Tyson Foods Inc., the world’s largest meat processor, reported a bigger-than-expected profit for its third fiscal quarter last week and raised its profit forecast for the year as it rebounds from last year’s losses. Tyson credited higher average sales prices for chicken, beef, pork and prepared foods, export growth and a cost-cutting program that is ahead of a target of saving $200 million this year. Those factors more than offset higher feed prices for animals, boosted by demand for corn for producing the alternative fuel ethanol. Analysts said chicken, Tyson’s second largest business by sales after beef, drove the quarter’s gains on higher profit margins under the cost-cutting program, higher shelf prices in stores, and export demand led by China. Springdale, AR-based Tyson said that it earned $111 million, or 31 cents a share, for the three months ended June 30 versus a loss of $52 million, or 15 cents a share, a year earlier. “I feel great about the progress we’re making,” chief financial officer Wade Miquelon said in a conference call. For the quarter, sales rose to $6.96 billion from $6.38 billion a year earlier. Tyson raised its forecast for the fiscal year ending in September to between 82 cents and 92 cents per share from an April estimate between 65 cents and 90 cents. It was the third profitable quarter after three quarters of losses last year that yielded a net loss of 17 cents per share in fiscal 2006, which ended last September. Export sales jumped 31 percent to $661 million, including a $70 million increase in chicken leg quarters to China, other Asian markets, Africa and the Middle East. CEO Richard Bond said antibiotic-free chicken launched in the U.S. market in June is already a hit among consumers and retailers and promises to boost growth in fresh chicken sales. Sales and operating income improved from the previous quarter and from a year ago in all four segments—chicken, beef, pork and prepared foods. Bond said the cost management program launched last year had already beat its goal of saving $200 million this year, helping reduce general costs by 12.4 percent for the first three quarters. Bond said he expects more than $250 million in savings this fiscal year from the effort. Tyson said the volume of meat sold fell, as expected, after the plant closings and because of higher prices for its products. But the average sales price for all its meats increased, allowing it to book higher revenues. Feed costs were higher as corn soared because of demand to make the alternative fuel ethanol. Tyson said in its chicken business, the second largest segment by sales after beef, net grain costs were up $113 million in the quarter from a year earlier.

Montana’s first clinical cases of West Nile virus (WNV) in horses this season have been confirmed in Blaine and Phillips counties, according to Montana acting State Veterinarian Dr. Jeanne Rankin. Neither horse had been vaccinated against WNV. The virus is spread through the bite of an infected mosquito. Mosquitoes become infected by feeding on infected birds. The virus does not appear to spread from horse to horse or from horse to person. Person to person spread, though extremely rare, may occur by means of organ transplants or from infected mothers to their infants through breastfeeding. Horses appear to be affected by WNV much more often than any other domestic animals. Infection can cause encephalitis, affecting the nervous system, and can cause severe complications and death in horses. The disease also affects humans. Many horses infected with WNV do not develop any illness, but of horses that become ill, about one-third will die or need to be euthanized. Although WNV has been documented in the U.S. since 1999, the first case of WNV in Montana was confirmed in a horse in Yellowstone County in 2002. During that season, 134 equine cases were reported in 26 Montana counties and 38 of the horses died or were euthanized. In 2003, WNV was confirmed in 193 horses in 34 Montana counties. A total of 70 horses died or were euthanized. Only 17 of the 193 confirmed horse cases were fully vaccinated. In 2004, WNV was confirmed in 11 horses in seven Montana counties and five horses died or were euthanized. Only one of the 11 horses was fully vaccinated, and that horse survived. In 2005, WNV was confirmed in 10 horses in eight Montana counties. A total of four horses were euthanized. None of these horses were vaccinated. In 2006, WNV was confirmed in 26 horses in 11 Montana counties. A total of seven died or were euthanized. None of these horses were vaccinated. Montana also confirmed two human cases of WNV in 2002, 228 cases in 2003, six cases in 2004, 19 cases in 2005 and at least two cases in 2006. To diagnose WNV in equines requires a serology test that can be conducted at the Veterinary Diagnostic Laboratory in Bozeman, MT. Clinical signs of encephalitis in horses include loss of appetite and depression in addition to any combination of weakness or paralysis of hind limbs, muzzle twitching, impaired vision, incoordination, head pressing, aimless wandering, convulsions, inability to swallow, circling, hyperexcitability, or coma. “These are also clinical signs of Western and Eastern Equine Encephalitis, viral diseases that affect the nervous system and can cause severe complications and death in horses,” Rankin said. In addition, rabies cases may also present with similar neurological signs and should always be considered as a differential diagnosis. These diseases also affect humans. Vaccination and mosquito control continue to be recommended as methods to help protect horses against the virus. For mosquito control, thoroughly clean livestock watering troughs on a regular basis, remove any potential sources of water in which mosquitoes can breed, dispose of water-holding containers such as discarded tires, and do not allow water to stagnate. If possible, horses should be stabled inside from dusk to dawn to reduce contact with mosquitoes. “There are USDA licensed vaccines available to help prevent equine cases of WNV encephalitis. For horses not previously vaccinated, two initial doses given three to six weeks apart are recommended,” said Rankin. Following the two initial doses of vaccine, the vaccine manufacturers also recommend an annual booster and some veterinarians recommend two boosters each year, particularly in high-risk areas. Combination vaccines are also available. Combination products provide protection against multiple diseases including West Nile virus, Eastern, Western or Vene-zuelan equine encephalitides, and tetanus. For horses that contract WNV, an equine-origin antibody product that aids in the treatment of horses is also available. Supportive veterinary treatment such as anti-inflammatories, administering fluids, and the use of a sling to keep the animal upright have also been used in equines diagnosed with WNV. Horse owners are encouraged to contact their local veterinarian for more information regarding WNV vaccine and treatment. More information is also available at the Montana Department of Livestock website at www.mt.gov/liv.

