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Thursday, December 20,2007

Demand is primary market driver

by WLJ
The cash fed cattle market last week was at a standstill Thursday with trade expected to slide lower by as much as $4 when it finally got underway. There was light trade reported in Nebraska at mid-day Thursday at $144-145 dressed basis, which was $3-5 lower than the prior week. However, most feedlots were still holding out for better money in hopes of at least steady trade, although it appeared unlikely. Prior week trade occurred at $96-96.50 live in the south. Live sales in Nebraska and Colorado came in a range of $95 to $96.50 and dressed sales were at $150.  Iowa/Minnesota live sales traded from $93 to $95 and dressed sales ranged from $147-150, with good numbers changing hands in all areas. The downside to the cattle markets continues to be weak demand at the retail level. Competing meats are value priced and far more attractive for retail features than beef right now. A tightening of consumer belts in the wake of rising household expenses has made beef less attractive and more difficult to move. The result has been lackluster movement at the wholesale levels and has made it difficult to push the beef cutout higher than the $147 level since early in the summer. Last Thursday, the Choice cutout stood at $147.28 at mid-day, up slightly from the previous day, while Select was up 50 cents at $136.78. Movement of product was slow. According to Dow McVean at McVean Trading, there is more downside risk to the market ahead. “Cattle futures have lost $2 thus far for the week and the thoughts of sluggish beef demand against competitive meats is starting to gain some traction in the trade which, up till now, has been pretty much ignored with higher cash cattle and big kills by the packers,” he said. “Packer margins are a negative $100 a head at current levels. We think the big kills to gain market share by individual packers will be a game too expensive to continue and we’ll see kills cut back.” Despite the ongoing packer woes and mounting losses, slaughter volume remained robust last week and rumored packer cutbacks have either been short-lived or failed to develop at all. The result has been slaughter levels which continue to run above year-ago levels, making it difficult to convince retailers to pay up for product. The week-to-date kill through last Thursday was estimated at 512,000 head, up from 505,000 head a week prior and 12,000 head greater than the same period in 2006. Cow beef markets were down again last week although they remain above year ago levels. The cow cutout slid more than $1 from the previous week to trade at $104.71 last Thursday. The 90 percent lean dropped to $124.50. The 50 percent trim market however, bounced nearly $2 higher to hit $53.06, well above prior year prices of $36.87, largely as a result of consumer demand for ground beef over whole muscle cuts. Adding to the downside of the fed cattle market equation are carcass weights that are even with last year’s record high numbers. The October live cattle contract on the Chicago Mercantile Exchange, trading at a significant premium to the August contract, caused many cattle feeders to hold market-ready cattle longer, adding weight and contributing to overall beef supplies when cutout levels were already difficult to maintain as a result of production levels. However, instead of cutting back on harvest, packers last week reportedly began implementing discounts for heavy carcasses, a trend which could continue until the heavy cattle are through the production chain. Despite the disappointing cash trade and retail picture, there is still good news ahead for the industry. The supply picture going into the end of the year continues to look tight and if retail demand can be improved, $1 fed cattle remain a good possibility in late 2007 and early 2008. However, the key is going to be the demand side of the equation, which must be a focus for the industry. Adding to optimism is the likelihood of harvest pressure on corn prices, said Virginia Tech Commodity Marketing Agent Mike Roberts. “Good weather and good yields are being reported across the Corn Belt. This news served to put a lid on corn prices even though they were supported by a good showing in wheat and consistent good demand. The December chart shows that is it trying to go back and fill the bullish gap established week before last,” he said. “Cash bids for corn in the U.S. Midwest were steady to firm across most locations as producers were reluctant to let go of their corn. Opening bids for cash corn in the U.S. Mid-Atlantic States found weakness in prices ranging from 6 cents per bushel to 14 cents per bushel last Monday.” He said it might be a good idea to hold off pricing near-term corn inputs due to expected downward movement in corn prices. Feeder cattle Northern Livestock Video Auction (NLVA) held a sale on Sept. 28 in which nearly 16,500 head of cattle were offered, giving a good gauge of the feeder market in northern areas. NLVA Manager Joe Goggins said that prices were good overall, but certain factors were having a small negative impact on demand. “The really light calves took the hardest hit I think. The four-weight and low five-weight calves were quite a little cheaper than they have been. The 500-600 lb. calves sold better, but in all the lighter feeder calves, there was a really big difference between the reputation calves, or preconditioned calves, compared to the mediocre and plain-Jane groups,” said Goggins. Goggins said there were no significant shake-ups, and that he sees things remaining strong in the feeder cattle market for some time to come. “The big feeders were really steady, but you could feel some resistance. A lot of the calves we sold are going to the Midwest, but I think local demand and demand form the farmer-feeder is what got hurt recently. All the farmers are in the field right now and are pretty busy at this time of year, so they just aren’t buying. Once they get done with harvest and field work and everything else, I think they’ll get back into the market and wonder where all of the good stuff went,” Goggins said. “I think the market will remain strong for a long time because we just don’t have enough calves to satisfy demand. The difference is that corn is still kind of up right now, so I see some good opportunities in the very near term to get in on calves that will be well worth the money. If you were to take 30 cents off of corn though, the market would get pretty jazzy again,” Goggins explained. Most lots in the Sept. 28 video auction came from Montana and Wyoming, with some coming from the Dakotas, Idaho and Nevada. A large number of the feeder cattle offered qualified for natural beef programs and were age/source verified. Good examples of continued strong prices included a 1,198-head group of feeder steers weighing an average of 563 and selling for $124.84 with an October delivery date attached. A similar group of heifers weighing 570 sold at $116.19 with similar delivery terms. In auction markets around the country last week, demands for cattle similar to what was offered by NLVA were seen, with the market demanding more quality out of the feeders as an abundance of unweaned calves are coming up for sale. At the Joplin Regional Stockyards in Joplin, MO, last week, 5,124 head sold and compared to the last sale, steer calves were $1-2 lower, with heifers following them down and going $2-3 lower. Demand and supply was moderate, with a few of the calf offerings being weaned with shots, though most were right off of the cows. Buyers at the sale had mixed feelings on the downward fed cattle futures, which added pressure to the feeder cattle trade. Five-weight feeder steers weighing nearly 575 sold for an average of $116.93, with heifers of a similar weight trading nearly $15 lower at an average of $101.99. At the Oklahoma National Stockyards in Oklahoma City, 8,783 head were seen last Tuesday, where feeder steers and steer calves were steady to $1 higher, with an advance on six-weights suitable for the feedlot. Feeder heifers were lightly tested but steady, with calves as much as $3 lower. Demand was good for steers but light to moderate for heifer calves, with buyers being very selective for kind and conditions. In this season in between grass and wheat pasture, middle weight, fleshy un-weaned calves, especially heifers, are in light demand. Some feeder steers weighing an average of 683 brought $123.16, with heifers of a similar weight and condition bringing approximately $10 less. Further west in La Junta, CO, last Wednesday, an offering of 2,115 head was seen, and demand followed a familiar trend. Steer and heifer calves of good quality and condition were steady to $1 higher, while plain fleshier calves were $2-3 lower. Yearling feeder steers and heifers were mostly steady in a light test and active trade conditions. One lot of 820 lb. yearling steers brought $112.25, while $105 was paid for a similar load of 840 lb. heifers. At the Stockland Livestock Auction in Davenport, WA, receipts totaled 2,164 last week. Compared to the previous sale, feeder cattle trended steady to $2 higher, with the most advance on 550-600 lb. steers. Trade was moderate with moderate to good demand. Five to six weight steers sold between $107.50 and $114, with heifers following mostly between $96-105. A total of 1,586 head were seen at the Western Stockman’s Market in Famoso, CA, last week, where prices were steady for stockers and mostly $2 lower for feeder cattle. Demand was strongest for quality lots, and was strong on heifers of 700-800 lbs. Crossbred steers of 600-700 lbs. sold between $90-100, with choice heifers of the same weights selling $90-95.75.

