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Friday, September 19,2008

NMSU helps New Mexico beef industry develop strategic plan

by WLJ
Leaders in the New Mexico beef industry are asking their fellow cattlemen, "What’s your vision for the future?" during meetings held across the state. Outreach meetings are scheduled for Wednesday, Sept. 24 in Ft. Sumner, NM; Friday, Sept. 26 in Sky City, NM, and Wednesday, Oct. 1 in Silver City, NM. "We are trying to get a sense of what is needed," said Steve Warshawer, a member of the New Mexico Beef Industry Strategic Planning Initiative task force. "We want to develop an industry-wide strategic approach for improving the opportunities of the New Mexico beef industry."Before the task force could plan for the future, they needed information as to where the New Mexico beef industry stands compared to the national industry. New Mexico State University’s (NMSU) College of Agriculture and Home Economics’ Agriculture Economics and Agricultural Business Department conducted a study and Terry Crawford, department head, and Jerry Hawkes, assistant professor, are reporting the findings during the outreach meetings. "We took a look to see were the beef industry is financially and economically in regard to the numbers of usable land, mother cows, yearlings—all of the industrial demographics of today," Hawkes said, prior to the Sept. 3 outreach meeting in Santa Fe. The study investigated the feasibility of an in-state feedlot/packaging facility, a grass-fed program and a New Mexico-grown branding program. The option with the most potential "seems to be a cooperative-branding program which would market New Mexico beef based on characteristics such as being locally grown and fresh as well as consumers’ willingness to support local producers," Hawkes said. The branding program would require independent cattle growers to form an alliance. Under the program, yearlings would be sent to feedlots and on to processing while the producers maintain ownership. The meat would be packaged under the New Mexico-grown brand name and then returned to retailers in New Mexico and the Southwest. "For the number of calves we have, this is the best bang for our buck," Hawkes said. Currently, New Mexico produces 100,000 to 150,000 calves annually. The NMSU study showed that the feasibility of a slaughter facility was unlikely because of a lack of sufficient slaughter animals in the state, as well as the competition the facility would face from larger, more efficient facilities located in the Texas Panhandle region. "A grass-fed program is feasible for a small-scale, niche marketing concept, but is not practical at this point to move the entire commercial industry to a grass-fed situation," Hawkes said. "We don’t have the forage. We’d have to reduce our mother cows to sustain our rangeland in the manner we’d need to for future uses—continued uses." Findings from a grass-fed study as a value chain in north central New Mexico and the San Luis Valley found that this method would be feasible for small-scale, direct marketing producers who don’t want to expand beyond 10 to 20 animals, Warshawer said. The study was funded by the Taos Community Foundation and the Town of Taos. "They could participate as a supplier to existing value chains such as Country Natural Beef," Warshawer said. Or, the producer would have to find a buyer serving the local/regional market to buy the whole carcass and work with a group of producers to develop it as a New Mexico value chain, he said. After hearing the reports by Hawkes and Warshawer, participants at the outreach meetings will be asked to identify the positive activities in the industry, what is their desired future for the New Mexico beef industry in five years, and what are the biggest obstacles for the industry to move to the desired future. Locations of the 9 a.m. to 12:30 p.m. meetings will be: • Sept. 24: Ft. Sumner at the DeBaca County Extension office, 514 Avenue C. • Sept. 26: Sky City at the Sky City Casino. • Oct. 1: Silver City at the Grant County Extension office, 2610 North Silver Street. Following the outreach meetings, a strategic planning summit will be held Nov. 18 and 19 in Albuquerque. For further information, contact the New Mexico Cattle Growers at 505/247-0584 or the New Mexico Beef Council at 505/841-9407. — WLJ