Rushing water, stagnant ponds, or even the dry stages after wet periods can lead to outbreaks of livestock disease. Mosquitoes and biting flies, capable of carrying and transmitting diseases, thrive in the damp weather, and naturally-occurring anthrax can take a toll on livestock and wildlife when pastures dry after prolonged wet periods. Horse owners should take precautions against mosquito-transmitted diseases by having their animals vaccinated against West Nile Virus and the reportable diseases Eastern and Western Equine Encephalitis. “If you wait until cases of ‘sleeping sickness’ occur in your area, you may have waited too long to vaccinate,” said Dr. Bob Hillman, Texas state veterinarian and head of the Texas Animal Health Commission (TAHC), the state’s livestock and poultry health regulatory agency. “You need time for the vaccine to do its job, which is to build the animal’s immunity to a particular disease,” he said. “Vaccine can provide the best disease protection possible, but it’s also crucial to keep up with booster shots, as recommended by the vaccine  manufacturer or your private veterinary practitioner. In 2006, 111 horses were confirmed to have West Nile Virus in Texas. So far this year, the disease has been confirmed in one horse, located in Willacy County.” Three cases of Potomac Horse Fever, which is not a regulatory disease, have been confirmed in Kerr County by the Texas Veterinary Medical Diagnostic Laboratory. Potomac Horse Fever, first detected in Maryland in l979, is not typically found in Texas. Clinical cases usually are found near rivers, streams, ponds or canals. The infection involves tiny flukes that are parasites of water snails. The flukes hatch their offspring into the water, and these are then picked up by aquatic insects that molt into flying insects, including caddis flies and mayflies. Horses can become exposed to Potomac Horse Fever when they eat or drink anything contaminated with the insects. Kerr County equine veterinarians are urging all owners to call their practitioner if equine animals exhibit signs of Potomac Horse Fever, which can include a reluctance to eat, fever, diarrhea, colic or inflammation around the hoof. Treatment includes antibiotics and supportive care. Biting flies can mechanically transmit equine infectious anemia (EIA), sometimes called “swamp fever.” This incurable disease, for which no approved vaccine exists in the U.S., is a regulatory disease. TAHC regulations require horses and other equine animals to have a negative test for EIA within the previous 12 months before entering the state, or going to events, assemblies, trail rides, undergoing change of ownership, or entering a breeding farm. The most commonly known test for EIA is the “Coggins” blood test. The incidence of EIA has dropped dramatically since l997 when 750 equine animals in Texas were found to be infected. Since January 2007, only 29 infected animals have been detected. “EIA-infected horses can develop severe anemia, fever and swelling. In severe cases, EIA can kill the animals, but many times, the infected animal has few signs of disease,” noted Hillman. “Prevent EIA transmission by avoiding blood-to-blood contact between infected and ‘clean’ equine animals. Disinfect medical instruments and tack, and control flies. Biting flies carry blood from one animal to the next on their mouthparts, and they play a key role in the mechanical transmission of EIA.” Infected equines must be maintained at least 200 yards away from other equine animals, euthanized, or sent to slaughter. “In the past, untested equine animals could be sold for slaughter through a livestock market. At the slaughter plant, blood samples were collected and sent for laboratory testing. Now that Texas equine slaughter plants have been closed, we can not ensure that horses moving to plants in other states or countries are tested. Therefore, we are requiring all horses to have a current EIA test, even when being sold for slaughter,” said Hillman. Rain, followed by hot weather can coax the invisible bacteria Bacillus anthracis to the surface, a situation that has occurred on a ranch in Tom Green County where 17 head of cattle and a number of white-tailed deer have died. “Anthrax in Texas occurs nearly every year, and it is a reportable disease to the TAHC. If we know an outbreak is occurring, we can let ranchers in the area know that it’s time to vaccinate their livestock. There is no preventive treatment for wildlife,” said Hillman. Anthrax naturally occurs worldwide and in many states of the U.S. Disease outbreaks have been reported in Minnesota, South Dakota and Canada this year. When an anthrax-infected animal dies and isn’t properly burned, the bacteria will infiltrate the soil and lie dormant (but not spread) for many years. Under ideal weather and soil conditions—a cool, wet spring, followed by a hot, dry spell—the bacteria will resurface on grass and forage. The disease cycle starts again when another animal ingests the resurfaced anthrax bacteria. TAHC regulations require that an infected animal’s carcass, manure and bedding be incinerated. This prevents wild animals from being exposed to the disease, and it kills the bacteria, preventing another site where the anthrax bacteria can resurface. Hillman urged ranchers to wear gloves and long sleeves when preparing the burn site and to avoid moving the carcasses, if possible. Exposure to anthrax carcasses could cause a handler to develop a black skin lesion that requires prompt medical treatment. “There is no need for vacationers or hunters to worry about naturally occurring anthrax. Just don’t touch or handle sick or dead animals, and don’t pick up bones or shed antlers. We usually advise