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Thursday, December 20,2007

Mustang event fetches $50,000 adoption fee

by WLJ
October 1, 2007 When trainer Ray Ariss went off pattern during the “horse course” of the Extreme Mustang Makeover, giving him a zero for that portion of the competition, his hopes for representing his hometown of Norco, CA, and displaying the talents of his American mustang Hail Yeah were dashed, or so he thought. That was until Hail Yeah was adopted for $50,000 during the Extreme Mustang Makeover adoption process, taking the high-adopted horse of the adoption and the highest-adopting mustang in the history of the Bureau of Land Management’s (BLM) adoption program. “It was totally my fault that I missed the pattern,” said Ariss, who, in only 100 days, had conditioned 3-year-old Hail Yeah to perform at dressage, pull a cart and in mounted shooting. “I hated that I didn’t have the opportunity to show the judges what this horse could really do. I’ve been in a lot of competitions and this one was different because it was definitely not about me. I knew there was some really good horsemen here and that I would need to step up and compete.” But the gelding’s adopters knew the horse’s abilities, so offering the adoption fee was, well, a no brainer. Partnering on the fee was the City of Norco, CA, represented by Mayor Harvey Sullivan and the Mustang Heritage Foundation (MHF). Ariss had a lot riding on the exhibition of his horse. Sullivan had seen the first episode of the Extreme Mustang Makeover on RFD TV and approached Ray about representing Norco in its marketing focus as Horsetown USA. “I thought this competition was so unique and Ray is an outstanding trainer,” said Sullivan, who traveled to Fort Worth, TX, to support Ariss and Hail Yeah. “When I return to Norco, we will be naming Hail Yeah the official mascot of the city and he will represent our message as Horsetown USA.” Norco registered Horsetown USA as a trademark to introduce and encourage specific types of businesses and vendors to the city that, in turn, will support and complement the community’s animal-keeping lifestyle and values. “With this partnership, Hail Yeah will serve as an incredible example of what the American mustang is and can be to people interested in owning a great horse,” said MHF Executive Director Patti Colbert. “The city of Norco doesn’t just call itself Horsetown USA, it is Horsetown USA, and having Hail Yeah there in Norco and traveling the country with Ray Ariss will do so much to raise the awareness of the value of mustangs.” The second highest adopting horse was a Calico Mountain mustang named Larry, trained by Dave Schaffner. Schaffner tragically suffered a serious riding accident on another horse shortly before the competition and was not able to compete. As a result, Larry was shown by Shaffner’s son Tyler and was adopted for $10,000 by Mustangs Forever Inc.’s Randy Olson of Kerrville, TX, who was also the high-money adopter purchasing two horses for a total of $13,100. The after fee funds received for Larry will be donated to the Schaffner family to assist with medical bills. Seventy-five mustangs were adopted for a total of $233,100 for a sale average of $3,108. BLM received $125 per head as the minimum adoption fee while the remainder was allocated for the development and programs of the Mustang Heritage Foundation. Trainers also received a 15 percent adoption commission for any horse adopted for a fee higher than $250. The Extreme Mustang Makeover will also become a six-episode series on RFD TV’s Wide World of Horses through December 2007. The show will share the stories of the mustangs and trainers as they learn to trust in one another and gain competitive confidence. The show will air future episodes Sept. 24, Oct. 22, Nov. 19, Dec. 17 and Dec. 31. Air times for the series will be Mondays at 10:30 p.m., with additional airings on Tuesday at 8:30 a.m. and Mondays at 4:30 p.m. All times are Eastern.

