 32 successive quarters on a year-over-year basis, according to the AFBF report. Given the pace of business to date, 2007 exports are likely to top $80 billion compared to $70.9 billion in 2006 and only $53 billion as recently as 2002. Favorable market supply conditions and demand fundamentals, both domestically and abroad, are keys to understanding this positive trade situation. “The world is currently experiencing strong economic growth on an almost global basis, short-term weather developments and a weak dollar which all contribute to this condition,” Pat O’Brien, AFBF economist, said. U.S. imports also are strong, which is somewhat surprising considering the declining value of the dollar against foreign currencies, according to AFBF. The decline of the dollar that has contributed to cheaper U.S. export prices also is making imports more expensive, thus slowing or reversing the growth in U.S. agricultural imports. However, U.S. agricultural import data shows the reverse – agricultural imports have risen to set successive record highs as the dollar has fallen to record lows. Demand for these imports, particularly semi-processed and processed products like French wine and Swiss chocolate, seems to be strong enough to overshadow the effects of the exchange rate, according to AFBF economists. The AFBF analysis also looks to the future and suggests if the dollar continues to be cheap, then the U.S. can expect continued strong exports. And a continued weak dollar may mean import growth may become somewhat restrained. If the dollar strengthens, the U.S. likely would lose its momentum in export growth, while agricultural imports would become cheaper. “Underlying all of this is the need for American farmers to realize that for at least the export market, it is the cost of American products in pounds, yens, and pesos—rather than U.S. dollars—that make or break U.S. sales,” O’Brien said.

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Thursday, December 20,2007

The right receiving protocols lead to better performance

by WLJ
Whether starting lightweight calves or growing and finishing cattle, a sound receiving program that includes prevention, control and treatment measures for respiratory issues helps offset the guessing game producers are typically faced with. “Unless producers are buyig known origin cattle or animals verified with SelectVAC, they don’t know what they’re getting,” says Mitch Blanding, DVM, Pfizer Animal Health veterinarian, Lenexa, Kan. “In any given group of animals, we don’t know if they’ve been vaccinated and for what, we don’t know if the sick animals have been ill for 1 or 5 days, we may not even be sure if they’ve come from a drought-stricken area that adds to the ‘normal’ level of stress.” Prevention is the most economical medicine Blanding says the most economical place to start to intervene with respiratory disease is with prevention. A beneficial practice to keep in mind is that for every hour animals spend in transport, give them at least that much time after they arrive before you start vaccinating. This allows them a chance to rest before the additional stress of processing. “We first try to intervene with those animals that have a competent immune system and are capable of responding to a vaccine,” Blanding says. However, many animals’ immune systems are already compromised due to not only their young age, but also risk factors such as nutritional and trace mineral deficiency, or other stressful events associated with the marketing process like weaning, heavy commingling and shipping. “In high-risk cattle, it would not be unusual to have a significant percentage of the animals not respond to the initial vaccination,” Blanding says. “A common practice in many operations is to revaccinate these animals somewhere between 8 and 12 days after arrival in hopes of starting an immune process in more of the animals and enhancing the overall level of immunity of the group.” On-arrival control measures add up For a certain population of animals, it will be too late to intervene with prevention. Risk factors may be stacked against them; they may be incubating bovine respiratory disease (BRD) and are either sick on arrival or will soon become sick. For these animals, Blanding recommends administering a control antibiotic to catch the disease early and put the animal on the road to recovery and gaining weight as quickly as possible. “Using extended therapy products is a groundbreaking concept for on-arrival control programs,” Blanding says. “These products can last up to 7 days and work with the animal’s own immune system to respond and help fight the infection. However, it can be difficult for some producers to trust the product is working.” Study results back up what Blanding recommends. Studies show that using an extended therapy antibiotic that maintains therapeutic blood concentrations for up to 7 days, compared to the traditional 3 days, results in healthier calves that start eating at the bunk faster, resulting in more weight gain and better carcass value. Using these products on arrival also reduces the total number of pulls. “Many animals just need a longer time to recover, and convalescing animals are more susceptible to reinfection,” Blanding adds. “Extended therapy products protect the animal for a longer period of time, allow the animal’s immune system to help fight off additional bacteria and reduce the reinfection that sometimes takes place during the convalescing period.” It may come down to treatment Ideally, you’ve impacted all the animals in a group with either prevention or control and no animals need additional treatment. However, producers know that’s not realistic; there are individuals in any group that fall into each category of needing prevention, control or treatment. “We’ve tried to intervene with vaccines to prevent the disease, we’ve tried to intervene with an extended therapy antibiotic to control the disease, but some animals will get sick regardless, and then it’s time to intervene with additional treatment,” Blanding adds. At the point when treatment is necessary, it is critical to choose a proven, effective antibiotic to prevent chronics, reduce the loss of cattle due to BRD and avoid significant risks to performance. Additional benefits to BRD control Blanding reminds producers that operational efficiency is another benefit of controlling BRD. “A producer may not be able to maximize opportunities because of limitations in cattle health,” he says. “If he is spending more time tending to sick animals, then he has less time to start new groups. Dealing with sick cattle can be a bottleneck in operations.” That’s in addition to treatment costs, labor associated with treatments and closeout value. It all adds up to maximizing profitability with a BRD protocol of prevention, control and treatment, and working with your veterinarian to select the best products and technologies available.

