— Higher costs may have reduced value of feeding cull cattle. Producers have a variety of differing philosophies when it comes to handling cull cows. Numerous studies have shown that selling unproductive cows contributes a substantial amount of money to an operation’s bottom line. According to the 1999 National Beef Quality Audit, cull cow marketing creates an average of 16 percent of ranch income. In some cases, it could be much more. Feeding culls is normally a proposition which is both risky and potentially rewarding, however, with this year's drought and high fuel costs translating into increased feeding costs, the picture may have changed somewhat. Jim Robb, director of the Livestock Marketing Information Center, said right now, the market indicators show that producers ought to sell their culls as soon as possible to avoid the price decline in the fall. However, he does expect some seasonal price rally through next year up to April 2007. According to USDA data, cow slaughter has been running 15 percent above the prior year for the first six months. R. Curt Lacy, extension economist for University of Georgia, said cow numbers are essentially the same this year as in 2001 and compared to the last severe drought year in 1993, there are one million fewer cows in the U.S. herd. Lacy said he expects this will contribute to a slight price decline in the next several weeks and months of approximately $7-10 per cwt. However, he said depending on drought conditions and available feed resources, it is likely more profitable to sell cattle now rather than further depleting feed resources. “The bottom line is, in all likelihood it is more profitable to market a cull cow in better condition and save the feed than to deplete feed resources and sell a thin cow for less money,” Lacy said. He said the consequences of marketing during the fall run of cull cattle would be less of a factor this year as a result of the early shipment of cows. “Cattlemen should not let concerns about the large numbers of cows being marketed keep them from making the correct culling decision,” he said. Of course, the major question any operation will need to consider is can feeding be done efficiently and at a profit. This year, that particular question is a more important consideration as a result of feed costs and lack of available grass.   Darrell Busby, livestock field specialist for Iowa Beef Center (IBC), has been involved in feeding cull cows for the premium white fat market for several years and said IBC intends to feed another group of cull cows from November to February again this year. He said although he hadn't yet completed projections, it has been profitable in most of the previous trials. However, finding a buyer could be the biggest challenge for anyone considering feeding cull cattle. In the areas with good quality winter forage or inexpensive feed, the practice of feeding culls may represent a feasible opportunity. Although purchasing culls for the purpose of feeding is a risky proposition at best, it can benefit a ranch that feeds out their own cows. In order to take advantage of high cow beef values, it is important to carefully select the animals placed on feed, specifically avoiding over-conditioned cows which gain poorly, and unsound or sick cattle, which can result in higher loss rates as well as a discounting of the carcasses that end up in the processing chain. At current market levels, a “high dressing utility” cow can bring in excess of $45 per cwt. while a lower yielding cutter in poorer body condition may bring $40 per cwt. or less. That analysis shows even at a high rate of gain, feed cost this year could make feeding cull cows more risky. The expiration of Mandatory Price Reporting has eliminated the price discovery and with the amount of consolidation among cow processors, it is important to evaluate the buyer market before undertaking the venture.   Market conditions Prior to the occurrence of bovine spongiform encephalopathy in North America, cow plants slaughtered an average of 7.2 million head of cows each year. Now, annual cow slaughter could drop to 4.8 million head this year. That's a number some believe is barely keeping up with current demand for cow beef cuts, a market which, by most accounts, is expanding and increasing in value. Although the cow beef market is expanding, fewer cattle in the processing chain is leading to rapid consolidation among cow processors. This consolidation is decreasing the number of plants and buyers, driving the price down in communities which don't have a nearby packer. In addition, it means that cattle that do find a buyer—although recent auction barn prices have still been above the five-year average—are having to be shipped farther for processing, increasing costs and adding uncertainty to the practice of feeding culls. — John Robinson, WLJ Editor  

In 2001 an outbreak of foot-and-mouth disease (FMD) in the United Kingdom (UK) resulted in catastrophic economic losses exceeding $15 billion. The cost to livestock producers was estimated to be nearly $1 billion and at least 6 million animals were slaughtered. Any outbreak of FMD in the US today, where the density of livestock animals is high, would likely be as devastating as the one that hit the UK in 2001.   With no recent FMD outbreak to use as an example, it is hard to predict how an outbreak might spread in today’s US. Current information on precise animal locations, movement and husbandry practices is not up to date, and this lack of information hampers the implementation of an effective response strategy. As a result, the US is left vulnerable to an FMD epidemic. Supported by the Office of Homeland Security and the USDA, researchers at the Center for Animal Disease Modeling and Surveillance (CADMS) in the School of Veterinary Medicine at UC Davis, are developing a simulation model, designed to characterize the size and duration of an FMD epidemic anywhere in the U.S. The model will also be used to identify the best strategies, to contain an outbreak and minimize the impact to the livestock industry. According to Dr. Carpenter, co-director of CADMS, “the exercise made it very clear that knowing the precise locations of livestock and the movements of animals, vehicles and people on and off the farm are critical in order to be able to predict where the disease will spread, as well as the magnitude of the outbreak.” CADMS has already gathered data from livestock producers in the state of California and now the model is being expanded to encompass the entire nation. In order to obtain the necessary information for the model, an online survey will be available to livestock producers in the western states starting this October. Clair Thunes, CADMS Project Manager, believes that all livestock producers will find the survey simple, educational and short to complete. “The response from the livestock industry in California has been outstanding and we are hoping to get the same response from the rest of the country.” CADMS guarantees that all the information will be kept confidential and will only be used for modeling purposes. For more information, please contact Pelayo Alverez by phone at 530/554-2988.