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Thursday, December 20,2007

COMMENTS

by WLJ
It looked like we were going to get some big news on reopening beef trade with Japan last week. Prime Minister Koizumi was in the U.S. attending the United Nations meetings in New York City, and took some time to visit with President Bush about getting beef trade restarted. Chandler Keys, lobbyist for NCBA said that Koizumi is taking this beef issue back to his parliament for further guidance. The White House has been aggressive on beef trade and U.S. cattle producers should feel very fortunate that these talks are getting the President's personal attention, which is unprecedented. This issue has become very frustrating because the Japanese aren't responding in what seems a reasonable way. The up side is that the talks are at the top of both governments and there shouldn't be many other elements to influence the decision. Keys said he expects to see something happen sometime later this week, but if it doesn't, we may be waiting a while. He also points out that there are no safe bets at this point. Trade on the northern border saw a new twist last week. The National Meat Association (NMA) filed court documents to gain intervener status in a lawsuit that includes an injunction that R-CALF received in order to keep the Canadian border closed to additional meat products and cattle. NMA is wanting live cattle exports to resume so their 500-plus members can keep their plants operating at near profitable levels. Boxed beef imports from Canada are up from a year ago, in the neighborhood of 25 percent. Sounds like its up pretty big, but when you look at the real number, of around 535 million pounds of beef, year- to-date, it all of sudden looks fairly small. Total Canadian imports are less that than one week's beef production in the U.S., when plants are running near capacity. NMA's legal action drew a quick response from R-CALF, with a convoluted lesson in beef economics that attempted to point out that there are plenty of cattle available for U.S. packers to slaughter, even though National Beef Packing Company turned their lights out last Wednesday, and Northwest beef plants are struggling to maintain a 40-hour week. R-CALF President Leo McDonnell responded to NMA's intervention and said, "with over 80 percent of our export market shut down there are still ample supplies of beef, and although industry analysts have reported beef demand as being up six percent, live cattle prices have fallen each of the past three months to a point, two weeks ago, where U.S. cattle producers were receiving less than they did one year ago. Certainly, such market indicators show a very ample supply of U.S. cattle, even with the near record retail prices consumers are paying for beef." If we had all those market indicators during the same week, he may be right, but demand index figures are four months old, retail price numbers are two months old and fed cattle prices used to make this illustration are two weeks old. Figures like these make it impossible to draw realistic market conclusions, so go figure, because it isn't that easy. McDonnell went on to say that cattle producers are receiving a smaller share of the consumer beef dollar than they were three years ago. Retailers are charging consumers record prices for beef, which is up 16 percent above the average price three years ago. He said consumers should be concerned by this beef industry activity, but, more than that, they should be cautious of meat packers present tactics of trying to elicit public sympathy while trying to relax standards for importing Canadian cattle and beef from a country with BSE in its native herd. Seeing things in NMA's perspective may not draw a lot of sympathy from some cattle people. Maintaining a balanced perspective in this business is a difficult task. There are a lot of elements that make a market, and throwing around a few loosely associated numbers doesn't tell any story at all. Hopefully, Japan will be on line in the next several weeks and NMA has a legitimate concern over opening the Canadian border but R-CALF continues to play producers as a victim in this business. And I would have to say that with producers still selling $130 calves, and a $110 yearlings, I'm not sure I see a lot of victims. — PETE CROW