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Thursday, December 20,2007

BEEF TALK

by WLJ
August 29, 2005 The North Dakota Beef Cattle Improvement Association (NDBCIA) has been keeping records since 1963 and annually presents five-year rolling benchmark values for average herd performance on several traits. The purpose of the NDBCIA is the improvement of beef cattle, primarily focusing on genetic improvement, but also being very cognizant of the yearly management that is involved in a beef cattle operation. By comparing individual herd values with the overall averages, individual herd performance can be evaluated. The data from the evaluation may lead to discussion, which may be the basis for management changes. Data trends also can be evaluated. For example, cattle have gotten larger, smaller, larger again, and perhaps have somewhat leveled off in body size. This would be a typical data trend, a trend in the overall growth rate of cattle involved with the NDBCIA program. A notable benchmark for producers this year is weaning 500 pounds of calf per cow exposed to the bull and points to increased growth. Growth, generally thought of as average daily gain in the feedlot business, is a major component of profit. In terms of the cow-calf producer, growth has the same impact; total pounds times price contributes in a major way to gross income. Growth for cow-calf producers is different from feedlot growth. In the feedlot, an individual calf is responsible for only bearing its share of the overhead and variable expenses, since each calf gains weight according to its genetic potential. In the cow business, that is not true. Cows make producers money by producing calves that have more value than expense. The value of the calf principally is determined by weight, but in contrast to the feedlot calf, the cow also must carry the burden of expense for cows that do not produce a calf. An open cow has a market value, but that value will not cover the cost of replacing the cow. Each cow in the herd has to produce a calf to cover her annual expenses and those of nonproducing cows. As the NDBCIA evaluates traits to measure cow performance, the trait “pounds weaned per cow exposed to the bull” is a trait that factors in both management and genetics. This is just an example of the many traits NDBCIA monitors using the Cow Herd Appraisal Performance Software (CHAPS) program. Additional traits follow along with the current benchmark. The average CHAPS producer exposed 191 cows to bulls. The cows had an average age of 5.6 years. Of the 191 cows exposed to the bull, 93.4 percent were pregnant in the fall, 92.8 percent calved in the spring and 90.3 percent weaned a calf in the fall. During the calving season, 62.4 percent calved during the first 21 days, 86.4 percent during the first 42 days and 94.6 percent within the first 63 days of the calving season. Here are the actual weaning numbers: age was 192 days, weight was 558 pounds and the frame score was 5.5. These growth numbers translated into a gain of 2.95 pounds per day of age and a 627-pound adjusted 205-day weight. For every cow exposed, CHAPS producers weaned 500 pounds of calf. Knowing these numbers allows for appropriate modification through management or genetics. There are no absolute answers to what a particular ranch should produce. The academic answer is optimization. In reality, the need is to grow profitable cattle that a producer can appreciate and still meet industry needs. Each producer must answer the question, but the answer must be based on data that ultimately tells you if you are in the game. To all those naysayers that claim you can’t wean 500 pounds per cow exposed to the bull, look again. Your neighbor may be filling more trucks and trailers than you may be. May you find all your NAIS-approved ear tags. — Kris Ringwall (Kris Ringwall is a North Dakota State University Extension beef specialist, director of the NDSU Dickinson Research Center and executive director of the North Dakota Beef Cattle Improvement Association. He can be contacted at 701/ 483-2045.)