hunters not to hunt feral or wild swine in the area during an anthrax outbreak. Feral swine may root around carcasses of anthrax-killed animals, becoming exposed to the bacteria but not contracting the disease.” Hillman advised swimmers to avoid ponds or streams if dead animals are nearby. The same advice goes for pets, too. By the time hunting season starts, he said, cool weather usually puts an end to anthrax cases. “Always harvest only healthy-looking animals, and, as a routine practice, wear gloves when processing meat,” he said. “In Texas, it is often ‘feast or famine,’ drought or flood,” said Hillman. “With each of the conditions, there are concerns about livestock health. So, while ranchers enjoy the lush grasses the rains have produced, they may have to control pests to lower disease risks. However, I don’t know many ranchers who would choose last year’s drought over some extra vigilance this year.”

The standoff between packers and feeders ended a little earlier last week than it has in nearly a month. Trade got underway last Thursday $1-2 higher in Nebraska at $128 dressed basis with live bids at $80. In the southern Plains, Texas trade began at $80-80.50 which was fully $2 higher than the prior week. Packers, who, according to HedgersEdge.com, were losing in excess of $10 per head last Thursday, chose to cut kill levels early in the week or close plants rather than continue operations while losing money. There were some reports of plants being dark at mid-week and harvest levels on Wednesday were only 100,000 head, down 26,000 head from the previous week. Harvest levels as of Wednesday were 42,000 head below the previous week and 24,000 below 2005. It appeared that the reduction in harvest was preventing packer losses from increasing significantly by boosting Choice and Select boxed beef cutout values. Packer margins improved by midweek from Monday’s losses which were estimated by HedgersEdge.com at $18.25 per head. Cutout values also improved. Thursday’s Choice cutout value increased 49 cents to $140.70. Select cutout values rose $1.23, to $126.67, narrowing the spread to $14.02 on moderate demand and light to moderate offerings. The next major boost to the market is expected to come from advance purchases for the Labor Day holiday in September and the boost from school lunch meat purchases. Those two events could begin to add support to the market in the next couple weeks. The combination of the two events will likely support both the suffering middle  meat complex and the end and trim meat markets. Extremely hot temperatures and rising gasoline prices are driving down consumer demand for high-priced beef products and demand at the retail level continues to slide. A 31 percent jump in fuel prices over last year has increased average annual fuel spending by $400 per year, according to Department of Energy estimates. According to Ron Plain and Glenn Grimes, University of Missouri agricultural economists, the effect has been a slump in beef demand and prices. For the first six months of the year, consumer demand for beef has fallen 4.4 percent. Grime and Plain said that increase in fuel price is cutting spending on meat purchases. As a result, prices have also fallen 9.6 percent since the end of June for Choice product. Select product has fallen 6.4 percent since June 30, 2006. “The good news continues to be that fed live cattle demand for this six-month period was up 3.5 percent from a year earlier,” they said. Cow carcass values have also fallen from last year and the number of cows being slaughtered as a result of the drought indicate prices will continue lower for at least the near-term. However, the consumer’s unwillingness to pay higher prices for middle meats is driving them to lower priced cuts from cow carcasses. In particular, the grind products are improving. Week to week prices for the 90 percent lean increased more than $6 last week. As of Thursday last week, the overall cow carcass cutout value rose more than $4 from the prior week, boding well for the cow processors. Last week’s live cattle contract trade on the Chicago Mercantile Exchange (CME) was mixed as traders looked for some firm direction. In all, though, the market set a record for live cattle open interest on Tuesday last week as more fund money poured into the already volatile market. Last Wednesday when fed cattle trade failed to develop as expected, live cattle contracts turned down sharply. The August contract traded down 82 points, closing at $82.92. October contracts were also lower on the day, dropping 72 points to $87.57. Thursday last week, however, saw a comeback as all but the August contract closed the day in positive territory. August live cattle was down 22 points, to $82.48. October live cattle contracts were up 37 points to close the day at 87.95. The basis between live cattle trade and contract trade last week was causing some alarm that there could be some deliveries taking place unless there is convergence of the two prices. If that happens, contract traders could find themselves holding onto the actual animals in the next couple weeks. Feeder cattle The recent mid-year cattle inventory report showed the drought has taken its toll on the expansion of the U.S. herd which could mean some better than expected returns next year. The growth in the beef herd was smaller than expected at only 1.1 percent above last year, meaning there will be fewer calves available for cattle feeders. This tighter than expected supply, particularly now that export markets are coming back online, could translate into improved profitability late this year and next. Currently, cow/calf producers are expected to remain profitable for the next two years. Last