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Friday, September 19,2008

Cattle industry responds to Hurricane Ike

by WLJ
The response to Hurricane Ike continues to be a team effort as the issues are much larger than the resources of any one agency or association, the Texas Animal Health Commission (TAHC) reported last week. TAHC has worked with the livestock industry to establish sites for emergency shelters, and with local governments, agencies and associations to develop animal issues committees. The agency has established a small area command in the Austin, TX, headquarters, and is one of more than 30 agencies in the Governor’s Division of Emergency Management. TAHC’s Area Command can be reached at 1-800-550-8242, ext 296. At the request of TAHC, members of a National Veterinary Response Team are now being deployed by the federal government to assist in Texas recovery operations. Animal response teams from both Florida and New Mexico have volunteered to provide assistance to Texas via the Emergency Management Assistance Compact system and are awaiting final authorization. A joint TAHC and USDA Veterinary Services team is working in the Beaumont area, assessing large animal issues from the air and ground. The scope of livestock death loss is not yet known, according to TAHC. Another team will be assessing the western side of the storm area when re-entry is allowed. The Texas State Animal Resource Team (TXSART), supported by the Texas Veterinary Medical Association, is working in the area with credentialed animal care groups. A TXSART hotline for Orange and Jefferson counties has been set up at 409/980-7280 and 409/838-2510. In several storm-ravaged counties, large numbers of cattle and horses caught in the storm surge either died, or fences are down and animals are loose or stranded. TAHC is coordinating carcass disposal with the Texas Commission on Environmental Quality and the National Resources Conservation Service. Reports of dead livestock should be made to TAHC’s Area Command Center at 800/550-8242, ext 296. Callers will be asked to provide the location, species of animal, approximate number, and, if, possible, the GPS coordinates of the site. The Texas Agrilife Extension, Texas Department of Agriculture and livestock industry groups have established "Operation No Fences: Hurricane Ike Horse and Cattle Relief" to collect feed, hay and water troughs to provide the livestock with safe feed and water. For more information or to make a donation, call the Texas 4-H Foundation at 979/845-1213. Producers who wish to donate hay or are in need of hay are encouraged to call the Texas Department of Agriculture’s Hay Hotline at 877/429-1998. Visit www.tda.state.tx.us/hayhotline for more information. Many of the emergency animal shelters for large and small animals remain operational, and livestock producers continue to generously volunteer their pastures and barns for evacuees. Early information from shelters providing reports indicates that more than 550 livestock and about 1,200 small animals were provided refuge. — WLJ

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Friday, September 19,2008

Hereford breeders to gather for annual meeting to celebrate Hereford demand

by WLJ
Members of the American Hereford Association (AHA) will gather in Kansas City, MO, Nov. 1-3 for the 2008 annual meeting. A full schedule of events is planned for Hereford enthusiasts from across the U.S. who attend the annual meeting and the National Hereford Show scheduled during the American Royal. The Annual Membership Meeting, which is open to the public, will be at 9 a.m. Monday, Nov. 3 at the Hilton President Kansas City. Association members selected 142 delegates to conduct the association’s business at the meeting and to elect three members to serve on the AHA Board of Directors. The board candidates are David Breiner, Alma, KS; Paul Funk, Copperas Cove, TX; Jimmie Johnson, Clinton, OK; Jack Lowderman, Macomb, IL; John Ridder, Callaway, NE; and Jay Wright, Morgan, TX. The association’s Annual Report will be presented and distributed during the annual meeting along with other reports on activities within the association, Hereford Publications Inc., Certified Hereford Beef LLC, and the Hereford Youth Foundation of America. This year’s Hereford Heritage Hall of Fame and Hereford Hall of Merit recipients will also be recognized. Before the annual meeting, the weekend kicks off Saturday at the Hilton President Kansas City with the state presidents’ meeting and breeders’ forum. All Hereford breeders are asked to attend the combined meeting at 8 a.m. Tom Field, Colorado State University animal science professor, will be an added bonus to this year’s meeting as he will address the group and answer questions concerning topics vital to all members and breeders. A panel of breeders and beef Extension specialists will offer advice and information on marketing and other areas of concern to the Hereford industry. For more information about the State Presidents Council, contact Phillip Moon at pamoon@alltel.net. Following the state presidents’ meeting will be delegate orientation. The six board candidates will have a chance to introduce themselves to the delegates during this session. At 2 p.m. and 2:30 p.m., a bus will be available outside the hotel to shuttle attendees to the American Royal Complex for the Ladies of the Royal sale which will start at 4 p.m. Following the sale, Hereford enthusiasts are invited to an open house at the AHA headquarters. Sunday, the junior Hereford show will begin at 8 a.m. at the American Royal Complex. The junior show judge will be Chris Mullinix, El Dorado, KS. Following the junior show will be the National Hereford Show judged by Bob Goble, Alto, MI. For those who can’t make the trip to Kansas City, show results will be available online at Hereford.org. The AHA headquarters hotel will be the Hilton President Kansas City, located at 1329 Baltimore in downtown Kansas City just blocks from the AHA office. To contact the Hilton President, call 816/221-9490. The hotel is in the newly renovated downtown Kansas City area called the Power and Light District. The nine-square-block area hosted a grand opening this spring and offers new retail and dining options as well as entertainment. For more information about dining and entertainment options, visit www.powerandlightdistrict.com. For general questions about the annual meeting and other scheduled events, contact Amy Cowan at AHA Headquarters at 816/842-3757. — WLJ

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Friday, September 19,2008

What is the value of a standing corn crop for silage?