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Thursday, December 20,2007

BLACK INK

by WLJ
August 29, 2005 We live in an era of new ideas and technology that can produce better beef profitably. It’s exciting to try out the cutting edge, but unless you are isolated and independently wealthy, you’ll feel pressure to justify your actions. When you “know” you are right, that pressure is a pain in the neck. Maybe you just need an adjustment. There is risk in making changes to an enterprise based on any new insight, tool or practice. The more you depend on that enterprise for a living, the more risk. The less known about the new application, the more risk. On the other hand, when new ideas debunk myths that stand in the way of profit, financial rewards can be great. In many farm and ranch businesses, there is a generational divide. Those who devoted their life to the business may feel a conservative skepticism toward ideas put forth by younger, inexperienced partners. They may also depend on the farm’s continued financial strength for their retirement security. A senior partner may be less conservative, but still skeptical. Conflicts arise from different ways of trying to achieve the same goals. If decades of experience and intuition without data served your father well, he may question the value of hours you spend on a computer or methodically sorting cows based on data. Your banker can raise a lot of questions, too. But if he is a scientific skeptic, you can convince him with proof. He’s not against progress, if that’s what it is. He just takes a Missouri, “show- me” approach. Any reach toward progress, must recognize its foundation. Maybe the previous manager set up a performance-oriented program and established benchmarks that are hard to beat. Yet, if those records are mainly production-based, there’s work to be done on the bottom line. Maximums often give way to optimum under the light of financial analysis. Differing views come from every age group and orientation along the optimistic-pessimistic line, men or women. A spouse or a junior partner may be holding up your idea of what might be progress, waiting for more information. As long as the skeptics recognize proof when they see it—and you know when to admit they are right—they do the business a great service. They make you think. Say you want to crossbreed the cows to bulls your friend is selling. You will get hybrid vigor so the calves will weigh more; you can point to studies that prove it. If you have to defend the idea, you will develop a structured crossbreeding program, how you will market the calves, where you will get replacement heifers and criteria for bull selection. And why they will return more profit through the years. No matter how much data you bring to bear on it, you must recognize the counter arguments as well. Skeptics aren’t just obstacles to knock down; they are often right. Your partner who spent 40 years developing a purebred herd may have built in some value in predictable quality that your plan will set back. Sometimes the answer lies in a compromise. Try terminal crossbreeding on some cows, and a greater marketing effort to capture more of the potential premiums from existing genetics. Try out-crossing within that breed to achieve some of your goals. Skeptics guard tradition on one hand, and seek science-based advancement on the other. You will find a lot of them at the local auction market; they base a lot on visual experience, but take nothing else at face value. They have heard the auctioneer’s claim that calves entering the sale ring have “had all their shots.” What would it take to convince them the calves are truly worth more? An ear-tag from a recognized health program might do it, or just knowing the owner stakes his reputation on those calves. Seeing is believing, and in the profit-driven world, that means seeing green. Whether you are the resident skeptic or blessed with the need to justify your actions to another, information is the key to that vault. — Steve Suther (“Black ink” is a cattle management column written by Steve Suther, industry information director for Certified Angus Beef. The column is not designed for strictly Angus producers, and does not necessarily represent the views or opinions of WLJ or its editorial staff.)