— Placements 17 percent above last year. — Marketings slightly higher than 2005.   The USDA National Agricultural Statistics Service (NASS) cattle on feed report released Aug. 18 was mostly in line with analysts’ pre-report expectations. The total number of cattle on feed as of Aug. 1 was up 7 percent over 2005, at 10.82 million, the second highest on record behind 2001 when NASS reported 10.89 million head on feed. The Aug. 1 number is down only 50,000 head from the July 1 number. NASS statistics show the normal decline is closer to 300,000 head between July and August. Erica Rosa, agricultural economist with the Livestock Marketing Information Center (LMIC), said the numbers were pretty much as she expected, with nothing too surprising showing up in the report.   “Even though placements were up, it was mostly lighter weight calves which were placed earlier as a result of drought conditions and a lack of available forage,” Rosa said. “We don’t expect those placements to create a problem later this year. In fact, we expect beef production will actually be down in the second half of the year.” According to several analysts, the report was expected to have little impact on the direction of trade, despite its slightly bearish nature. For almost two weeks prior to the report’s release, market economists were warning the industry to expect a jump in the number of cattle on feed and July placements as a result of the summer’s ongoing drought.   During the month of July, feedlot placements numbered 1.96 million head, 17 percent higher than last year and 14 percent above 2004. This year’s placement number, while high, was expected as more calves have been weaned early and shipped to feedlots to reduce pressure on pastures and cow herds.   Placements in South Dakota, which is suffering through severe drought, showed the greatest increase, rising 60 percent above last year. California however, reported placements dropped 24 percent from 2005 and Oklahoma, where many cattle moved to feedlots early, was down 6 percent.   Placements of lightweight cattle less than 600 pounds were 570,000 head in July. Placements of cattle in the 600- to 699-pound class were 403,000 head and 700- to 799-pound placements totaled 490,000 head. Perhaps the only surprise for analysts in this report was the continued strong number of heavyweight cattle 800 pounds and over last month, with 500,000 head being placed on feed in July.   Rosa said most of those heavy placements were yearlings from the northern tier which had been held over by producers for placement on feed this year. She said the continued dry conditions in the north had finally pushed those heavier cattle into feedlots. Marketings of fed cattle during July reached 1.96 million head, 2 percent above the same month during both the past two years. Rosa said the marketing rate was in line with LMIC’s pre-report expectations.   Feedlots in South Dakota sold 27 percent more cattle last month than the prior year. Iowa feeders also were well above normal, marketing 16 percent more cattle this July than in 2005. California was also well above the prior year, marketing 14 percent more fed cattle. Bob Price at North American Risk Management Services, Inc. cautioned cattle feeders about the current rate of marketings and front end ready supply. Feedlot operators have heard the advice frequently over the past several months.   “Marketings projected from weight breakdowns of placements show a decline in numbers in the September and October before jumping sharply higher in November to February time frame. However, the front end numbers and the computed carryover remain record-high. This should mitigate to some degree the drop off in cattle placed against September and October as more front end cattle are carried into that time frame.”   Price said there was some good news ahead for cattle feeders who have done a good job so far in the month of August with liquidating cattle.   “July marketings were reported at 1.955 million head, up slightly from last year's record low number and well below the five-year average. The computed carryover grew by 164,000 head,” Price said. “August sales have been brisk and this should help whittle down the carryover coming out of this month.”   Several states were below last year’s marketings number including Colorado, which was down 10 percent, Idaho, where feedlots sold 11 percent fewer cattle, Washington, with fed cattle marketings down 13 percent and Oklahoma, where feedlot sales declined 15 percent from July 2005.   Price echoed what many analysts said about the report's overall impact on the market. “This report should have much less of a reaction on the futures than the last two reports have had,” Price said. He said he believes the report’s big placement number could keep some pressure on the February live cattle contract though. — John Robinson, WLJ Editor  

— On feed report does little to move market despite jump in placements.   Fed cattle trade last week was at a virtual standstill with offers last Thursday at $88 live basis and $139-$141 on dressed cattle. Packers were still about $5 below live and $5-6 on the dressed asking prices at press time last week. Trade was expected to be at least steady to higher when it did finally occur last week.   “Producers have every reason to hold firm given the packers’ record of caving in at the last minute and having the economic incentive to add weight,” said Andy Gottschalk at HedgersEdge.com last week. He estimated that despite a falling cutout value, packers last Thursday were still in positive territory, earning approximately $3.35 per harvested animal, down approximately $23 per head from the prior week.   The cattle on feed report issued by USDA on Aug. 18 was essentially a non-event. It was largely in line with pre-report expectations and did little to provide market direction. Mike Roberts, commodity marketing agent for Virginia Tech, said last week the report “showed no surprises, was basically neutral, and slightly bullish to feeders.” Roberts said he was optimistic about prices over the next 12 months as a result of a potential production void due to good prices and dry weather.   He said some analysts noted that placements in earlier months were heavier and are hitting the market now.   “Cash sellers should sell live cattle at the heaviest possible weights, not hurrying anything out the door. Hedgers should seriously consider protecting December and February marketings,” he said.   Packers, who have largely filled pre-Labor Day demand, are faced with a decline in consumer interest in higher priced beef items. Retailers are largely focused on value and were straying away toward pork and poultry last week as feature items. Beef will certainly factor into holiday grilling plans, but based upon the large demand for grind product, it seems they will choose to serve hamburger rather than steak. Middle meats are still dragging down carcass cutout values with the only strength to be found in the end meats right now.   