by WLJ
Many acres of corn in the region are two weeks behind normal in maturity, so the corn is vulnerable to yield and quality loss because of possible frost. "Harvesting the corn for silage rather than grain may be a better option for some of this corn if a killing frost arrives too soon," says Dwight Aakre, North Dakota State University (NDSU) Extension Service farm management specialist. "However, many corn producers do not run cattle, so they must find a buyer for the standing corn. It is difficult to place a value on a crop, such as silage, that typically is not a cash commodity." Further complicating the pricing decision is that the buyer and seller may want to determine a value per acre prior to harvest when the yield is still in question. The NDSU Extension Service has a worksheet available at county extension offices titled "What is the Value of a Standing Corn Crop for Silage?" to help answer this question. The worksheet also is available on the Web at www.ag.ndsu.nodak.edu/aginfo/farmmgmt/resources.htm. The worksheet goes through a procedure to estimate the value of silage based on different levels of corn grain content. The value of silage is determined by estimating the quantity of corn grain and fodder dry matter per ton. The local prices of corn grain and grass hay are used to value the grain and fodder in each ton of silage. Silage yield is another important variable in determining the value per acre. A formula for estimating yield is included in the worksheet. This involves cutting and weighing the production from one one-thousandth of an acre to determine the per-acre yield. "Once both parties are in agreement on the yield per acre and the market value per ton, the total value per acre in storage is known," Aakre says. "This is the value per acre if the owner of the corn is going to chop, haul and pile the silage at the buyer’s location. More often than not, the buyer is going to incur the harvesting costs, rather than the corn producer. In that situation, the costs of chopping, hauling and piling must be subtracted from the gross value per acre to determine the net value in storage." Before any corn is chopped for silage, if it is covered by multi-peril crop insurance, the producer must contact his insurance company and have the crop adjusted. Failure to do so will result in loss of any potential insurance payment. An insurance indemnity payment does not affect the value of the corn for silage. Its worth is its feed value less harvesting and hauling costs. "Some buyers think they should pay no more than the price of corn times the adjusted yield," Aakre says. "This completely ignores a major part of the value of silage, which is the fodder. Likewise, some corn producers believe it is worth a certain amount because of the money invested in the crop. These are sunk costs that do not impact the value of the crop." — WLJ