week, prices were very near last year’s levels and, in some cases, above 2005 levels. According to Dillon Feuz, agricultural economist at Utah State University, the average price paid last week for 500- 600-lb. feeder steers in Kansas livestock markets was $129.19 which is $6.07 more than the same week in 2005. Prices for feeder steers in the 700- 800-lb. range were $6.27 above 2005 prices at $117.27. Nebraska markets, where calves continue to be weaned early as a result of drought, saw prices in both classes only slightly above 2005, according to Feuz. Last week, however, prices in most feeder cattle markets were mostly mixed. In Amarillo, TX, compared to the previous week, feeder steers under 600 lbs. were steady to $3 higher, with no comparable sales available on offerings over 600 lbs. Feeder heifers under 600 lbs. sold steady to $2 lower on active trade and moderate demand. In Oklahoma City, OK, compared to last week, feeder cattle were $1-3 higher. Steer calves $1-3 lower. Heifer calves steady to $2 higher. Demand very good for all classes of feeder cattle. Demand moderate to good for calves despite the continued high heat and extremely dry conditions. In Joplin, MO, compared to the last week, steers and heifers under 700 lbs. were steady to $2 lower, over 700 lbs. sold steady on moderate demand and supply. Dry, hot weather had returned to the four state area, with a heat advisory in effect at the time of the sale. According to market reports, there were noticeably more light, new crop calves in the offering, as producers look for ways to conserve forage and stock water as dry conditions cause more early weaning. In Nebraska markets last week, the averages for steers weighing less than 700 lbs. were steady to $4 higher, steers over 700 lbs. trended steady to $2 lower. Heifer offerings trended mostly steady with a weak undertone. Demand was reported to be good to very good, especially for yearlings. Farther north in Hub City, SD, a good run of feeder steers and heifers sold steady to $2 higher. Most advance came on reputation light fleshed yearlings off grass.

August 8, 2005 Too often in the beef cattle industry, producers slip into the business-as-usual mode and life moves forward. That penchant for the status quo, however, is about to end. The future for beef cattle production no longer is going to be business as usual. The current case in point is documentation of the source and age of calves. A common response as cattle are sold is to add the phrase “source and age verified.” A few words can mean a lot or, if not appropriately stated, can imply more than what actually can be verified. To verify something, according to Webster, means to confirm or substantiate in law by oath, or establish the truth, accuracy or reality of the stated event. When held to specific requirements, a common approach is to audit the data that is in use to substantiate the verifiable event. An audit, again according to Webster, is a formal examination of an organization or individual’s accounts or financial situation, or a methodical examination and review. These are not words to take lightly. The typical action in today’s markets, in preparation for future source and age verification requirements, is to ask for a form of animal identification. This verification can include an electronic identification tag, a premises identification number or a 911 emergency response address, plus an assurance of written records substantiating source and birth data for the calves being sold. This information also should be placed in a working national database, along with permission to access the data by the cattle buyers. Given the historical appreciation of stated facts within the concept of selling cattle, claims may have been made. These claims are ignored due to the inability to substantiate the claim. Often repeated sales lingo is “the calves have all their shots.” In reality, this phrase means nothing because the buyer generally revaccinates newly arrived cattle to assure the calves are vaccinated. Seller accountability throughout the marketing process never existed. The net result was a tendency to speak prior to thinking and the words may have stretched the truth on some groups of sale calves. The cattle business is not going to be the same. These new processes involving the transfer of ownership are increasingly connecting the ability to verify statements made at the time of sale back to the cow/calf producer. Furthermore, subsequent sale of the calves does not release the cow/calf producer from the original claim, in this case source and age verification. The caution is simply this: Don’t state cattle can be source and age verified unless the statement can be substantiated by records. These records need to be auditable. The impact on cow/calf producers is that, upon request, a producer will need to provide the required records to verify that an individual calf was in fact born at a certain location on a certain date within the operation. A simple notation on a calendar or in a notebook is a stretch, especially when a producer is asked to state unequivocally several months after a sale that a particular calf in question actually is the calf that was born within the operation and within a certain range of calving dates. The answer to the question of source and age verification, at least in an auditable sense, implies the keeping of accurate cattle inventories within the operation. These inventories must be accessible and the cattle traceable. Yes, the mere fact the calf was identified individually implies you know and can prove the answer to the question. Can you? May you find all your NAIS-approved eartags. — 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.)