Last Thursday for instance, the Choice cutout value dropped $1.23 to trade at $146.40. Select cutout values were down 76 cents, to $136.11. The spread, under $11, was expected to continue to narrow until the retail sector was able to stir demand through lower priced features. Despite the softness in cutout values, packers were taking advantage of the positive margins to make hay while the sun shined. Harvest last Thursday was estimated at 128,000 head. That number was up 7,000 head above the prior week and 3,000 above 2005 levels. For the week last week, USDA estimated harvest as of Thursday at 509,000 head, 12,000 above the previous week and 22,000 above the prior year.   On the Chicago Mercantile Exchange (CME) last Thursday, live cattle futures traded modestly higher with the nearby August contract gaining 92 points, closing at $88.12. October contracts gained 87 points to close the day’s trade at $92.32 and December was up 62 points, to $91.42, at the end of Thursday’s session.   Feeder cattle The anticipation of at least steady to possibly higher fed cattle trade last week fueled the demand for feeder and stocker cattle and prices across most of the country, along with contract trade on CME, was mostly higher. There was some weakness in the corn market as a result of improvements in crop condition and better than expected yields being found on crop tours. That weakness added strength to feeder cattle in many areas. Although there are a number of reports of early weaning and continued problems with drought in much of the central U.S., the large runs of fall calves haven’t started trickling into auction markets yet, or in some cases are already past, leaving producers to sell bred cows. Fortunately, despite the awkward trickle of cattle into markets, prices have remained strong for the past several weeks for not only cows, but also feeder cattle. Both Western Video Market and Superior Video Market sales found strong prices for their customers and willing buyers. Western Video Market sold some good lots of cattle in the 510- 565-lb. range for $139-145.50. Another bunch in the 500- 535-lb. class sold in a range of $132.50-137. A lot of 600-lb. feeder steers brought $136 and some steer consignments in the 830- 860-lb. class sold in a range of $107.75-113.75.   On CME last week, prices moved higher in unison with fed cattle contracts and were steady to slightly higher with the prior week. The nearby August contract traded 35 points higher last Thursday to close at $116.25, nearly 75 points above its Thursday close the week prior. September feeder contracts last week were mostly steady to slightly lower than the previous week. In last Thursday’s session, the contract traded 17 points higher to close at $116.27. October and November were also mostly steady with October gaining 25 points to close at $117.17 and November up 30 points to close at the same price in last Thursday's trading session. The feeder cattle cash settled index as of Aug. 22 was up slightly to $116.18.   In auction market trade, in Abilene, TX, last week, feeder steers were steady to $2 higher, yearlings $1-3 higher. Feeder heifers steady, yearlings steady. Slaughter cows and bulls steady. Replacement cows and cow/calf pairs sold for prices steady to firm with the previous sale. Trade was called good and demand active.   At Oklahoma City, OK, the Oklahoma National Stockyards sold cattle higher last week. Feeder steers and heifers were steady to $1 higher. Steer and heifer calves steady to $3 higher. Demand good for all classes. Some rain and cooler temperatures over the last weeks have brought relief to parts of the region but some areas remain very dry. In West Plains, MO, compared to the prior week, light steer calves under 450 lbs. and heifers under 400 lbs. were $2-5 higher, steers over 450 lbs. sold $1-3 higher, with most advance on 500-650 lbs. Heifers over 400 lbs. were steady to $2 higher, although weights over 700 lbs. were not well tested. Supply moderate, both quality and flesh conditions, in most cases, not as attractive as last week. Demand good, continuing best on better quality, uniform lots of weaned calves having received one to two rounds of vaccinations and most all yearling cattle. Cattle feeders and backgrounders, currently in the market, continue showing a bullish side and obviously feel comfortable with the market remaining fairly stout or perhaps just nervously hoping.   In McCook, NE, last week, steers and heifers under 600 lbs. were called steady to $3 lower. According to market reports, there were not enough over 600 lbs. to call a price trend at the sale. I n Hub City, SD, one of the few northern tier markets to have sold a significant number of feeder cattle, steers and heifers sold steady. In Sioux Falls, SD, a light run of feeder cattle sold with higher undertone noted.   On the west coast in Galt, CA, feeder steers and heifers under 600 lbs. sold for prices mostly steady with the prior week. Feeder steers and heifers over 600 lbs. sold for prices mostly $2-3 higher than the week prior. — WLJ  

— Fed cattle $5-6 higher live and $6-7 higher dressed. — Feeder cattle follow feds higher. Packers stepped up to the plate early last week and paid sharply higher prices for cattle in both the north and south Plains. Trading occurred late Wednesday afternoon at $86 live basis in the south, $5-6 higher than the previous week. In the northern Plains, packers paid $136 live, $6-7 higher than the prior week. Volume was reportedly good with feedlots in Texas, Kansas and Nebraska each trading approximately 90,000 head, according to USDA figures. Despite the good cleanup of feedlot show lists on Wednesday, there was some additional light trade reported on Thursday morning last week. Analysts said the positive news from Japan, which reported that five tons of beef sold out in a single day, coupled with rising domestic demand in advance of the Labor Day holiday, were the primary factors in the rise in prices paid by packers last week. It also appeared that at least one major packer last week was very short on their supply of fed cattle, which added to the early trade. Packer margins last week were much improved from prior weeks and on Thursday, HedgersEdge.com estimated packers were earning $46 on every head passing through plants. The margins were bolstered by a rising boxed beef cutout value last week. On Thursday, Choice boxed beef cutout values rose another 62 cents in morning trade to $147.59. The day prior prices had added $1.29 to the Choice cutout value. Select boxed beef was also up, adding $1.54 last Wednesday and another $1.09 Thursday to trade at $136.11. Trade was called moderate on