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Friday, September 19,2008

Markets

by WLJ
Fed cattle trade last Thursday was underway in the Corn Belt and northern Plains regions with dressed sales in a range of $148-152, with most trade occurring at the $150-151 level. Southern Plains trade was still inactive at mid-day although live trade was expected to come in mostly steady to perhaps slightly higher at the $99 level after cutout values held their ground early in the day. The mostly steady trade comes at the start of what is expected to be a very tight supply of fed cattle over the next several months. Ahead of the cattle on feed report due out Sept. 19, analysts were predicting overall on feed numbers would decline an average of 2.1 percent from Sept. 1, 2007 levels. That number is expected to remain low, as placements have repeatedly fallen below year-ago numbers and could show a drop again for August when the numbers are reported. Average analyst estimates were for a placement number of 100.2 percent, up just slightly from year earlier levels. Marketings, with two fewer slaughter days during August, were expected to show a significant drop with average guesses coming in at 90.3 percent of year-ago levels. The drop in the number of market ready cattle well into next year could shift bargaining power solidly into the hands of cattle feeders who should be able to force packer bids higher as a result of limited supply. For now, though, packer margins remain solidly on the positive side of the ledger and feedlot operators were likely to hold out for a larger share of the pie last week as they edged higher. Choice cutout values rose in morning trade to $161.64 while Select prices declined slightly to $153.98, mostly steady to slightly higher than a week earlier despite weak trading action in the middle meats for the past several weeks. Livestock Marketing Information Center Director Jim Robb explained that much of that weakness is directly attributable to lackluster sales in the restaurant sector. "Restaurants are really the story in the meat markets and will remain so with the larger economy at the edge of a recession," Robb said. "The macro side of the economy is becoming an increasingly important issue in the market right now and if we are going to benefit from the tighter supplies of fed cattle through the second quarter of 2009, then we are going to have to see some improvements at the consumer level." He said export markets, which have been critical to supporting the market for much of the year, continue to be exceptionally strong. He noted that South Korea, on a weekly basis, has returned to the import volume seen prior to 2003. The result has been a big boost in some of the end meats, particularly the chuck primals which are in high demand overseas. "With the domestic economy on the edge, the big question will be can we maintain the export markets, particularly as foreign economies begin to slow down?" he said. "If we can, and the restaurant sector manages to improve, then we might be in a position where second quarter live cattle contract prices are a little too low." However, he cautioned that consumers are under extreme pressure from losses in the housing markets which are now spreading to other areas of the economy and could lead consumers to pull in their horns even farther when it comes to spending. "I think we are continuing the trend of consumers trading down to lower priced proteins," he said, noting the competition, particularly from pork, currently suffering from an oversupply which is lowering prices and making it a more attractive buying opportunity. Likewise, ground beef markets continue to be a bright spot despite higher than normal slaughter volume. "Ground beef prices remain historically high and some of that’s a result of consumer demand, but it’s also a result of very low imports of beef from overseas," Robb said. "When the beef import volume is translated to a per-head basis, during July it would have amounted to a decline of 170,000 head. So you can see there has been a substantial drop in the amount of beef being imported into the U.S., and that’s a big reason our cow beef markets have been so strong recently." Last week, those markets remained well above prior year levels, although they had slipped back some from the previous week. The cow beef cutout stood at $137.15 in morning trade last Thursday, down $2 from the prior Thursday. The 90 percent lean traded at $171 while the 50 percent trim traded at $92, both down more than $2 from the previous week. Feeder cattle Even with ample rain in many major production areas, this summer’s grass supplies have begun to grow short and a number of lightweight offerings have begun to make up a heavy presence in auction markets around the country. Buyers, however, have been very selective for type and kind cattle, possibly more so than normal. Heavier yearlings would normally continue to be in strong demand, but buyers have begun to eschew these cattle for lighter-weight calves which can be backgrounded over the winter on forage resources, the cheaper alternative to placing light cattle directly in the growing yard. Reports from many areas, though, show that buyers are still taking a wait-and-see approach as the picture for fall and winter grazing prospects begins to clear up. "We’re definitely seeing good demand for the number of calves we have had come in this fall, which is fairly high right now," pointed out Brian Winter of Winter Livestock in Dodge City, KS. "But there are a lot of people who are waiting to see what there will be available for these cattle to graze over the winter. A lot depends right now on how much wheat pasture there will be available." DTN analyst Walt Hackney noted that yearlings coming off of summer pastures will begin to taper off in the weeks ahead, though calf movement through auction markets should remain strong for a couple more months. "The supply of available yearlings has gone through the initial phase of movement off grass pastures, and the remaining run of unsold cattle coming off the grass programs will be primarily finished within the next two to four weeks," he said. "The calf runs will continue on into early to mid-November when all of the October-November contract deliveries are completed and the remaining unsold spring calves are either weaned or taken off the cows and delivered to an auction environment." James Mintert, professor of ag economics at Kansas State University, warned producers that as corn harvest approaches and grain market uncertainty continues, it would be wise to pay attention to markets closely to secure feed resources for the winter at more reasonable prices. "Attention is expected to remain focused on corn yields for a few more weeks, perhaps until harvest is well underway in October," he said. "However, once 2008 yields are confirmed, attention will shift to a battle for acreage between corn and soybeans. Once that happens, it’s possible that corn prices could move higher over the course of the winter and early spring. As a result, livestock producers should consider taking steps to aggressively manage their feed purchases for the rest of the fall, winter and spring." As the runs of yearlings begin to peter out and lighter-weight calves begin to dominate the markets, buyers will start becoming more particular about the cattle they choose, explained USDA market reporter Corbitt Wall. "Normally this time of year, available yearlings are highly sought after and the first offerings of top quality calves are met with open arms, though outlets tend to fill up later in the fall," he said. "This week, buyers turned much more particular, even on heavy yearlings, which is a direct contrast to their bidding habits of several weeks ago—when scattered single and odd lots would sell very near the top of the market." A total of 6,170 head were received last week at the Oklahoma National Stockyards in Oklahoma City, OK, where compared to the previous sale, feeder cattle and calves moved $1-3 lower, with instances of $4-5 lower on plainer, fleshy or stressed offerings. Demand was moderate at best, with some buying interest out of the market. Many cattle buyers have a wait-and-see attitude, as there is uncertainty in the financial, grain and futures markets adding to the pressure on cattle prices. Lighter runs showed up last week as many of the summer yearlings get cleaned up and the fall calf season is not in full swing. Heavy rain in western and eastern areas of Oklahoma also slowed down cattle movement some. Steers weighing 776 lbs. sold at $110.61, while heifers weighing 760 lbs. sold at $100 even. The Joplin Regional Stockyards near Joplin, MO, took in 4,525 head last week where all classes of steers sold $3-7 lower. Heifers, calves and yearlings traded $1-4 lower with a few consignments of northern-quality heifers selling steady. Market uncertainty from several different fronts pressured feeder cattle demand. Factors included bearish news from Wall Street, flooded conditions in many cattle and grain production areas from the remnants of Hurricane Ike, and unseasonably cool nighttime temperatures that are triggering calf health concerns. Buyers paid $107.05 for steers weighing 784 lbs., and $101.97 for heifers weighing 757 lbs. Last week’s sale at the Winter Livestock Feeder Cattle Auction in Dodge City, KS, saw receipts of 3,349 head. There was a higher undertone noted on steers from 350-600 lbs. and heifers from 300-550 lbs., though there were no sales last week for a comparison. Steers from 600-750 lbs. were weak on a light test, with weights from 750-1,000 lbs. going $1-4 lower. Heifers from 600-700 lbs. were not tested, while 700-850 lb. heifers were weak to $3 lower in a light test. Steers weighing an average of 776 lbs. sold at $109.59, while fleshy, 781 lb. heifers brought $100.10. A full 4,300 head were received last week at the Bassett Livestock Auction in Bassett, NE, where compared with two weeks ago, feeder steers and heifers trended $5 lower. Demand was fair to weak, with most consignments showing extra fill. An average of $113 was paid for 773 lb. steers, while 767 lb. heifers brought $106.80. The La Junta Livestock Commission Company in La Junta, CO, reported receipts of 1,287 head last week where steer and heifer calves under 600 lbs. dropped $2-4 lower. Feeder steer and heifers over 600 lbs. were $2 lower, with active trade and moderate demand. Steers weighing an average of 615 lbs. sold at $109.55, while 610 lb. heifers were good for $101.50. Last week’s sale at the Riverton Livestock Auction in Riverton, WY, offered 2,101 head for sale. Compared to the previous sale, steer calves under 400 lbs. went $1 lower, with 500-600 lb. steers steady with instances of $1-5 higher. Heifer calves under 500 lbs. dropped $3-5 lower. Yearling steers were $4-5 lower with instances of $7-10 lower on weights over 900 lbs. Yearling heifers were $1-3 lower, with instances of $4-5 lower. Demand was noted as being good to moderate. Buyers paid $103 for steers weighing an average of 760 lbs., and $102.29 for heifers weighing an average of 767 lbs. The Stockland Livestock Auction in Davenport, WA, reported receipts of 1,080 head last week where feeder cattle went $5-6 lower. Trade was slow with light to moderate demand. Steers weighing 739 lbs. sold at $94.36, while 782 lb. heifers brought $85.66. — WLJ