August 8, 2005 With all the attention being paid to bovine spongiform encephalopathy (BSE) and the resumption of live cattle trade with Canada, several other items of importance to the industry have “flown under the radar.” It was interesting to note that USDA released its mid-year cattle inventory report in late July to very little fanfare. In addition, there was surprisingly very little reaction to the news that herd expansion continues on a nationwide basis. According to the report, there are 33.8 million productive beef females across the country and another 9.05 million head of dairy cows. Both of those figures were a full one percent larger than the same figures last year. In addition, five million replacement beef heifers were said to be held back by producers as of July 1, four percent more than last year. Three percent more dairy replacement heifers were also noted. I found the report fascinating and it propelled me to ponder whether or not cattle producers are starting to expand their herds a little too prematurely. I don’t ask that question because export markets are still closed to U.S. beef, because that will change in the very near future, probably within the next two months. Nor does the reopening of the border to Canadian cattle bother me much. What perplexes me about the desire to expand herds right now is that a majority of the West is still trying to recover from five to seven years of drought, which means pasture and rangeland is still in the process of getting back to “normal” production levels. In talking with extension personnel and rangeland specialists across the country, there is a fear that stocking rates are growing at a rate beyond sustainability and that drought in several of those areas is just a couple dry weeks away from recurring. This past winter, spring, and even very early summer, were abnormally wet and by mid-June a lot of climatologists were indicating the drought across most of the western U.S. appeared to have subsided to very minimal levels. In some states, those experts said the drought no longer had any foothold. However, in its Aug. 2 “Drought Monitor” report, the National Oceanic and Atmospheric Administration indicated that Oregon, Washington, Idaho, Montana, Wyoming, western and southern Nebraska, eastern Colorado, and parts of New Mexico and Arizona appear to be firmly entrenched in drought conditions again. A lot of that deterioration was the result of those states being hit by one of the hottest and driest Julys ever. In the case of Wyoming, Colorado, Nebraska and New Mexico, this past July was the second hottest and third driest on record. While USDA didn’t provide a regional or state-by-state breakdown of cow distribution, market analysts indicated that a lot of the expansion happened in the states mentioned above. Now questions are arising about whether or not there will be enough pasture, grass and other forage to sustain those increased cow numbers. The desire to expand one’s interest in the cattle business is understandable, particularly for those producers who have spent their lifetime in the industry and rely on cattle as a primary source of income and financial stability. However, if the resources aren’t there to support those animals, then there is a major problem. Are things better than they have been since the very late 1990s? Absolutely—grazing prospects are much better than they have been the past five, or more, years. However, producers still have to remember that it takes a lot more than one or two wet seasons to get back to normal, and right now normal appears even further away than just six weeks ago. How quickly things can change for the worse. It never seems to work that way when it comes to improvement. — STEVEN D. VETTER

August 8, 2005 Wow, has the USDA ever got a bad rap over its BSE measures, particularly its testing program. If you believed some of the critics, you’d think a BSE epidemic was lurking beneath the surface and was ready to overwhelm the beef industry, if only USDA would admit it. Nothing could be further from the facts. To date, USDA’s enhanced BSE surveillance program has tested more than 426,000 of the cattle that are most likely to harbor BSE. That’s 61 weeks since the program began. Just one animal has tested positive for BSE. One case out of 460,000 doesn’t exactly suggest an epidemic. Nor does it suggest that USDA is doing anything less than a superb job in testing all most at-risk cattle in the U.S. Before USDA launched the enhanced testing program on June 1, 2004, it tested 8,992 cattle for BSE from January to May. That was 428 cattle per week. All samples went to USDA’s National Veterinary Services Laboratory (NVSL) in Ames, IA, where they were tested using the so-called gold standard IHC (immunohistochemistry) test. NVSL’s experience in using the IHC test was one reason why USDA decided to continue using this test as the confirmatory test on samples that might be deemed inconclusive under the enhanced program, which uses the Bio-Rad rapid test for initial testing. USDA then began its enhanced program. Understandably, it took USDA and the accredited laboratories involved in the program several weeks to come up to speed. Test samples initially were only 1,000 or so a week. But the program began to blossom as more samples came from various sources and labs got their testing techniques perfected. After 61 weeks, the program had tested an average 6,986 samples per week. The tests didn’t average more than 6,000 per week until Week 19. So, achieving that weekly average is nothing short of remarkable. It’s even more so when you consider that the average number of tests per week is 16 times larger than before the program