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Thursday, December 20,2007

Full House to hear ESA changes

by WLJ
After several months of speculation, U.S. Rep. Richard Pombo, R-CA, last Monday introduced legislation that would reauthorize the Endangered Species Act (ESA), but with some changes that would make the legislation more compatible with the interests of ranchers and other private land owners. The House Resources Committee acted quickly on the proposal passing it by a vote of 25-12 last Thursday, which means it will next go the full House for debate and a vote. Among the changes approved under the Threatened and Endangered Species Recovery Act of 2005 (TESRA), is a plan to financially compensate private property owners for losing use of their land because of a species being protected under the ESA. Contrary to previous reports, compensation would not require 50% of the land or land use being taken under the guise of “critical habitat” or other ESA protocol. The new law would also increase the amount of input from state and local governments and individual land owners regarding the listing of new species and of new critical habitat to the ESA. An incentive program for voluntary conservation efforts has also been proposed. According to Pombo, changes to the current act have been too long in coming, because the law has not been successful in reviving many populations of species considered to be in danger of becoming extinct. “After three decades of implementation, ESA has only recovered 10 of approximately 1,300 species on its list,” said Pombo, who is the chairman of the House Resources Committee. “What it has done instead is create conflict, bureaucracy and rampant litigation. Without meaningful improvements, the act will remain a failed managed care program that checks species in but never checks them out. Under this bill, the impediments to cooperation will be removed and we can start achieving real results for species recovery, the goal that was set over 30 years ago.” Ranching and other land rights organizations have put their full support behind TESRA, especially after the threat of the 50% compensation trigger was removed from the final proposal. Most groups welcome Pombo’s action because it allows the people most knowledgeable about the land and the flora and fauna that inhabit it to have proper input. Among those land owners are ranchers, particularly those on large tracts in the western half of the country. Ranchers are outside on the land everyday,” said Jim McAdams, president of the National Cattlemen’s Beef Association. “We have an important role to play in species and habitat protection and we know that local partnerships and on-the-ground practices can achieve better results than federal mandates.” Other land owner organizations said the legislation is a huge step forward toward having environmental and conservation decisions based on sound science and common sense and not based on political views or litigation. The Resources Committee held a hearing regarding ESA last Wednesday, with Democrats sharing their concerns that the bill doesn’t focus enough on science-based decisions from the Fish and Wildlife Service (FWS) or the National Marine Fisheries Service, the two federal agencies responsible for ESA decisions. Officials with FWS indicated that they are given enough discretion and ability to conduct science-based reviews, but that they aren’t staffed enough to conduct them in a timely and/or efficient manner. When full House debate on the issue will happen was not known last week. — WLJ

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Thursday, December 20,2007

Cargill buys West Coast packer

by WLJ
Cargill, the nation’s second largest beef processor, announced their intentions to purchase California’s largest meat packing operation, Beef Packers Inc. (BPI). This is Cargill’s first packing plant in the western U.S. and a move that further consolidates the meat packing industry. Cargill Meat Solutions Corp. has made a preliminary agreement to acquire the Fresno, CA-based company and all its subsidiaries. Cargill is buying the slaughter operations of BPI, the processing operations of Fresno Meat Co., the retail meat distributorship known as RPM Beef Inc., steak cutter and restaurant distributorship King-O-Meat, Inc. and live cattle and meat transportation company Ore-Cal Transportation, Inc. The transaction is expected to be completed by the end of the year. The companies have annual sales of $500 million. According to BPI officials, most of the company’s leadership team will stay on with Cargill, and the merger means the company will become an even bigger player in the U.S. cattle and beef market. “This is a tremendous growth opportunity for our companies and our people who helped build them,” said Dennis Roth, president of BPI. “Cargill has a history of investing in its people and facilities. Having access to those resources will help us move to the next level of success.” BPI is currently owned by the Roth, Maxey and Pestorich families; most of the involved family members have agreed to stay on with the company. “We are pleased that the companies will remain in the hands of a family-owned business; we share similar cultures and values,” said Roth. The company, started in the 1930s and originally known as Fresno Meat Packing, was founded by the grandfather of current partner, Mike Pestorich. The Fresno business will become a part of the Taylor Beef business unit within Cargill Meat Solutions business. “These are excellent companies, with great people and a history of family ownership,” said Mike Coleman, president of Cargill Taylor Beef. Cargill Taylor Beef processes both mature and fed cattle, providing boxed beef, boneless beef and custom-formulated ground beef with regional service capabilities on the East Coast through its facility in Wyalusing, PA, and to the central U.S., through its facility in Milwaukee, WI. Coleman said the acquisition of BPI and its subsidiaries would help its market share in the western U.S. and that BPI’s business plan fits well with what Cargill Taylor Beef does. Coleman also said, “Cargill is committed to helping our customers succeed by providing customized services. We’re also committed to the growth of the beef industry, which is a positive for the Fresno team, area cattle producers, and the Fresno Community.” According to Roth, Cargill officials have indicated they will continue with the current business plan that BPI has in place which includes a $15 million, 70,000 square foot expansion to the current 220,000 square foot plant, which will allow for a second slaughter shift. “We are already in the midst of fairly major expansion,” said Roth. “Cargill has said it will complete that and add on even more slaughter and processing volume in the future.” Currently, BPI primarily processes cattle over 30 months of age, focusing on cull cows and bulls, Holstein heiferettes and other older dairy-influence cattle. The company does some custom processing for independent cooperatives, however, Roth said it is a very small portion of their overall business. “We do three or four loads of Western Grassland cattle a week and just a few of the Hearst Ranch cattle on the custom processing side,” he said. “We used to process for Laura’s Lean, but then they moved out of California. We don’t do much on that end, but we will continue to keep that in our business plan. Overall, we don’t do many ‘fed’ cattle.” Roth said Cargill will continue to focus on the processing of 30-month-and-older cattle and dairy-influenced animals, but will expand to include younger animals, also mostly dairy-based. “The main objective of Cargill is to keep BPI as a processor of cows, bulls and dairy cattle,” said Roth. “They will probably move towards processing more 20-month cattle, but most of them will continue to be Holsteins or other dairy influence. It doesn’t look like we will include a lot of fed cattle.” “By producing in California, Cargill will get closer to West Coast ports, a move that could pay benefits if Japan and South Korea ease restrictions on U.S. beef,” said livestock analyst Daniel Vaught at A.G Edwards. He added that, “The move could lower transportation costs, an important factor as energy costs soar.” Roth said that Cargill had been showing interest in purchasing BPI and its subsidiaries over the past 18 months, and said the offers just kept getting better and better, adding that the last offer from the company was too good to refuse.