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Friday, September 12,2008

Students encouraged to apply for Beef Industry Scholarships

by WLJ
Applications are being accepted for the 2009 Beef Industry Scholarship program, sponsored by the National Cattlemen’s Foundation (NCF) and the CME Group. All entries must be postmarked by October 1, 2008. Ten scholarships of $1,500 will be awarded to young people pursuing careers in the beef industry. The program encourages talented and thoughtful students who have demonstrated a commitment to a career in the beef industry, either through classes, internships or life experience. Graduating high school seniors or full-time undergraduate students enrolled at a two-year or four-year college for the 2009-2010 academic school year are eligible to apply. Applications must include a 750-word essay that identifies a key issue confronting the beef industry and suggests a solution. Applicants must also submit a letter expressing future career goals and two letters of recommendation. A full description of the scholarship program, submission requirements and an online application can be found at the NCF Web site: www.nationalcattlemensfoundation.org/scholarship.aspx, or by calling 303/850-3372. In addition to a scholarship, the first-place winner will receive airfare and lodging to attend the Cattle Industry Annual Convention and Trade Show in Phoenix, AZ, January 28-31, 2009. The Beef Industry Scholarship program is a cooperative effort of the CME Group NCF that was launched in 1989 to celebrate the 25th anniversary of the Live Cattle Futures Contract on the Chicago Mercantile Exchange. The CME Group has been a leader in the live cattle market since 1964, and the Beef Industry Scholarship program exemplifies their commitment to the beef industry. — WLJ

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Friday, September 12,2008

New contact for popular program

by WLJ
In 1967, a South Dakota cattlewoman started a program that provided a big boost to promoting South Dakota beef. The plan seemed simple enough. While it might not be practical to give actual beef product as a gift, why not develop a beef certificate that could be given to others so that they could buy beef at retail stores or restaurants? Now, for more than 40 years, individuals, businesses or organizations have purchased the South Dakota Beef Certificate for a variety of occasions, from gifts for bridal showers and anniversaries and Christmas or as part of a special company promotion. The result has been tens of thousands of consumers buying and enjoying South Dakota’s favorite product because someone was thoughtful enough to give them a South Dakota Beef Certificate. Today, the organization that operates the program, the South Dakota Cattle Women (SDCW), has announced that there is a new contact for the South Dakota Beef Certificate program. Lindy Harkin, of Winner, has been hired to maintain the program. Other than a new contact person, South Dakotans will see no changes to this long-time and popular promotion tool. "We sell tens of thousands of Beef Certificates each year," says SDCW President Nancy Stirling Neuhauser. "We’ve been doing this as a service to the beef industry, and people have come to rely on Beef Certificates as a gift that they can package easily or send through the mail. Not only is giving Beef Certificates as gifts a great way to promote beef, but you’re also providing the recipient with a nutrient-dense and delicious protein that they will truly enjoy." Neuhauser says there have been other unique uses for the Beef Certificates, including purchase of thousands of dollars worth of the certificates by an organization to use through food pantries across the state. The idea for the program, explains Neuhauser, originated with Winnie Bones. President of what was then called South Dakota CowBelles, Bones had been impressed with a similar program in Nebraska and Texas. She developed and ran the early Beef Certificate program from her farm home near Sioux Falls for several years until it was moved to the South Dakota Stockgrowers office in Rapid City. There, Darlene Huettel, assisted by several other dedicated CowBelles—now called South Dakota CattleWomen—mailed out the certificates and kept the program’s records until 10 years ago, when Alice Hendrickson of Caputa, SD, took the responsibility, with assistance from the Black Hills Belles CattleWomen. When Hendrickson announced that she was retiring, the SDCW decided it was time to hire a full-time manager of the program, says Neuhauser. "We want South Dakotans to know that the Beef Certificate program is up and running and still in business, only at a different address and phone number," says Neuhauser. "We’re excited that we have a full-time person now to handle requests. We also want to thank the South Dakota Stockgrowers for allowing us to maintain the project in their office for so many years. It’s a time-consuming effort, especially during the holidays when Beef Certificates are especially popular. The effectiveness of this program is due to the efforts of so many people throughout the years." To order South Dakota Beef Certificates in $5, $10, $20 or $25 denominations, contact Lindy Harkin, P.O. Box 451, Winner, SD 57580, 605/842-9066, llharkin@goldenwest.net. Beef Certificates also continue to be available at various banks, through SDCW members, or through the offices of the South Dakota Stockgrowers in Rapid City or South Dakota Beef Industry Council office in Pierre. Beef Certificates are redeemable at most retail outlets and restaurants. — WLJ