began. Yet, none of this has deterred USDA’s critics. All they have focused on is the fact that USDA found its first domestic case of BSE after a sample was retested, and the fact that a hard-working country vet forgot to send in a brain sample for three months. Again, to believe these critics, you would think USDA’s BSE testing protocols were in disarray. I see things differently. USDA was exceptionally open (it has used the word “transparent”) in explaining the circumstances of these two cases. It explained in great detail exactly what happened, the rationale for its action on each occasion and what it was doing in light of what had occurred. Regarding the sample that was retested in June and was deemed positive, I would make a couple of points. USDA and Ag Secretary Mike Johanns were obviously blind-sided by their own Inspector General who ordered the retesting. The question still remains unanswered as to whether the IG had the authority to make such an order. That question gets to the heart of what occurred regarding this positive test, much more than whether USDA’s testing protocols were okay. Ordering the retest did not invalidate what USDA had been doing up to that point. I mentioned earlier how NVSL had been using only IHC tests in its testing prior to the start of the enhanced surveillance program. No one questioned then whether that was sufficient or not. So why was there such criticism of the retest? Well, it involved a sample that turned out to be positive. But the critics had savaged USDA even before this result was known. Perhaps the real answer is that consumer activist groups for months had been hammering away at previous Ag Secretary Ann Veneman about BSE, including testing. When she resigned, they transferred their attention to USDA’s Inspector General, one Phyllis Fong. Lo and behold, a few months later she orders the retest. Remember, these are the same activist groups that have campaigned for years for Americans to eat less beef. As for the non-definitive sample, how can USDA be held responsible for the fact that a vet forgot to send in a sample? It didn’t even know the sample existed until it suddenly turned up. Contrary to what USDA’s critics claimed, there was no breakdown of USDA’s testing protocols. I happen to think USDA’s enhanced BSE testing program has been a remarkable achievement, especially when you consider the logistical challenges of collecting and testing so many samples across such a huge area. Rendering plants, plants that handle dead or dying cattle, beef processing plants, producers and others have played an important role in providing samples. The labs have done a great job in testing them. USDA’s management has been exceptional. It deserves credit for making this vital program such a success. — Steve Kay (Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533; Petaluma, CA 94953; 707/765-1725. His monthly column appears exclusively in WLJ.)

August 8, 2005 The USDA's National Agricultural Statistics Service released two important cattle supply-related reports on July 22. The July 1 cattle inventory report and the July 1 cattle-on-feed report help give some indication of cattle and beef supplies for the next six months. The July 1 cattle report confirmed the expected increase in the U.S. cattle inventory. All cattle and calves totaled 104.5 million head, which is 900,000 head, and slightly less than 1 percent more, than in 2004. This is the first time the July report has shown an increase in cattle numbers since 1995, which was the previous cyclical peak. The July report is an abbreviated report, compared with the more in-depth, state-by-state analysis that is included in the Jan.1 USDA cattle report. The number of beef cows, at 33.75 million head, was up 250,000, or less than 1 percent from last year. That number supports the expectation that herd expansion, although modest, is under way. Beef cow numbers peaked cyclically in 1995 at 36.1 million head, so numbers are still more than 2 million head less than they were 10 years ago. The higher numbers were not a surprise to cattle market observers because of the much improved moisture conditions in many cattle-producing states. Much of the northern Plains, which has suffered with severe drought for several years, has returned to near normal precipitation levels. Another indication that beef herd expansion is under way was noted in the heifers kept for beef cow replacement category. Beef replacement heifers increased 200,000 head from last year, the second straight year with a 200,000 increase. The 5 million head of beef heifers was the largest number to be retained since a similar number was reported in 1998. The USDA cattle-on-feed report indicated that the number of cattle being fed to slaughter weight in feedlots with more than 1,000 head capacity was 3 percent above last year. All of the year-to-year increase was due to steers. As of July 1, steers on feed were up 7 percent, compared with heifers reported at 4.5 percent below last year. Cattle herd expansion will have both long- and short-term price implications on feeder calf prices. In the long run, as offspring from increasing cow numbers and heifer retention are marketed, beef production will increase and prices will decline cyclically. If good to normal precipitation patterns continue, cattle numbers will likely increase through the end of the decade. The timing of the cyclical price highs and lows will be different from the past. Observers of the cattle cycle will recall that prices have been low and numbers high in the mid decades of the past, especially in years ending in 5 ('65, '75, '85, '95). The extra long liquidation during the previous nine years, instead of the