light to moderate offerings from packers last week. Packers, in an effort to take advantage of positive margins, ramped up harvest levels last week killing 127,000 head last Thursday for an estimated 502,000 head for the week-to-date total as of Thursday. That number was 64,000 head more than the prior week and 18,000 ahead of last year’s numbers. Retail movement of beef out of packing plants last week was good as buyers began forward contracting to meet holiday demand and cooler weather also led consumers back to beef cuts as grilling weather returned after a hot spell across most of the country which had decreased demand temporarily. All of the positive news coming from the cash fed cattle trade, coupled with the improvement in the boxed beef complex, spilled over to contract trade last week. Prices were lifted significantly ahead of the Cattle on Feed report by the much improved trade on the cash side. On the Chicago Mercantile Exchange (CME) last Thursday, prices were also sharply higher. The August contract traded up 217 points to close the day at $88.47 and setting a new contract high in the process. In fact, during last Thursday’s trading session, all but the February contract broke through resistance levels to reach new contract highs. The October live cattle contract was up 192 points on the day and closed at $92.37. December contracts closed up 97 points to settle at $90.97. Mike Roberts, commodity marketing agent for Virginia Tech, said last week that the boost in retail demand and the market opening in Japan were driving contract prices higher, but he cautioned that the market would be slow to recover overseas. There was also optimism last Thursday about Korean inspectors being dispatched to review the two plants that had previously failed the inspections by South Korea. The prospect of fully revived Asian trade added support to the already exuberant marketplace in Chicago and in the country last week. “Quick shipments (to Japan) indicate better-than-expected price levels may be in order. Cash sellers should continue to sell live cattle as soon as they can at the heaviest possible weights,” Roberts said. He also cautioned feeders not to jump into the corn market ahead of USDA’s crop report, due out last Friday, because of the current volatility. “Corn users should not consider pricing more corn needs at this time,” Roberts said. Feeder cattle According to industry leaders, and taking a solid glance at the feeder cattle market, allows one to say with confidence that producers have little to no validity for complaints. Although auction markets across the country have feeder cattle prices staying steady to slightly higher, as well as slightly lower, prices are still strong considering drought conditions and a heavy supply. Also on the CME, contracts are all in the black. Compared to a week prior in Oklahoma City, feeder cattle stayed steady to $1 lower. Steer and heifer calves were described as selling unevenly steady. Officials at the facility said demand was moderate to good. Supply in Oklahoma City was heavy with 9,200 head selling, compared to 7,966 the week before. Quality was staggering, being called plain to average with an increased showing of number 2 muscled cattle in thin to average flesh coming off short grass due to extreme drought conditions. Like many other geographical regions of the U.S., weather continues hot and dry. In all parts of Oklahoma, they have witnessed 23-plus days of 100 degree or better temperatures. In Winter, KS, 1,058 fewer head were sold last Thursday, but the lighter supply increased demand and allowed producers to realize steady to $1 higher. Steers weighing 700-950 lbs. traded firm to $1 higher, with heifers weighing 700-900 lbs. steady in what was called a very limited supply. Slaughter cows brought good money, selling from $1-3 higher. Slaughter bulls in a very limited test, firm to $1 higher. At the Joplin Regional Stockyards in Joplin, MO, last Tuesday, 4,800 head traded places compared to the 3,270 the week before. Trade could be called uneven in Joplin with a wide flux in prices. Compared to the week prior, steers under 700 lbs. were steady and over 700 lbs. steady to $2 higher. Heifers in south Missouri weighing 450-600 lbs. sold weak to $3 lower and heifers under 450 lbs. and over 600 lbs. traded steady. Similar to Oklahoma City, Joplin market officials said temperatures were forecast at 100 degrees plus and said the heat is holding the calf trade in check. In Hub City, SD, at the Hub City Livestock Auction, 3,119 head went through the ring. Compared to the Wednesday the week before, feeder steers and heifers sold up $2-4 with good demand in all classes. Offerings included long strings of reputation feeders off grass, where the cattle were average to thin, again undoubtedly due to drought conditions. At the Billings, MT, Livestock Commission Co., 555 head sold where feeder cattle offerings were too limited to offer any price comparisons. However, the market sold slaughter cows and bulls steady to $1 lower. Six hundred and forty head sold at the Stockland Livestock Auction in Davenport, WA, up 300 head from the Tuesday prior. Slaughter cows and bulls, like most other markets, were realizing higher prices. They were bringing steady to $1 higher in Washington last week. Trade was also described as active with good demand. In the most recent Superior Livestock Auction, held July 31 through Aug. 4, over 207,820 head sold with consignors from 31 states. The auction was held in Winnemucca, NV. Officials there said the demand was “excellent” and trade “very active” on all classes of cattle. The calves on cows in the southern region were $2-5 lower while the weaned calves were selling mostly $2 higher in all tiers. Egbert Livestock in Wells, NV, sold 410-lb. calves that were certified natural from Anus and Angus cross for $158.85 per cwt. Skinner Ranches in Jordan Valley, OR, sold 515-lb. certified natural Red Angus and Hereford cross steers for $140.50 per cwt. The yearling steers were trading steady to $2 higher while heifers suffered $2 lower. Officials at the market said the largest interest was in good quality, conditioned yearlings to be “delivered immediately.” Van Norman Ranches in Tuscarora, NV, sold Angus and Beefmaster cross steers weighing 725 lbs. for $114.50 per cwt. Delong Ranch in Winnemucca, NV, sold 800-lb. certified natural Red Angus/Charolais cross steers for $115.50 per cwt. Debruycker Charolais sold cross steers weighing 890 lbs. for $112.85 delivered. Cedar Top Ranch in Stuart, NE, received $116.25 for their yearlings weighing right around 860 lbs. On the CME, contracts traded significantly higher across the board as a result of spillover enthusiasm from the live cattle pit last Thursday to reach some new contract highs. August contracts traded $1.33 higher, closing at $117.40, which was 15 cents short of being a new contract high. September did reach new highs last Thursday, increasing 150 points, settling at $117.45. October contracts traded 140 higher to close at $117.93. November followed trend, settling at $116.75, which was 105 points higher than last Wednesday’s $115.20. — WLJ  