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Friday, September 12,2008

Fed cattle prices steady to weaker

by WLJ
A broad-based sell-off in the commodity markets last week and the Goldman Sachs commodity roll limited expectations for improved cash trade last week. At mid-day last Thursday, there was only light trade in Iowa and Minnesota reported at prices between $149 and $153, with most trade in the $151-152 range dressed basis although volume was too light to call the trend. Analysts were calling the week’s trade steady to weaker with live trade in the southern Plains expected in a range of $98-99 when it developed. Prior week trade came at $99 in the southern Plains, while fed cattle in Nebraska sold from $98-99. Iowa/Minnesota live sales ranged from $97-97.50 with dressed sales from $153-156. The commodity sell-off last week led to some erosion among those who expected continued upward movement in beef prices as the industry heads into the fourth quarter. However, some carry-over from lackluster August marketings and improved feed efficiency means that some of the fourth quarter supplies are likely front-loaded, DTN analyst John Harrington explained last week. That, combined with a slowing export market as the U.S. dollar rebounds, is putting more pressure on the domestic market, which is unable to sustain prices at high levels, he said. "Disappointing beef and pork prices at this time may suggest that surging export demand through the first half of the year hid the exact softness of domestic demand. Now that the sizzle has come off foreign demand, struggling hometown demand is painfully clear," said Harrington last week. However, the news may not be all bad for cattle feeders who are relying on the market to reach projected levels in order to improve margins before the end of the year. "If the early fall is front-loaded as suggested, it could bode well for the manageability of fed supplies next month. The same factors that may force producers to swallow hard this month could cause the October offering to be even tighter than originally anticipated," Harrington noted. Cow beef markets also showed some slight weakness last week as producers begin to send culls to market. Analyst Troy Vetterkind, Vetterkind Cattle Brokerage, said last week that the prices in the next two weeks should be taken advantage of before they begin to decline seasonally. "The bulk of your better-yielding cutter and boner cows (are bringing) $53-$63," he said. "We are probably close to seeing the best of the slaughter cow market for the rest of the year in the next couple of weeks." The cow beef cutout slipped back slightly last Thursday during morning trade to $138.64, with the 90 percent trim trading at $173.25 and the 50 percent lean up to $94.45. USDA estimated cow and bull slaughter for last Thursday at 25,000 head, steady with prior week numbers. Fed steer and heifer slaughter remained robust last week at an estimated 510,000 head, compared to the prior week’s holiday-shortened total of 387,000 head. Despite some stagnation in the beef prices, last week’s tally was well above year-ago totals of 491,000 head harvested. Much-improved packer margins from year-ago levels are responsible for the current chain speeds at packing plants. Last Thursday, HedgersEdge.com estimated packer margins in positive territory at $14.85 per head, well above last year’s per-head losses. The current profitability of packers is largely the result of improved boxed beef prices, which come on the heels of sharply higher exports from year-earlier numbers. Last Thursday’s morning Choice cutout stood at $160.26, up slightly from the prior day’s trade and well above year-ago prices of $146.05. Likewise, Select values were at $153.78 compared to year-earlier prices of $139.32. What remains to be seen is how export markets will hold up if the world economy continues to cool, and whether or not domestic demand can fill the void to support prices if it does. — WLJ  