typical four-year liquidation, caused relatively high prices and low beef production in 2005. If the next cycle is the typical 10-year length, low prices likely are to occur in 2009 through 2010, with cyclical high prices again in 2015. In the shorter term, historically low feeder cattle supplies will be supportive to feeder-calf prices in the next six months. The 2005 calf crop is projected to be 37.8 million head, up slightly from 37.6 million in 2004, but down slightly from 37.9 million in 2003. This year's calf crop will be almost 2.5 million head less than 10 years ago. Continuing heifer retention also will reduce supplies available to the feedlot sector. The demand for feeder calves and heavier-weight feeder cattle this fall will depend on the size of the corn crop and the resulting prices and the price of fed cattle. Parts of the Corn Belt are experiencing dry conditions, so corn-futures prices have been volatile. Fed-cattle prices likely will average several dollars per hundredweight less than last year in the fourth quarter. If a good corn crop materializes and fed-cattle prices average more than $80 this fall, calf prices should average near last year's levels. Reduced corn production or lower fed-cattle prices would pressure calf prices lower. — Tim Petry, livestock marketing economist, NDSU Extension Service

Good trade volume broke out early last week at mostly lower prices after a sharp sell-off on the futures market early in the week. According to reports, trade as of last Thursday was light to moderate in the southern tier and light in Nebraska, Colorado and Iowa, with light to moderate demand from packer buyers after Texas feedlots came to the table last Tuesday to accept lower money. Prices in Texas were mostly steady to $1 lower from $90-91.50 live basis. Sales in Kansas were mostly $1.50 lower at $91 live and dressed sales sold $2.50-3 lower from $142.50-143. The few live sales in Colorado sold $1 to $1.50 lower at $91. In Nebraska and the western Corn Belt, sales were in a range of $90-90.50 live basis and $143-144 dressed last Thursday. Falling beef cutout values and a steep drop were responsible for the unexpectedly lower cash market last week. Many analysts had been expecting trade to develop in steady to higher territory before the sell-off in the Chicago Mercantile Exchange (CME) live cattle issues last Tuesday. However, by Thursday, the market had stabilized at $91.40 for the August contract. The October and December contracts, which had been selling over $100 for a brief period allowing a good hedge opportunity, were also lower last Thursday. At mid-day, October was down slightly at $95.50 as was December, which ended the session at $97.90. Futures markets last week showed that good prices for fed cattle are likely well into 2008, however, corn remains the wildcard. Last week’s USDA crop estimates, due out Aug. 10, were expected to be a major market mover. If corn prices remain in check into next year, sustained fed cattle prices over $1 in the spring are not out of the question. This year’s small calf crop combined with the currently ample pen space in the country is going to translate into a good fall marketing season for cow/calf producers as well. The beef cutout, which suffered last week from ongoing retail demand, was further hampered by the fire sale pricing of products which were initially intended for the South Korean market. Since the sudden stop implemented after officials with the Korean Agriculture Ministry found prohibited beef products, some end meats have been piling up in cold storage. Chuck, loin and round were all noticeably weaker last week as a result of the heavy offerings as packers tried to clear some of the inventory. Select and Choice ribs were about the only bright spot last week when even the recently popular beef trimmings moved lower, despite very light offerings. Beef slaughter for the week was still running relatively strong, despite the lower cutout and packer margins estimated at $11.60 per head in the red by HedgersEdge. com. The weekly harvest through last Thursday totaled 497,000 head, even with a week earlier and 6,000 lower than last year’s pace. Despite the soft market for domestic product and the packer’s ability to push the cutout higher, cow beef prices remain at comparatively high levels when viewed from a historical perspective. Last week, the 90 percent lean was moving at $141.60, compared to $130.74, while the 50s were holding steady with 2006 levels at $57.17. The cow beef cutout price has been well above year ago levels as well. Last week it was steady at $115, compared to the same day in 2006 when it traded at $105.33. The high prices being paid for cull cows is a result of a combination of factors including the apparent consumer demand for ground beef and a decline in cow slaughter. With an expected increase in herd growth on the horizon, many analysts believe that cull cow prices are heading higher over the course of the next year, possibly hitting record prices early next year. Feeder cattle The Superior Video Auction sale, held two weeks ago in Winnemucca, NV, once again provided good prices for calf sellers. In addition to the high prices being paid for yearlings that have been typical this year, ultralight calves also sold well, with prices into the $160s being paid for 3 and 4 weight calves. Five-weight steers in the north central region were in the mid $120-130 range, while farther west, the price of trucking kept prices closer to $120. University of Utah Economist Dillion Feuz said last week that the corn market will continue to be the biggest driver of calf prices. “In mid June when December corn was trading at $4.20 per bushel, October