— USDA halts rule-making process. USDA has rescinded a proposal which would have allowed imports of Canadian cattle over 30 months of age, saying there won’t be a ruling on the case until it has completed its investigation into the most recent case of bovine spongiform encephalopathy (BSE). The most recent case, announced last month, was found in an animal just 50 months old. That animal had been born nearly four years after Canada’s ruminant animal feed ban was enacted. Dennis Laycraft, executive vice president of Canadian Cattlemen’s Association, said he hoped the delay would be a short one. “USDA has inspectors here working with the Canadian Food Inspection Agency and we hope the delay in this rule will be limited to two to four weeks,” Laycraft said. “Since they are working side-by-side, they will have access to the information as it is being researched, but for right now, we are still waiting for specifics.” USDA spokesman Ed Loyd said the department has withdrawn the proposal which had been under review by the White House Office of Management and Budget that would have allowed shipments of cattle over 30 months of age and beef from the older animals. That rule was expected to be published in the Federal Register sometime in August. “If no revisions to the proposed rule are needed, it will continue through the rulemaking process as planned. Holding this proposed rule has no impact on current trade or related regulations,” said Loyd. According to Loyd, USDA is committed to insuring the feed ban in place in Canada is working properly before continuing down the road toward restoring the full flow of cattle across the border into the U.S. “As Secretary Johanns indicated on July 13, we have questions about Canada’s recent case of BSE in an animal born several years after the 1997 feed ban was instituted. We believe it is prudent to hold the proposed rule until the joint investigation into how this animal may have been exposed to infected material is complete,” said Loyd. He said USDA wants to know how the latest infected animal in Canada acquired the disease, considering it had been born in 2002, well after Canada imposed feed regulations in 1997 designed to curb the spread of BSE. “It is important to confirm that Canada’s regulatory system is effectively protecting consumers and livestock so there is no question about safety as we proceed.” The U.S. banned Canadian cattle and beef in May 2003 after Canada’s first case of BSE. When the ban was eased in August 2003 to allow imports of younger cattle and boneless beef from those animals, USDA said it hoped to eventually end all restrictions. Laycraft said he believed the case was caused by either residual feed contamination or perhaps through the accidental exposure to contaminated feed for other livestock. He pointed to the enhanced feed ban put in place recently. The Canadian feed ban closely mirrors the one in Europe which prohibits ruminant animals from being used in animal feed or fertilizer. “The incidence in Canada is fairly similar to what we have seen in other countries which have had cases of BSE. We anticipated having more cases crop up,” Laycraft said. Scientists say cattle under 30 months are at little risk of contracting BSE, however, USDA argues that beef, from cattle of any age, is safe once the tissues which harbor the BSE prions, including the brain and spinal cord, have been removed from the carcass. R-CALF USA President and Region Five Director Chuck Kiker praised USDA’s decision to halt the rule making process. “The assumptions regarding the scope of the disease problem in Canada, along with the ineffectiveness of the Canadian feed ban, must now be changed following Canada’s discovery of a BSE-infected cow that was only 4 years and 2 months old.” In addition, R-CALF continues to urge USDA’s Animal and Plant Health Inspection Service to publicly announce it is postponing, indefinitely, plans to allow into the U.S. cattle over 30 months (OTM) of age from Canada, and beef from those OTM cattle, until the full scope of Canada’s BSE problem is scientifically known and a new risk assessment is completed that incorporates the four separate BSE-infected cows born after Canada’s feed ban was implemented in 1997. — John Robinson, WLJ Editor

The news of Japan didn’t move the market last week and as of Thursday afternoon, trade was still at a halt, despite rumors of packers being short for the week in the north. Previous week trade occurred in the south Plains at $79-79.50. Live sales in the northern Plains traded at $80- 80.50 live basis with dressed sales at $126-127, mostly $126. Brent Snyder, market analyst for Texas Cattle Feeders Association, said the market this week was difficult to call. “I thought the Japan news might help open up trade a little, but it hasn’t,” Snyder said. “Right now, asking prices are in a range of $82-83 and I think by the time trade starts, it will occur in the $80-81 range.” Boxed beef cutout values and packer margins appeared to be the biggest factors in last week’s market. The seasonal consumer demand for middle meats slumped and end cuts were largely responsible for what movement and support was available in the market. Last Thursday, Choice boxed beef values declined sharply for the second consecutive day and Choice cuts fell $1.34 to $139.68. Select cutout values fell 40 cents to $123.08. Cattle-Fax analyst, Troy Applehans, said he expected cutout values to continue lower for the next two to three weeks before finding the bottom. “Keep in mind though that the Choice/Select spread at $16.60 is still at historical high levels for this time of year,” Applehans said. “I expect to see the cutout values reach their seasonal bottom some-time in the next two or three weeks.” According to HedgersEdge.com, the eroding cutout values have taken a toll on packer margins. Last Thursday, packers were estimated to be losing $5.40 per head. Despite being in negative territory, harvest rates remained in line with prior weeks, which analysts have continuously cited as important to maintaining current price levels. For the week, packers had harvested an estimated 499,000 head, 7,000 head more than the prior week and 20,000 more than the same week a year ago. On the Chicago Mercantile Exchange (CME), early week trading was hit hard by an unexpectedly bearish cattle on feed report issued by USDA on July 21. The repercussions of the report rippled through both fed and feeder cattle markets and on Monday, contracts in both trading pits sold off sharply. Mid-week