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Friday, September 12,2008

Feeder cattle market mixed as managers face tough decisions

by WLJ
Wild fluctuation in the corn markets and uncertainty over the large variation in harvest predictions has led to an up-again, down-again feeder cattle market. Buyers looking to place cattle on feed have had a tough time recently in deciding whether to take heavier, bunk-ready cattle over the attractive prices on quality, lighter-weight calves which have seen a decrease in demand as corn prices stay high. The fall calf run has started and has been fairly heavy in many auction markets around the country, but for feedlot operators without a comparatively cheap source of feed, questions concerning the corn markets have caused many buyers to remain cautious. Although finding forage at reasonable prices hasn’t been easy, recent analysis in some of the major feeding areas has shown that cheaper gains can be had by backgrounding cattle on grass before switching them to corn. Prospective buyers have already started switching their attitude and have begun searching for lighter cattle at decent prices to run as stockers. Darrell Mark, professor of ag economics at the University of Nebraska-Lincoln, recently spent time examining the historic breakevens when comparing systems that feed out either lightweight calves or yearlings in the feedlot. As buyers begin putting pencils to paper and the corn markets continue to shake, the research takes on greater importance. "As corn prices have more than doubled in the last two years, cattle producers increasingly look for alternatives to finishing calves exclusively in feedlots on high concentrate rations," Mark said, pointing out that feeders have traditionally placed a high proportion of fall-weaned calves on feed in the fall and sold them as fed cattle in May before seasonal summer price declines. "However, as feeding cost of gain has increased from about $50/cwt to nearly $100/cwt in the past two years, livestock operators have more incentive to background calves during the winter and following summer on forages and delay placing the cattle on feed until they are long yearlings at the end of the summer grazing season," he noted. "However, one factor that must be considered before changing the production system is cattle size. Large-framed, heavy calves weaned in the fall may have to be fed as calf-feds to minimize overweight carcasses." Mark points to UNL research which examined the performance of both calf-fed and yearling feeding operations from 1996 to 2007. Findings indicate that the difference in returns between the two systems is relatively small (around $4 per head), but highly variable, as shown in Figure 1. Average returns to the calf and yearling systems were $20.83 per head and $16.77 per head, respectively, but ranged from losses exceeding $175 per head and to profits greater than $350 per head. In the ten years of the study where both systems were directly comparable, Mark notes, the yearling system was more profitable than calf finishing in four years and less profitable in six of the years. There also seemed to be little correlation between higher profits in the yearling system and high corn prices. "As cattle feeders, backgrounders and ranchers considering retained ownership look ahead to this fall’s calf crop, decisions need to be made whether to place calves on feed or background them through the winter, and possibly the following summer, and not place them on feed until they are long yearlings next fall," he explained. "Assuming cattle performance in these systems is similar to the previous years in this study and using forecasted prices as of late August 2008, it appears that the yearling system could generate returns of $69.48 per head, compared to $2.40 per head for calves placed directly on feed and targeted to sell in May 2009." Last week’s sale at the Oklahoma National Stockyards in Oklahoma City, OK, saw receipts of 11,721, where compared to the previous sale, feeder steers were steady to $1 higher, with feeder heifers mostly steady. Calves were steady to $4 higher, with the advance coming on the weaned kinds. The run included a string of fresh, ranch-raised calves sold in large bunches to very good demand. Demand for feeder cattle was good with widespread buyer participation. Demand was moderate for steers over 850 lbs. and heifers over 800 lbs. as these cattle were in light supply. Average quality of the offerings improved some last week. Steers weighing 720 lbs. sold for $113.15, while heifers weighing 727 lbs. sold at $108.17. The Joplin Regional Stockyards near Joplin, MO, received 7,000 head of cattle last week, where compared to the previous sale, steers were steady with instances of 600-800 lb. steers steady to $1 higher. Heifers under 650 lbs. were steady to $2 higher, with weights over 650 lbs. steady. However, several lower-quality heifer calves were $1-2 lower. Demand was moderate for calves, and moderate to good for yearlings. Feeder steers weighing an average of 730 lbs. brought $111.93, while heifers weighing 722 lbs. sold for $105.45. Last week’s sale at the Winter Livestock Feeder Cattle Auction in Dodge City, KS, offered 2,425 head for sale, where compared to the previous week, steers from 600-900 lbs. and heifers from 650-950 lbs. were weak to $2 lower. Steers weighing 600 lbs. and heifers weighing 650 lbs. and under carried a lower undertone, though there were not enough for an adequate market test. Buyers paid $114.25 for steers weighing an average of 724 lbs. and $103 for fleshy heifers weighing 735 lbs. There were 3,000 cattle received last week at the Huss Livestock Market in Kearney, NE, where steers and heifers traded steady to $3 lower. Demand was moderate to good and trade activity was mostly moderate. Some 43 percent of the heifer offerings at this sale were spayed. Steers weighing 719 lbs. brought $110.88, while 741 lb. heifers were good for $107.71. Good demand was noted for the 851 cattle received last week at the La Junta Livestock Commission Company in La Junta, CO, where compared to the previous sale, steer and heifer calves were steady to $1 higher. Yearling feeder steers and heifers were steady. Steers with a full weigh-up of 804 lbs. brought $108.85, while heifers weighing 860 lbs. sold at $95.50. The Torrington Livestock Commission Company in Torrington, WY, offered 1,200 head at last week’s sale, where steers and heifers were steady to $2 lower in a limited test on moderate to good demand. Buyers paid $109 for 767 lb. steers, and $105.51 for heifers weighing 773 lbs. A good run of 5,614 head was seen last week at the Miles City Livestock Commission Company in Miles City, MT, which had the first reported sale of fall feeder cattle. No trend was available due to no recent sale, though demand was good for several thin-fleshed packages. Steers weighing 736 lbs. sold at $110.48, while 724 lb. heifers brought $105.09. Last week’s sale at the Stockland Livestock Auction in Davenport, WA, saw receipts of 968 head, where active trade and moderate to good demand was noted for all offerings. No trend could be established due to a dark market as a result of the Labor Day holiday the previous week. Steers weighing an average of 724 lbs. sold at $101.03, while 784 lb. heifers were good for $89.50. — WLJ