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Thursday, December 20,2007

Prevent Pasteurella pneumonia—Boost marketability

by WLJ
With volatile feed costs that have reached record highs in recent months, feed yards want calves this fall that will perform from day one without added worry of sickness. That means buyers will be willing to pay more for healthy cattle, says Dr. Joe Dedrickson, director of the Merial Large Animal Veterinary Professional Services. “Feed yards can’t afford sick cattle this fall,” he explains. “The stress of weaning and shipping can lead to bovine respiratory disease (BRD), and with profit margins tight, any setback due to BRD can be devastating to the bottom line. Prevention is key.” Treatment costs alone for BRD add up quickly. One feed yard study reported that the average BRD treatment cost for one animal in a 1,000- to 7,999-head feed yard was $11.09 and in an 8,000-head or more feed yard, the cost increased to $16.26. “These numbers only account for actual treatment costs—not losses in weight gain and grid performance,” Dedrickson says. By combining medical costs and gross carcass value, one study determined that heifers treated at least once for BRD had lower marbling scores than those never treated, resulting in a 37.9 percent reduction in carcasses grading USDA Choice or above. Heifers that never had to be treated produced a net return of $11.48 per head more than heifers treated once for BRD and $37.34 per head more than those treated two or more times. Dedrickson says a high percentage of diagnosed cases of BRD are a result of Pasteurella bacteria, which is why feed yards will be looking for cattle that have been through a sound preconditioning program that includes vaccination for Pasteurella. “Much of the financial losses caused by BRD occur during the feeding and slaughter phases due to lost weight and reduced numbers of cattle grading Choice and above,” he says. “That is why it’s important for feed yards to find cattle that have been vaccinated against Pasteurella and viral respiratory pathogens.” Vaccinating with Respi-shield HM helps build immunity to Mannheimia (Pasteurella) haemolytica and Pasteurella multicoda, two of the leading causes of BRD. These two organisms are part of a complex group of bacteria and viruses that can cause shipping fever. Pasteurella bacteria inhabit the upper respiratory tract of healthy cattle. Pneumonia occurs when the Mannheimia haemolytica and Pasteurella multicoda migrate to the lungs. Dedrickson says the stress of weaning and shipping is the final causative factor that completes the disease complex—resulting in BRD. The complex nature of this disease is why Dr. Gerald Gibson of Gibson Veterinary Clinic, Montezuma, KS, recommends that all of his cow/calf clients use Respi-shield HM to vaccinate for Pasteurella pneumonia. “Over the years, I have seen a lot of Pasteurella problems. We were always vaccinating calves with virals, but we were leaving them vulnerable to the bacterial end of the complex,” he explains. “Ideally, all cow/calf producers would vaccinate calves with Respishield HM before they are subjected to the stresses of weaning and exposed to the outside world.” He adds that even calves that may have come from the same ranch and are not considered high- risk should be vaccinated. For calves to develop immunity, Dedrickson recommends producers vaccinate two to four weeks before weaning. “The key to getting a good immunologic response to vaccination is to vaccinate before putting cattle through stressful events such as weaning and transportation to feed yards,” he says. Gibson says this protocol is ideal. However, if vaccination did not occur before weaning, Respishield HM can still be used effectively during the backgrounding phase. “We vaccinate incoming stocker cattle also because they do not have any immunity against this important disease,” he explains. The added level of immunity to BRD that can come from vaccinating against Pasteurella can help producers add value to calves this fall and help feed yard managers protect profits. “Prevention of BRD ultimately lies in the hands of cow/calf producers, and feed yards know this,” Dedrickson says. “By using a Pasteurella vaccine, producers can improve the health and marketability of their calves and feed yard managers can rest assured cattle will hit the ground running.”