trading, however, saw significant recovery. “The board supported the fed cattle prices this week much as it has for most of the year,” Applehans said. Although in Thursday’s session, the news from Japan did little to move the market and contracts traded mostly lower in the absence of any cash trade. August contracts traded 80 points lower, closing at $83.47. October was off 22 points, closing at $87.64 and December was down 12 points to $88.27. The June 2007 contract was the single exception to the downward trend last Thursday. It closed unchanged with the previous day at $84.10 on light volume. Beef production impacting market Production of Choice beef continues to slide, which, when combined with the demand for Choice middle meats, has supported the market. According to USDA figures, during the same week last year, 55.56 percent of steer and heifer slaughter graded Choice. Last week, only 52.33 percent of steer and heifer slaughter graded Choice. Production of Prime grading beef has also slipped by two-tenths of a percent since last year. According to analysts, the decline in high quality production is largely responsible for the current boxed beef spread. On the opposite end of the spectrum, cow slaughter continues to run above last year’s level as a result of the drought. The July 1, cattle inventory report showed the number of beef cows in the U.S. up a modest 1.1 percent. That number was lower than expected and shows the current herd expansion rate has slowed. Applehans said most of the slow was a result of the drought and he expected it to continue. “If you look at current cow slaughter rates, they’re above last year, but about even with historical levels. That said, I think there are still a lot more cows out there that are going to be heading to town before too long,” he said. “But regardless, it has impacted the price of the cow carcass market and on the 50 and 90 percent lean price.” In fact last week, the 90 percent lean market was more than $15 below last year’s levels at $122.60. Cow carcass cutout values were also well below last year as a result of the slaughter discrepancy. Cow carcass value last Thursday was $100.92. During the same week in 2005, the carcass value was $111.29. “Keep in mind though, that last year, cow harvest was very low. This year’s harvest rate is much higher as a result of the drought. This year is much closer to historical norms,” Applehans said. Feeder cattle Auction markets across the country are suffering a downward swing. Although total cash receipts were lower at most markets, prices still fell. For example, Joplin Regional Stockyards, Inc. saw feeder prices drop as much as $6 for yearlings. More specifically, steers exceeding 500 pounds and heifers under 450 dropped $2-4. Those weighing between 500 and 800 lbs. sold steady, while over 800 took a $2 cut for the most part. Despite the lower trend, demand and supply was described as moderate with active buyer participation. Market officials said once buyers filled their load, prices quickly moved downward. The market sold 3,650 head compared to the week prior’s 4,000. An array of reasons are responsible for the lower prices. According to Mark Harmon, marketing director for Joplin Regional Stockyards, Inc., the most likely causes are drought conditions, depressing cattle on feed report, activity overseas and other uncertainties. In short, he said it’s all just a guess because “here lately, nothing is typical.” “It’s really hard to tell what causes the market to suffer a bit. There’s a lot going on, it could be all sorts of things,” said Harmon. “For example, the cattle on feed report didn’t look too friendly this go round. It’s real hot in our part of the country and no rain really to speak of. That certainly has something to do with it. I’d say, though, that the report probably had the most impact.” Harmon said having a Monday sale as Joplin does, and the cattle on feed report being released on Fridays, can often times have a “hard reaction” on their market. He also said the overseas activity and the uncertainty that goes along with it has some buyers leery as well. “Overseas effects a lot of this. It’s all a chain reaction,” said Harmon, who was in Oklahoma City at the Oklahoma Cattlemen’s Association’s 54th annual convention. “It’s bone dry here, too, (Oklahoma) and other uncertainties may have affected their market. For example, guys here are skeptical what their corn is going to bring and won’t know until they harvest up north. My guess would be that it’s not going to be very good.” In Oklahoma City last week, the market followed the cycle downward. Steers and heifers stayed steady to $1 lower. The quality last week, however, was reported as much better compared to prior weeks. The demand wasn’t stellar, but stayed moderate for the most part. Oklahoma City’s receipts this week, much like Joplin, also fell, but even more so than the Missouri market. Cash receipts last week summed 9,878 compared to 14,817 the week before. At the Winter Livestock Feeder Cattle Auction in Dodge City, KS, prices also suffered, reportedly as much as $5 lower for feeder steers and heifers weighing 300 to 600 lbs. and didn’t vary to far from that figure, being called weak. The market was described to have limited supply as well as dwindling demand. Slaughter cows dropped $2. However, some feeders weighing 600 to 950 lbs. climbed $2 and stayed mostly firm. In the Western region, prices didn’t follow the sluggish trend quite so closely. More specifically, most markets saw steady prices to even a dollar or two higher. In Wyoming at the Riverton Livestock Auction, consisting mostly of slaughter cows and bulls, things looked positive. Slaughter cows were up mostly $1, with some instances of $3. Bulls also up a dollar with rare instances of $5. In La Junta, CO, at Winter Livestock, steers and heifers under 700 lbs. sold $1-2 higher. Yearling steers jumped mostly $2 and heifers stayed steady. The market sold 1,040 head last week compared to 1,804 the week before, following the overall trend of lessening supplies. As no surprise to most market officials and livestock economists, feeder trade on CME was lower throughout all last week. Few disagree that the bullish cattle on feed report is to blame. Hesitant traders backed away from trade last week. August contracts started weak mid-day Thursday and decided to stay that way, closing 33 points lower to settle at $114.20. September dropped 28 points from Wednesday’s $114.40 to close at $114.13. October joined in at 43 points lower to close at $113.93. November, too, closed lower Thursday, settling at $112.60. Auction markets and future contracts agreed on a lower trend, but Harmon said it’s just a “temporary thing” and said this happens often, calling it a mere reaction to the drought conditions and the cattle on feed report. “I expect prices to stay lower for two more weeks,” he said. “That’s only a guess, though. That, and 25 cents, will get you a cup of coffee.” Harmon said although prices may be a little lower, consumer demand is still good and that’s what really matters and what will keep the beef market alive. “More people are staying close to home this summer than they usually do,” he said. “They are barbecuing, eating ribeyes, and we love them all for it.” — WLJ