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Friday, September 12,2008

49BeefBits

by WLJ
Texas Beef Council cuts budget Following a lengthy budgeting process, the Texas Beef Council (TBC) Board of Directors approved a $6.36 million Checkoff program budget for Fiscal 2009 that includes beef advertising, marketing, nutrition outreach, promotions at consumer events and in retail, export efforts, foodservice communications and more. The new budget reflects a $490,000 decrease from last year. "With Checkoff collections significantly down again, leveraging Checkoff dollars is more important now than ever," said TBC Executive Vice President Richard Wortham. "TBC works very hard to partner and align ourselves with retail and foodservice companies and beef industry organizations that are willing to contribute to our demand-building programs in efforts to stretch the Checkoff dollar as far as possible." Korean demand for U.S. beef strong Chuseok, or Korean Thanksgiving, has had U.S. beef flying off the shelves in South Korea. Consumers, burdened by steep inflation, are looking to U.S. beef, which is much cheaper than the homegrown variety. The Korea Meat Import Association (KOMIA) has said that some 30 tons of U.S. beef was sold in the association’s nine directly-run stores in just a few days leading up to the holiday, three times more than usual. "It seems there was a huge potential demand for U.S. beef, although the social atmosphere did not allow it to surface. Sales of U.S. beef will dramatically increase after Chuseok," said the president of KOMIA. According to the National Veterinary Research and Quarantine Service in Korea, over 10,000 tons of U.S. beef has passed inspection in just two months. Tyson to liquidate 20 million shares Springdale, AR-based Tyson Foods recently announced that it intends to offer 20 million shares of common stock for sale, as well as $450 million in convertible senior notes due 2013, and use the proceeds from both to grow its business. "Net proceeds from the offerings are expected to be used to repay portions of the outstanding borrowings under Tyson’s accounts receivable credit facility and for other general corporate purposes such as acquisitions, strategic investments and initiatives to grow the company’s business," Tyson said in a news release. Analyst Farha Aslam wrote that he predicts the cash will be used for foreign investment. "We believe that the bulk of the proceeds will be used to fund international acquisitions—in China, Brazil, Mexico and India." Korea to send additional inspectors South Korea has announced it plans to send inspectors to U.S. slaughterhouses to ensure those facilities are following proper export protocol. Seven experts from the National Veterinary Research and Quarantine Service will be sent to 22 U.S. meat processing and packing facilities. If approved, the number of eligible U.S. meat exporters will expand to 52. "They are to check if the facilities can safely remove specified risk material and properly control the age of animal that can be slaughtered for export to South Korea," a Korean official told a local news agency. Included in the list of plants the inspectors will visit is the Omaha, NE-based Nebraska Beef Ltd., in order to determine the measures the company has taken to counter the E. coli outbreak of earlier this summer. Beef trade limits domestic supplies Domestic beef supplies will remain tight due to increased beef exports and fewer beef imports, according to Kansas State University Ag Economics professor Jim Mintert. The combination, Mintert said, of larger exports and smaller imports meant net beef trade for January through June was down 553 million pounds compared to a year earlier. The Livestock Marketing Information Center (LMIC) forecasts per capita beef supplies this year will fall 2 percent below 2007 levels. This prediction assumes beef exports will grow 27 percent by 2008, while beef imports will fall 21 percent. Based on first half actual performance, Mintert said per capita beef supplies could decline more than LMIC has predicted. Mintert believes these tighter domestic beef supplies will help support prices across all beef marketing sectors. Agriprocessors faces child labor charges A criminal complaint has been filed by the Iowa attorney general’s office against Agriprocessors, Inc., a kosher meat packing plant in Postville, IA. The lawsuit accuses Agriprocessors of violating child labor laws such as illegally employing minors at a meat processing or rendering plant and exposing minors to dangerous chemicals. Other charges include employing persons under age 16 for more hours per day and more days per week than the law allows, and employing persons under age 16 in positions that involve operating power machinery. The violations allegedly occurred from September 2007 to May 2008, when immigration officials raided the plant and arrested 389 people on charges of identity theft and using false identification to gain employment.

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