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Thursday, December 20,2007

COMMENTS

by WLJ
August 29, 2005 Just when you think all the ballyhoo about the Canadian border is over, someone has to go and push the “fools button”. The calamity of errors over the Canadian import rule and BSE testing continue; this time it was the Canadian Food Safety Agency that messed up. You would think that with the sensitivity toward BSE and trade with Canada that the agencies would go out of their way to insure accuracy of import and testing standards. Last week, it was discovered that a heiferette over 30 months old went through a processing plant in Wisconsin. Then, to top it off, the load of 35 Canadian fed cattle produced eight pregnant heifers. Apparently, the Canadian CFIA vet had an arthritic arm and palpated the heiferettes with his other arm and consequently missed the pregnant heifers. This vet, and the exporter, were both de-certified as a result of the episode. Verifying age on these cattle through dentition isn’t 100 percent accurate and the idea that we’re going to get them all would be a bit unrealistic. A month or two difference in the age shouldn’t be that big a deal and I would suggest that 99.9 percent would be more realistic. However, putting eight pregnant heifers on a truck destined for a U.S. packing plant is a pretty big mistake and it is unthinkable that a qualified vet could miss these pregnant heiferettes. As I said, 99.9 percent accuracy on age would be good enough for me, but for groups like Public Citizen and R-Calf USA who want to keep the border closed, they would certainly require 100% compliance. Their cause to keep Canadian live cattle out of the country just received a shot in the arm and justification for mandatory country of origin labeling was also bolstered. Now, perhaps add a spaying requirement is next. Unfortunately, the beef from this cow over 30 months old made it into the food supply. The product has been recalled, and although it probably has been consumed, it is unlikely there is any human health risk. The eight pregnant heiferettes were processed and sent down the line also. The fetuses were destroyed, but questions remain about the fetal blood serum which has been banned from import. At this point, the entire episode makes you wonder who is minding the store. The USDA has had their share of problems and everyone needs to take some responsibility that these imported cattle are handled properly. A 30-month animal that was actually 31 months old shouldn’t be that big a concern, but heiferettes will always be in a very suspect age window and should require much closer evaluation. This episode casts a little shadow of doubt on the enforcement of our import rules with Canada. Make no mistake, it is the CFIA that is responsible for this one. USDA is, for the most part, out of the loop. Besides raising questions about older cattle getting into the U.S. beef supply, this situation is sure to raise some eyebrows from our export markets for both the U.S. and Canada. There is still speculation the Japanese market could open this fall. However, the food safety commission said again, last week, they need more information to approve beef trade with the U.S. The folks at USDA say the Japanese have all the information they need. USDA and Secretary Johanns have been very aggressive in their pursuit to resume trade with Japan. USDA recently made a proposal to accept Japanese beef, which is a small gesture but says we’re not concerned about Japanese beef even though they have had several BSE cases. Where USDA seems to be dropping the ball is on the epidemiology report on this Texas cow that was confirmed to have BSE. This episode has caused several countries to halt trade and many are waiting for this report. Sources at USDA told us that the report should be done in a week or so; that comment was made six weeks ago. Apparently, the hold up is that USDA is waiting to test one more animal. They know where it is, but the owner is busy harvesting cantaloupes and said he will round up the cows and let USDA get their cow when he’s done picking the melons. In the meantime, beef export trade is on the back burner and appears to be costing the beef industry a pile of money.– Pete Crow

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Thursday, December 20,2007

Mexican cattle linked to drug cartel

by WLJ
The U.S. Department of Treasury (Treasury) Aug. 18 announced that two Mexican cattle companies are among the front businesses for Mexican drug-trafficking cartels. Cattle sold to Texas ranchers by these suspect companies after Aug. 19 could be seized as evidence of a money laundering scheme, agency officials said. Cattle already purchased and owned before the suspect Mexican companies were identified are not going to be impacted by the announcement, Treasury officials said. The department also plans to inform cattle associations and other groups of the action taken against the Mexican companies, officials said. The Treasury also will provide other information, such as the brands used by the cattle companies linked to the drug cartels. For now, buyers are expected to practice due diligence when purchasing cattle. The two Mexican cattle companies named by the Treasury Department are Corrales San Ignacio S.P.R. de R.L. de C.V. and Del Nortes Carnes Finas San Ignacio S.A. de C.V., both of Mexico’s Chihuahua state. A U.S. company in Presidio, TX, Corrales San Ignacio L.L.C., was identified by the Treasury Department as a “mirror” entity, which is an organization that exists on paper to give a foreign company a U.S. outlet. Treasury officials said it was unlikely that company actually has any pens or feed lots. The two suspect cattle companies are linked to the Arriola Marquez group, which is associated with Mexican drug kingpin Joaquin “El Chapo” Guzman. Guzman is a leader of one of the factions fighting for control of Nuevo Laredo and its smuggling routes into Texas. The U.S. cannot seize cartel property outside the country. But once the companies have been identified as having links to drug cartels, federal law prohibits anyone from doing business with them and allows the federal government to take any property of the groups that is “in the possession or control of U.S. persons.” It is not clear how many Mexican cattle owned by companies linked to drug cartels have been sold in Texas. The two cattle companies are part of approximately 30 total companies and individuals that have been linked to the Arriola Marquez and Arellano Felix organizations.

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Thursday, December 20,2007

Plaintiffs must pay Tyson’s trial costs

by WLJ
The three judge panel unanimously supported a district court decision, ordering the plaintiffs — five individuals and one corporation — to pay Tyson Fresh Meats more than $70,000 in expenses related to the trial held last year in Montgomery, Alabama. Last week the appeals court affirmed Judge Lyle Strom’s decision to reverse a jury verdict against Tyson Fresh Meats, a subsidiary of Tyson Foods, Inc. They found Tyson did not violate the law through its supply agreements with independent cattle producers and has legitimate business reasons for entering into such agreements. In the subsequent ruling on trial costs, the appeals court rejected the plaintiffs’ argument that the case was “close” and that they should be exempt from paying Tyson’s expenses. The appeals court wrote “this case was not a close and difficult one” and noted the plaintiffs “lost every aspect ...” The court found that “witnesses for both parties agreed Tyson had a number of competitive justifications” for using marketing agreements. “The legal issues were not particularly novel or difficult. Although it took a long time to try, the case was not especially complicated.”