Earl Adam Smith, of Antelope, OR, died Saturday, July 22. He was 88. A grave side service was held July 27, at Juniper Haven Cemetery. Smith was born March 26, 1918, in Mayville, OR, to Earl and Gladys Smith. He graduated from Condon High School and attended Oregon State University. He served in the U.S. Army Air Corps as a staff sergeant during World War II. He married Ann Anderson on Aug. 30, 1946, in Vancouver, WA. A cattle rancher, Smith was appointed by three governors to the state Board of Agriculture, and he served as chairman of the board for the Pacific International Livestock Exposition and the Northwest Livestock Production Credit Association. He had also served as vice president of the Oregon Cattleman’s Association, as president of the Wheeler County Cattleman’s Association, as chairman of the Mitchell School Board and as a board member of the Oregon Historical Society. In 1995, he was entered in the Diamond Pioneer Agriculture Career Achievement Registry by Oregon State University. Survivors include his wife; a stepson, Marc Anderson, of Springfield; and two grandchildren. He was preceded in death by three brothers. Memorial contributions may be made to any Oregon youth agricultural program or the Oregon Historical Society. — WLJ  

I’d have to say at this point, the Canadian beef industry has a bit of explaining to do. They have certainly had their problems with bovine spongiform encephalopathy (BSE) lately. I hate to say it, but I’ve gathered a bit of concern over the past few BSE cases they’ve experienced. A couple of weeks ago, they found their seventh case of the brain wasting disease in a 50-month- old cow. That cow would have had her first calf after the border was closed by BSE and six years after the feed ban. Canada has now removed meat and bone meal from all animal feeds. A week or two before, the Canadians found BSE in a 15-year-old cow , which didn’t seem to raise any real attention. You could understand the possibility of BSE in a cow that age. The only thing you might be able to say about the 15-year-old cow is question why was she still around. The only thing I can think of is that she was someone’s pet. Anyway, the 50-month-old cow that was found did raise a few concerns about the Canadian feed ban, and at this point, you do have to ask the Canadian government what gives. The first answer—excuse—was that having a 4-year-old cow turn up with BSE is not unusual from other countries’ experiences and it doesn’t surprise them. They are concerned enough about this cow that they decided to quarantine the farm she came from. If I recall, out of six of cases of BSE, three of them are from cattle questionably under, or close to the feed ban. I realize that the day the feed ban was implemented wouldn’t mark the end of any meat and bovine material used in cattle feed, except perhaps at the feed mill, but not at the farm level. It seems the feed ban may have been more of an arbitrary line than anything. It also demonstrates that we still know so little about this disease. The issue doesn’t get any play in the major media anymore, which is just about perfect. No one seems to really care about BSE except for a few of our more fickle trading partners, and a few cattlemen’s groups. BSE has had little impact on the markets in recent times. That brings me to another point. Canada does have a small problem with BSE and its seems to be getting in the way of our ability to do business overseas. Mexico has been a real star in the wake of all this BSE stuff and has been there buying beef since the beginning, I would imagine they are also smart enough to realize that if they don’t buy U.S. beef, the U.S. may not need to buy as many Mexican feeder cattle. Korea has pointedly said they are concerned about buying our beef because they’re aware U.S. packers are not segregating U.S. and Canadian beef. During the first full year of trade with Canada, the U.S. imported around 650,000 head of fed cattle and 350,000 head of feeder cattle. Of the 34 million head of cattle slaughtered in the U.S., it wouldn’t seem that Canada’s million head exports to us would have that much effect on the markets, and it hasn’t. This is one of those situations when perception becomes reality. Japan and Korea think this BSE is pretty real and I’d have to say, right or wrong, ensuring that our packing industry doesn’t ship any Canadian cattle processed in their U.S. plants is apparently an issue. Where do you draw the line on live cattle imports from Canada in order to perpetuate trade with Japan and Korea? A million head of fed and feeder cattle from Canada certainly isn’t enough to make or break this market. But the only cattle shipped to the U.S. for slaughter are under 30 months old and have been proven not to be at risk for spreading the human form of BSE. It’s looking like the Canadian BSE situation may turn out to be like Japan’s and turn up a few cases every year. I was under the impression that as time went on, post feed ban attrition of the cow herd would take care of BSE and be less of an issue. We know that banning specified risk material from bovine feeds has reduced the incidence by 80 percent, or better, world wide. But that other 20 percent is becoming annoying, because this group defies BSE logic as we know it. One thing you have to say about this BSE situation, there doesn’t seem to be anything consistent about it. — PETE CROW