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Thursday, December 20,2007

Packers trim harvest for second week

by WLJ
After very light live cattle trade a week earlier, beef packers cut plant operating hours again last week to reduce total harvest significantly in their efforts to boost the sagging cutout values. However, the move appeared to have little effect and at mid-week, lower wholesale prices spurred heavy trade, allowing packers to move 482 loads of Choice and Select fab cuts and 134 loads of trim and grinds out of cold storage and into the hands of retailers. Most of the decline in cutout values came on middle meats, with rib roasts and boneless ribeyes leading the way lower, although there was discounting throughout the middle meat complex along with some light discount on rounds and shoulder clods. There has been very little out front beef trade in recent weeks, which has hurt the beef cutout. Unless contracting picks up, the trend could continue to hurt cutout prices in the weeks ahead until tighter fed cattle availability starts to impact the market. Last Thursday, the Choice cutout stood at $145.34 on the Choice and $136.83 on Select product. Harvest for the week, despite packer cutbacks at mid-week stood at 504,000 last Thursday compared to 490,000 head for the same period a week earlier and 507,000 in 2006. Analysts said it was likely packers would continue to slow chain speeds late in the week in an effort to bolster the cutout. The reduction in kill levels and unsustainable beef cutout kept packers on the sidelines in the fed cattle battle, with very few animals trading hands as of last Thursday. As of mid-day last Thursday, feedlot asking prices stood in the $95 live and $150 dressed range, with packers bidding $90-91 live and $142-143 dressed. The prior week trade came in a range of $91-93.50 live and dressed sales traded from $144-146.50. Analysts last week agreed that fed cattle sales would come in at steady money in a range of $92-93 live and $142-$144 dressed, although there was little hope for trade to develop until Friday, perhaps not coming until after USDA released the Sept. 1 cattle on feed report. Average pre-report estimates showed analysts were expecting total cattle on feed numbers to be down 6.5 percent, placements 7.5 percent below August 2006. and the number of cattle marketed in August up .8 percent above last year. “If the report does come out this way, it is again going to be supply friendly for the fourth quarter of this year, and this is what had guys covering short December and February positions along with outright net new February buying going into the close (on the Chicago Mercantile Exchange or CME),” said Ehedger analyst Troy Vetterkind last Thursday. “I would really continue to look at lower October live cattle futures as a buying opportunity.” He said he expected corn prices on the Chicago Board of Trade to also move higher which would add pressure to cattle markets although fed cattle prices are expected to remain strong into the first quarter of 2008. Jim Robb, director of Livestock Marketing Information Center, agreed and said last week that the corn market bears watching, particularly now that soybean futures have moved above the $10 level. “Corn is going to have to buy acreage again next year and in the first quarter, I think that higher prices are really going to pose a risk and some of the people planning to sell heavy calves or cattle off wheat pasture could be faked out this fall,” he said. Cow beef markets last week continued their seasonal downtrend as more cattle are shipped to town after the fall sort. The cow beef cutout value fell nearly $4 from the prior week to reach $109.14 last Thursday, with the 90 percent lean trading more than $6 lower than the prior week at $131.08 and the 50 percent trim mostly steady at $49.98. Feeder cattle Western Video Market (WVM) got a good test of the feeder cattle market last week when they sold 50,000 head on video from the Haythorn Ranch near Ogallala, NE. WVM co-founder Ellington Peek said that owing to a large amount of feed in the area, calves sold very well in the Nebraska region. “There was so much feed in the Sandhill region there that you wouldn’t know what to do with it,” Peek said. “Calves sold very well in the Nebraska, Kansas and Colorado area. There is some drought in the Nebraska panhandle, but that didn’t seem to hurt local demand too much.” Peek said that in areas further west, calves were a tough sell. “Areas in Utah, Nevada, California—some places in eastern Oregon as well... We’ve got an unbelievable drought in that area and we had a tougher time selling calves there as a result. We still sold the calves, but the market simply wasn’t as good as it is on the Plains. I think the corn report did a good job spurring demand, although calves out west didn’t see much of a boost because to get them to the Plains to go on feed would simply cost too much,” said Peek. The market for yearlings is getting tight due to a limited supply, according to Peek. “There are not any yearlings to be had in the west. Anything that was available for sale has already been sold and is being delivered about now. We’re really busy shipping cattle right now. I think we had maybe nine lots of yearlings in the western region sell this last time around; so the prices are quite high for them because you have to pay for them if you want the few yearlings that are left,” Peek explained. Peek also said WVM had a packed house for the first day of the sale when the calves were shown, but fewer people were on hand the second day to bid when yearling cattle were auctioned. Good examples of the strong market were 2,561 head of feeder steers weighing 550-585 which sold for an average of $129.95 with an October delivery date. One lot of 800 lb. feeders sold for $116 with a December delivery date attached. A group of similar 800 weight cattle sold for less in the western region, bringing a $106.95 average. Heifers did not lag nearly as far behind at the WVM sale as they have at most auctions during the duration of this market trend, with most heifer calves hanging within a couple dollars of their brothers. Derrell Peel, marketing specialist with Oklahoma State University, says that while things remain strong in the feeder cattle market right now, there could be a little bit of trouble brewing. “The interesting thing that we’ll see in the markets going into the spring is competition for acreage between wheat, corn, and soybeans. There’s almost no way that corn will keep the same acreage it had this year, and there will have to be a significant run-up in the corn market in order to buy acreage away from soybeans, which look really attractive right now,” Peel says. “The effect this is going to have will be some sort of drop in the feeder cattle market when we see this price increase in corn. A year ago in October when we saw corn spike, the feeder market reacted negatively all winter until it corrected come about February. I think last time, it reacted mostly out of surprise. This time, we know why the situation exists and I don’t think the depression should linger for any more than a month at the most. Long story short, there is definitely a strong potential for a short-term shake-up in the market, but underneath it all is still a very tight supply of feeder cattle, which should keep things from dropping too far or too long,” explained Peel. Peel also said that wheat production issues in the southern Plains are keeping some confused about whether there will be wheat available for grazing. “Conditions have been mostly good for wheat. We’ve had good moisture—in some cases too much moisture—which is helping farmers feel good about their grazing prospects this winter. The problem is that guys are way behind on their farming; weed control and planting issues, along with a severe lack of seed wheat, has put things behind on time. It’s likely that the wheat grazing season may be shortened, as farmers wait to make sure they get the wheat out of the ground before they throw any calves out there,” Peel says. In Oklahoma City two weeks ago, the cash cattle trade was dampened by the surprising news that a record corn report had actually caused a short-term price spike in the CME corn markets. The result was feeder receipts showing steady demand but slightly lower prices. Auctions elsewhere around the country were quite limited in the supply of cattle and did not receive good tests on average, although most markets were steady and in some cases, lower. The market for the 10,068 head offering in Oklahoma City last week was similar, posting prices $1-3 lower on the larger feeder steers and heifers. Steer calves were steady to $1 lower, and heifer calves dropped $2-5 lower. All classes of feeders closed at the full decline. Demand at the Monday and Tuesday auctions was moderate, with the best demand coming for the steers. Buyers were selective for kind and condition, with orders for cattle seeming to run out late in the sale. Weigh ups were reported as mostly average to full, with a larger number of native calves beginning to show up as the fall weaning season approaches. Weather in the area was warm and dry with cool nights, and wheat planting is now finally underway in most parts of Oklahoma. A large load of 830 lb. steers sold for an average of $113.68, and a lot of six-weight calves sold for $121. In Joplin, MO last week, 6,341 head sold, with steer and heifer calves $1-3 lower, with yearlings steady on moderate supply and demand. As is typical for this time of the year, fleshy, unworked calves made up most of the lower market. Six-weight steers sold for $122.75 and 800 lb. feeders sold at $114.30. Heifers of 600 lbs. brought receipts of $113.21. Last week in Torrington, WY, steers were unevenly steady on a very limited test, with receipts on heifers steady to $1 lower. The 1,442 head total supply showed considerable fill and demand was good. One larger lot of heavier nine-weight feeder steers brought $113.23. At the Central Oregon Livestock Auction in Madras last week, 716 head sold, with 600-700 lb. steers bringing $98-103, and heifers bringing the same price—steers of heavier 800-900 lb. weights kept up with the lighter classes, topping out $2 lower at $101 on a light test. Peek’s comments about the western drought hurting feeder prices were echoed in Famoso, CA, last week, where a trend similar to that in Oregon was seen, with 700 lb. feeder steers sold at $106, with one lot of 516 lb. heifers selling for $107.25. Both classes of cattle were very lightly tested.