feeder cattle were at $107 per cwt. December corn declined to $3.36 on Aug. 1 and October feeder cattle had increased to $118 per cwt. The expectations for winter and next spring fed cattle prices also increased during that time which also provided added strength to the feeder cattle market,” he said. “Since Aug. 1, December corn has been increasing again, live cattle contracts have been declining, and not surprisingly, feeder cattle have also declined and closed at $115.25 on Aug. 8.” Feuz said the historical tie between corn and feeder calf prices remains true today despite the changes in market dynamics created by the ethanol industry. “The old adage of a dime increase in a bushel of corn will lead to a dollar decrease in the price of a 5 weight calf still seems to hold true. I recently completed an analysis of feeder cattle prices from 1991-July 2007 and that was the relationship I found,” Feuz said. “Obviously, as the price, or expected price of fed cattle increases/decreases, feeder cattle prices also tend to increase/decrease. Right now in the corn market there is equal money bet on December corn prices being below $3.30 or above $4 per bushel this fall. That is a swing of $.70 per bushel which could swing calf prices $7 per cwt. The next few weeks’ weather in the Corn Belt will help determine where the corn market will end up this winter.” Last week, it appeared as though the traders on the CME were anticipating that feeder prices might slip back as they pushed contract prices into what some analysts believed was oversold territory. Last Thursday there was some sign of recovery however, as the market moved higher. August feeder cattle contracts closed the day up 37 points at $114.95, while September contracts added 52 points to close at $114.97 and October feeders gained 45 points to end the day at $115.70. November calves were also higher, moving up 25 points to finish the session at $115.30. Meanwhile in auction markets across the country, the trend also worked higher last week in many sales, despite continued seasonally light runs of cattle, as producers continue to busy themselves with summer projects like haying. In El Reno, OK, last week, feeder steers sold steady to $2 higher, except for those thin enough for grass which were $5-10 higher as cattlemen with ample grass worked to take full advantage. Feeder heifers, which were present in limited quantity, sold steady. Demand was reportedly extremely good for feeder cattle, especially for those in thin flesh. The few available steer and heifer calves were called steady to $2 lower. Demand was called moderate to good for calves as summer’s heat is taking its toll on the short weaned calves. To the north in Joplin, MO, compared to last week, steers under 600 lbs. were $1-2 higher despite 100-degree heat and a lack of precipitation in the region. Heifers under 600 lbs. were steady to $2 higher; steers and heifers over 600 lbs. were steady after last week’s sharp upturn. Demand was reported to be moderate to good on moderate supply.   In Hub City, SD, last week, feeder steers and heifers sold mostly steady to $1 higher on a run which was reportedly made up of heavier fleshed cattle. The offering also included several loads of feeders off grass, as well as several consignments of backgrounded cattle. In Davenport, WA, compared to the prior week, feeder cattle were steady to firm in a light test on active trade and good demand. South along the coast in Famoso, CA, market prices were steady for stockers and feeders. There was reportedly big demand for the stockers and feeders on offer, particularly the quality greener kinds in the 450-550 lb. class. There was also strong demand for feeders in the 700-800 lb. range.

The recent hot, humid weather is bringing out odors at some North Dakota cattle feedlots. “Feedlots do not need to smell,” says Karl Hoppe, area Extension Service livestock specialist at North Dakota State University’s (NDSU) Carrington Research Extension Center. “Feedlots may have a slight odor, but they do not have to have an overwhelming odor.” Proper feedlot design and management are the keys to keeping smells to a minimum, he adds. One of those management tools is pen stocking density. “Don’t overcrowd the pens,” advises Ron Wiederholt, NDSU’s nutrient management specialist at the Carrington center. “This may not be easy since most producers want to maximize pen space, but during hot weather, this may not be good for the cattle nor the condition of the pen.” High stocking rates lead to wetter pen surfaces from the cattle’s urine. Overcrowding also can degrade the pen’s surface, resulting in wallows and potholes that stay wet. Rainfall that collects in pens is another odor causer, according to Hoppe. “Whenever you have water mixed in with manure, you have odor,” he says. Wiederholt recommends keeping pen surfaces uniform so they don’t develop low spots where rain and urine can collect. Feedlot operators also should scrape and remove manure from pens more often during hot weather. “Frequent scraping and removal of manure from pens is probably the most effective management tool for odor control,” he says. “If you can’t afford to decrease pen stocking density, then you must increase the frequency of pen scraping and manure removal.” However, feedlot operators have to find a place to put all that manure. They’ll need to have a temporary manure stacking area since they won’t have a place to spread it at this time of year. The temporary storage area can be in the corners of fields where the manure will be spread after the crops are off. But producers will have to make sure the sites they chose for the piles have a low risk of runoff, Wiederholt says.