Fed cattle trade was slow to start and the standoff was apparent with packers offering $78 against feeder offers of $83-84 live, and $130 dressed. There was some limited trade at $81-81.50 and $126-128 dressed, but not enough volume to call the market. Boxed beef cutouts have been in a tailspin the past two weeks and wholesale buying interest emerged only when prices fell to a more attractive level of $144 on Choice products. Packer margins fell into negative territory for the first time this summer at a minus $4.80 a head. Even though packers are familiar with this arrangement, it didn’t appear that they were going to give in much. Trade was expected to resume at the $79-80 level and $128 dressed. The mid-summer beef rally appears to have found a lull, typical for the post 4th of July period. Retailers reported slow sales and have backed product up in coolers. The Choice boxed beef cutout was at $151.69 the week of July 10 and this past week, fell to $142.63. Select product also fell to $123.93, closing the Choice/Select spread to $18.69. The Choice and Select primal cuts suffered comparable declines for the week, although the Select rib was sharply lower. Notable out front sales include Choice and Select briskets, Select trimmed top butts and 73 percent fed cattle grinds. Slaughter levels have been strong for most of summer. Last week as of Thursday, slaughter levels were at 492,000 head steady with the same week a year ago. The week ending July 15 showed slaughter at 683,000 head compared to 658,000 the same week a year ago. Several market analysts have pointed out that slaughter is running 4 percent more than a year ago while beef production is 6.5 percent higher than a year ago. Dillon Fuez at Utah State University attributed the increase in production to increased slaughter weights which are posting new records. Last week, steer carcass weights were at 838 lbs., up 5 lbs. in one week and up 16 lbs. from the same time last year. Texas and Oklahoma feeders showed live steer weights at 1,247 lbs., up just 2 lbs. from a year ago. According to Jim Robb at the Livestock Marketing Information Center, the big extra carcass weights are coming out of the northern Plains states and Corn Belt feeders. The high level of calf fed placements in southern lots have kept those feeders fairly current in their marketings. Marketings are expected to show another solid month for June. The slaughter cow market has started its season early due to dry weather. Good fleshy cows are trading at the $45 range and the cow beef markets have fallen along with beef from fed cattle as well. The cow beef cutout was at $100.88 and cow carcass beef at $72.50. The 90 percent lean beef markets were at $122.21 and 50 percent trim is at a annual low of $35.27. Kansas State University reported in their latest feedlot survey that for the month of May, the closeout weight for steers was 1,264 lbs. versus 1,246 lbs. in 2005, while the average weight for heifers was 1,152 pounds, 22 pounds heavier than a year ago. So far this year, steer and heifer closeout weights are up 3 to 3.5 percent on average from 2005, respectively. At 173 days, steers were on feed one week longer than a year ago. Average daily gain at 3.10 lbs. per day was above May 2005 levels of 3.05 pounds. Heifers were on feed an average of 162 days, 4 days longer than 2005 and posted an average daily gain at 2.85 pounds, slightly higher than last year. Compared to the prior five-year average, average daily gains for steers were comparable while daily gains for heifers were 1 percent better. The amount of feed per pound of gain (dry matter basis) for steers in May was 5.91 pounds, down from last year’s average of 6.01. Heifers closed out in May were reported at 6.13 pounds of feed per pound of gain. For the month of May, surveyed feedlots reported the average cost of gain for steers at $53.61 per cwt., just $0.15 per cwt. lower than 2005, while the average cost of gain for heifers was $55.99 per cwt., up $0.20 per cwt. from a year earlier. When compared to the 2000-2004 average, cost of gains for both steers and heifers were 5 and 3 percent higher, respectively. Feeder cattle Hot and dry conditions put feeder cattle buyers in a sour mood last week and auction markets turned sharply lower in many areas as a result. Pasture conditions, according to one USDA market analyst, have deteriorated significantly in the past two weeks and few are willing to buy cattle when there isn’t much grass available. Early weaned calves are heading to town now and market numbers are above year-ago levels in many markets as producers try to stretch available forage for their cowherds. Fleshy, unweaned calves were heavily discounted last week which placed a further drag on the market. The bright spot in the feeder cattle market last week was the result of the first two big video auctions of the year. Superior Video Auction held their annual “Week in the Rockies” sale in Steamboat Springs, CO, July 10-14 and the results were very positive. Trade was very active across all classes of cattle and calves from across the country were called $3-5 higher. Northern yearlings were $4-8 higher while southern yearlings sold $3-5 higher. The large crowd on hand bid actively on an excellent set of cattle. Some representative lots from the sale include a consignment of 400-lb. Angus and Charolais cross steers from Wallace, NE, for October delivery which brought $165. A consignment of 490-lb. English and English Exotic cross steers from Alta Vista, KS, sold for $150.75 for August delivery. Yearling representative lots from the same sale included a consignment of 760-lb. English and English exotic cross steers from Council Groves, KS, for August delivery which brought $118.75. A Tyron, NE, ranch sold 900-lb. Angus, Angus cross steers on September delivery at $118. In Reno, NV, Western Video Market held their sale at the Silver Legacy Casino and a large crowd of buyers bid readily on an outstanding offering of quality cattle. Prices were very strong. Representative lots of yearling cattle included a consignment of 800-lb. steers from Nebraska for September delivery which sold at $119. A consignment of Colorado 725-lb. yearlings brought $120. Calves also sold well. A consignment of 500-lb. steers from Nebraska sold for $141 for October delivery. A Nevada ranch sold 400-lb. weaned heifers for November delivery at $155.50. In auction market trade last week at Oklahoma City, OK, feeder cattle turned sharply lower on heavy receipts. Compared to the prior week, feeder cattle were $1-4 lower, with the least decline on weights over 800 lbs. Demand was called moderate despite fewer buyers on the seats. Steer and heifer calves were $4-8 lower, with some instances of $10-15 lower on fleshy unweaned calves. At Abilene, TX, a light run of feeder steers and heifers under 500 lbs. were $1-3 lower, over 500 lbs. were steady to instances of $4 lower, yearlings were steady. In Joplin, MO, compared to the previous week, steers under 800 lbs. and heifers under 600 lbs. were $2-4 lower. Heavier weights were called steady. Demand and supply were moderate. Farther north in the Dakotas where the drought is taking its toll on the corn crop, cattle prices were mostly steady with the week prior although runs were light. In Torrington, WY, feeder steers and heifers were steady on a limited test. The Chicago Mercantile Exchange feeder contracts last week traded in mixed territory. Wednesday, lower corn markets pushed feeder cattle contracts higher across the board. Last Thursday, contracts traded lower and gave up the previous day’s gains. The August contract shed 45 points last Thursday to close at $115.27. September dropped 65 points, closing at $115.10. October feeders were 55 points lower at $114.70 while November feeder contracts were down 47 points, closing the day at $112.77. — WLJ