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Thursday, December 20,2007

Hereford tour goes from pasture to plate

by WLJ
Sheep producers in 16 Montana counties are not allowed to move their sheep within or beyond their county lines until Oct. 10 because of a recent bluetongue outbreak. “Test results on Tuesday (Sept. 18) confirmed bluetongue in sheep from Musselshell County, and we’ve gotten reports of sick sheep and preliminary test results from several additional counties, so I’ve chosen to expand the hold order to also include Big Horn, Carter, Carbon, Custer, Fallon, Fergus, Garfield, Golden Valley, Petroleum, Powder River, Prairie, Rosebud, Stillwater, Treasure and Yellowstone counties,” said state veterinarian Dr. Marty Zaluski. Bluetongue had already been confirmed in whitetail deer from the area last week. The disease spreads when a gnat bites an infected animal and then bites a healthy animal. Sheep, whitetail deer and antelope are especially susceptible to bluetongue; the virus may cause death if these species are exposed. Cattle, goats, mule deer and elk also can contract the disease, but rarely show symptoms and are a much lower risk in spreading the disease, said Zaluski. Humans are not susceptible. “I extended my order to keep all sheep in high-risk counties right where they are in an effort to protect livestock producers and prevent the movement of potentially sick animals into other states,” said Zaluski. “Bluetongue can be economically expensive and emotionally demoralizing. The Department of Livestock wants to do all it can to reduce the risk of spreading this virus.” Zaluski implemented a 30-day hold order for Musselshell County on Sept. 10 after screening tests indicated bluetongue was the likely cause of several sheep deaths. He has now extended the hold order geographically, but did not extend the time frame. “We expect a killing frost by Oct. 9 and that should reduce the risk of spreading bluetongue significantly,” Zaluski said. As state veterinarian, Zaluski has the authority to extend the hold order if new cases continue to appear or if a frost has not occurred in that region by Oct. 9. Producers should inspect their sheep frequently to look for signs of the virus. Common symptoms of bluetongue include a crusty, swollen muzzle, lesions or bleeding in the mouth or on the skin, and sometimes, lameness. In sheep, the mouth can become swollen and the tongue can swell and turn blue color because of damage to blood vessels and lack of oxygen. This dirty blue-colored tongue gives the disease its name—bluetongue. Livestock producers also should look for the following signs of the disease: Depression with heavy breathing or panting; High fever; Open sores on the tongue, mouth, or nostrils; Redness of the skin, face, neck, and possibly body; Lameness accompanied by an engorged reddish-blue area around the base of the horns and on the coronary bands of the feet; Loss of condition and muscular weakness; And loss of wool.