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Thursday, December 20,2007

Texas TB testing reaches halfway mark

by WLJ
“We’ve completed the dairy herd testing and have passed the halfway point for testing purebred and seed stock herds. More than 750 of these have been tested since late April when herds were randomly selected for the disease surveillance. We plan to complete the remainder of the testing of the randomly selected herds before the end of the year. Volunteers still are welcome to have their purebred or seed stock herds tested,” said Dr. Dee Ellis, who heads up field operations for the Texas Animal Health Commission, the state’s livestock and poultry regulatory agency. “Accredited private veterinarians who are TB-certified conduct the testing on a fee-basis reimbursement, which covers the cost of the test, so ranchers do not have out-of-pocket expenses,” Ellis said. “Regaining TB-free status is a time-consuming and expensive endeavor, but after fighting this disease since l917, the U.S. cannot allow this disease to regain a foothold,” said Ellis. Tuberculosis (TB) is caused by the Mycobacterium bovis bacteria and is a major concern to the U.S. cattle industry. This contagious, infectious and communicable disease can affect not only cattle, but bison, deer, elk, goats and other animal species and humans. “We’ve worked closely with the cattle industry to develop and follow this five-point plan in order to ensure all TB infection has been detected. Fortunately, we have been able to work with the USDA funding through TB cooperative agreements to assist with program funding. We anticipate completing this last leg of the TB plan—the targeted herd testing—by the end of the year, so we can reapply for TB free status,” Ellis stated. Dr. Ellis said testing dairies, purebred and seed stock herds so far has resulted in finding and depopulating only one infected herd, a dairy, in 2003. “We cannot tell by looking if a herd is infected, so we have selected herds for testing based on statistics and science. We targeted all dairies and about 2,400 purebred or seed stock herds for testing because, in the past two decades, TB has been detected in 15 Texas dairies and six purebred cattle herds in nine counties, including El Paso, Karnes, Comanche, Pecos, Uvalde, Fayette, Culberson, Grayson, Zavala and Hamilton counties.” Only Texas and Michigan currently do not have the coveted TB-free status. Texas earned TB- free status in 2000, with the exception of dairies in the El Paso Milk Shed, which have been purchased by the USDA and are being depopulated. In 2002, Texas lost its status after two TB- infected cattle herds were detected. Michigan, he explained, is coping with cattle TB infection in wildlife, and officials examine hunter-killed deer and require yearly TB tests on cattle herds in affected areas. California, which lost TB-free status in 2003, tested nearly a million cattle in a three-county dairy area prior to regaining free status in April 2005, said Ellis. New Mexico regained TB-free status in July 2005, with the exception of Roosevelt and Curry Counties along the state’s eastern border, where testing still is being conducted.