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Thursday, December 20,2007

Consumers demand tenderness rule

by WLJ
Consumers tell us that tenderness and taste are two of the most important attributes when they are evaluating their beef eating experience. They want tender beef and are willing to pay for it. That was the message Dr. Keith Belk, professor at Colorado State University’s Center for Red Meat Quality and Safety, delivered to agricultural editors and other participants at a Sensory Evaluation Briefing and Wet Lab held at Iowa State University. The training session was hosted by Elanco Animal Health as part of its continuing effort to educate beef producers on the importance of tenderness of the beef they produce. Tenderness is an important aspect of beef palatability that ultimately drives consumer satisfaction. The beef checkoff’s 2005 National Beef Tenderness Survey shows the industry has made improvements since the 1999 study, but there still are inconsistencies and further need for improvement. A key factor in beef tenderness is the aging process. Most experts agree beef becomes more tender when it is aged about 21 days. However, according to a number of meat industry experts—including the University of Minnesota Extension department—most of the beef offered for sale as retail cuts in the supermarket is aged five to seven days. Rarely is beef in the retail case aged more than 10 to 14 days. Aging isn’t the only factor driving beef tenderness. “Quality grades and marbling itself have become extremely important,” says Belk. “Prime and upper two-thirds of Choice-branded beef are in high demand and are returning larger profits back through the production chain. That’s the signal consumers are sending to us. An excellent example of that is the success that Certified Angus Beef LLC (CAB) is experiencing.” Dr. Larry Corah, vice president of supply development for CAB, says, “Our single biggest challenge is finding enough cattle that meet our quality specifications. Consumer demand for CAB products is growing faster than our suppliers’ ability to produce them. The beef industry needs to avoid using products or management practices that decrease the marbling or tenderness of the final product. Efficiency is great, but efficiency at the expense of quality or tenderness of the meat is counter-productive for the producer and for the entire beef industry.” “In the new food chain equation, it is not enough to provide technologies that only meet production challenges,” says Roy Riggs, director of Elanco’s beef business unit. “New products must also help producers meet consumers’ demand for tender, top-quality beef. We know just one bad eating experience can negatively impact all segments of the food chain. That’s why Elanco is committed to developing production inputs that not only improve animal health and performance, but also maintain or improve the palatability of the meat products.” Elanco believes that sensory evaluation training programs like the one held recently at Iowa State University are an important part of producer education. Riggs says, “We believe that the first critical step in maintaining beef quality is to raise producer awareness of the importance consumers place on tenderness and how tenderness can be measured and managed. We know today’s consumers have many choices of protein. If we want their first choice to be beef, we need to help our producers deliver the tender, tasty product consumers demand each time they purchase beef.”

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Thursday, December 20,2007

Bluetongue confirmed in Montana sheep

by WLJ
Sheep producers in 16 Montana counties are not allowed to move their sheep within or beyond their county lines until Oct. 10 because of a recent bluetongue outbreak. “Test results on Tuesday (Sept. 18) confirmed bluetongue in sheep from Musselshell County, and we’ve gotten reports of sick sheep and preliminary test results from several additional counties, so I’ve chosen to expand the hold order to also include Big Horn, Carter, Carbon, Custer, Fallon, Fergus, Garfield, Golden Valley, Petroleum, Powder River, Prairie, Rosebud, Stillwater, Treasure and Yellowstone counties,” said state veterinarian Dr. Marty Zaluski. Bluetongue had already been confirmed in whitetail deer from the area last week. The disease spreads when a gnat bites an infected animal and then bites a healthy animal. Sheep, whitetail deer and antelope are especially susceptible to bluetongue; the virus may cause death if these species are exposed. Cattle, goats, mule deer and elk also can contract the disease, but rarely show symptoms and are a much lower risk in spreading the disease, said Zaluski. Humans are not susceptible. “I extended my order to keep all sheep in high-risk counties right where they are in an effort to protect livestock producers and prevent the movement of potentially sick animals into other states,” said Zaluski. “Bluetongue can be economically expensive and emotionally demoralizing. The Department of Livestock wants to do all it can to reduce the risk of spreading this virus.” Zaluski implemented a 30-day hold order for Musselshell County on Sept. 10 after screening tests indicated bluetongue was the likely cause of several sheep deaths. He has now extended the hold order geographically, but did not extend the time frame. “We expect a killing frost by Oct. 9 and that should reduce the risk of spreading bluetongue significantly,” Zaluski said. As state veterinarian, Zaluski has the authority to extend the hold order if new cases continue to appear or if a frost has not occurred in that region by Oct. 9. Producers should inspect their sheep frequently to look for signs of the virus. Common symptoms of bluetongue include a crusty, swollen muzzle, lesions or bleeding in the mouth or on the skin, and sometimes, lameness. In sheep, the mouth can become swollen and the tongue can swell and turn blue color because of damage to blood vessels and lack of oxygen. This dirty blue-colored tongue gives the disease its name—bluetongue. Livestock producers also should look for the following signs of the disease: Depression with heavy breathing or panting; High fever; Open sores on the tongue, mouth, or nostrils; Redness of the skin, face, neck, and possibly body; Lameness accompanied by an engorged reddish-blue area around the base of the horns and on the coronary bands of the feet; Loss of condition and muscular weakness; And loss of wool.

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