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Thursday, December 20,2007

Labor day meat sales create cautious market

by WLJ
September 4, 2006 Again, fed cattle markets were slow to develop last week. Packers were reluctant buyers looking into the Labor Day weekend, the last big grilling holiday for summer. Labor Day is a pivotal point for market direction and strong meat sales are often required for the market to advance into positive territory during the following weeks. Packers are at break-even levels and will be trying to get some positive margin back into the picture. Packers were bidding $86 for cattle and feeders were looking for $90 as of last Thursday. The boxed beef markets were significantly softer last week, down $5 on the Choice cutout at $145, which is considered a market threshold. Ironically, packers are keeping processing lines moving rapidly, slaughtering 384,000 head midway through last week. This was 3,000 head more than the week before. The last major fed trade was Friday, two weeks ago, trading at $87-88 live and $138 dressed. As of Thursday, it looked as if trade would continue the same pattern and any significant trade wasn’t expected to take place until Friday at $88. Slaughter volume, too, remained strong and had some perplexities going into the Labor Day weekend. Most recently, slaughter data shows that kill numbers are up 3.9 percent from a year ago. Much of that additional slaughter is from increased cow slaughter. In addition, data shows beef production up 6.1 percent. Futures markets remain strong with a large cash discount. Across the board, on the Chicago Mercantile Exchange, (CME) last Thursday, contracts were down with the exception of August. August contracts traded at $90.40, which was up 53 points from last Wednesday’s trade. October and December contracts dropped five points. October settled at $92.83 last Thursday and December closed at $92.85. Market watchers have been waiting for the spread to correct itself, which was expected last week, but wasn’t very dramatic. Andy Gottschalk at HedgersEdge.com said the squeeze on August cattle continues and should provide plenty of fireworks this week as the contract expires. The squeeze on August has the “tail wagging the dog and it appears the dog likes it that way.” Gottschalk also said that the basis between the cash market and the October board is the second largest in history, currently at $4.80. He said the large commodity funds have invested heavily in cattle keeping this basis wide. “If the funds become bearish, it could get ugly and they don’t pay attention to the fundamentals of the cattle industry.” Packers held what some called distressed meat sales last week, which essentially go unreported on the cutout. This would indicate that packers are forced to move product before it spoils. The cold storage index showed that supplies were significantly larger. It was also mentioned that packers were attempting to price November product to wholesale buyers at substantially higher prices—$165 based on the cutout. There were no takers, sources said.   The Choice/Select spread has narrowed quite a bit over the past few weeks. Now at $10, the volume of Choice product hasn’t expanded at all since the spread was at $22. The grading report has been fairly steady, showing the industry is producing only 50 percent Choice product, leaving packers to search for enough Choice product to fill demand, which continues to grow. However, as prices continue to climb, retail buyers may begin to look for values in the Select product rather than continuing to pay higher prices for Choice cuts. The choice cutout was at $145.61 and Select at $135.44.   Feeder cattle Most auction markets across the country last week reported higher prices for feeder cattle. Renewed rainfall and reports that the corn crop yields are less drought stressed than anticipated added optimism at auction markets last week. Rain in the southern Plains has improved the grazing picture slightly as well as hopes that there is more on the horizon. Also helping support higher prices was the continued strong fed cattle market. As a result, most classes of feeder cattle moved $1-3 higher with some instances as much as $10 higher than the previous week on lightweight steers and heifers. On the CME, last Thursday’s feeder cattle contract trade was lower across the board despite firm fundamentals early last week providing support and a spillover effect from the live cattle contract trade. According to Virginia Tech commodities marketing agent Mike Roberts, live cattle prices, tight feeder supplies, and firm cash feeders lent support to the market last week. Feeder supplies outside feedlots remain tight amid improving grazing conditions in the southern Plains due to rain. The CME Feeder Cattle Index for Aug. 25 was placed at $117.02/cwt., up 82 cents per cwt., its highest level since Nov. 28, 2005. Last Thursday, the August contract went off the board at $116.90, just 15 points lower than the prior day. September feeders shed 47 points to close at $116.37 and October feeders were down 65 points, closing at $116.50. November contracts posted the day’s largest drop, losing 80 points to close the session at $116.32. In Oklahoma City, OK, last week, feeder steers and heifers sold $1-2 higher. Steer and heifer calves were generally steady although buyers were being very selective for kind and flesh condition. Demand moderate to good, especially good for thin fleshed steer calves. A cool front pushed through the state over the prior weekend lowering temperatures some 20 degrees and much of the state saw from one-half to seven inches of much-needed rain. Maybe a little late for the hay crop, but definitely beneficial to ground that will soon be planted in wheat. In West Plains, MO, steers and heifers sold $2-3 higher last week, with the majority of 350- 450-lb. heifers $2-4 higher. The exception was 700-lb. class steers, which were no better than steady, yet several unweaned bull calves sold steady to $3 lower. Supply was called moderate to heavy on good demand. Good rains had been hampering movement of cattle, but according to reports from West Plains, several producers took advantage of a break in the weather last week to use stockyard facilities to begin the weaning process of their calves, while others elected to use the new buyers’ labor and blade to steer their bull calves. In Dodge City, KS, last Wednesday, feeder steers from 300-600 lbs. were $2-5 higher, with those 600-900 lbs. selling $3-4 higher on a light test. Heifers 350-600 lbs. were called steady to $5 higher, and those 600-900 lbs., $2-3 higher on a light test. In Philip, SD, where producers struggling through the severe drought finally received some beneficial rain last week, steer and heifer calves sold steady to firm. Feeder steers and heifers were called steady to $2 higher. Buyer demand was best for load lots of calves, and moderate on part loads. Out west in Famoso, CA, last week, stocker cattle were called $2-3 higher and feeders were steady on a good quality run of cattle. Stockers met with excellent demand, especially the greener kinds in the 500- 600-lb. range. Feeder cattle were also highly sought after, particularly the 650- 800-lb. steers and heifers.

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