Close
Home » Articles »   By WLJ
 
 
Thursday, December 20,2007

GeneSTAR feed efficiency could increase profitability

by WLJ
Producers in every sector of the cattle industry are facing rising costs, but none that impact the bottom line more than the cost of feed. To maintain profitability, producers must be able to identify genetic lines that provide the most feed efficient animals possible. Bovigen is addressing this ever-increasing need with a true technological breakthrough: the industry’s first and only DNA test that can identify an animal’s genetic ability to efficiently convert feed. “Producers can use the new GeneSTAR feed efficiency test to identify up to a $50 difference in feed cost between animals when ration costs are at $165/ton,” said Victor Castellon, CEO of Bovigen. “Now everyone in the cattle industry has access to a tool for measuring feed efficiency and for improving the profitability of cattle production.” The markers were identified through discovery and validation work on thousands of cattle focusing on the trait of net feed intake, sometimes also called residual feed intake or net feed efficiency. This trait was identified by nutritionists to measure differences between how much an animal should eat, and how much an animal actually eats over a given period of time by accounting for the calf’s weight, how much it grows and its composition of bone, muscle and fat. For example, an animal with a feed efficiency GPD of -3.0 will eat 3 pounds less feed per day than an animal with a feed efficiency GPD of zero. Over a 150-day feeding period and with a ration cost of $165/ton, the animal with a -3.0 GPD will cost $37 less to feed without sacrificing growth performance or carcass quality. The new GeneSTAR feed efficiency test is made up of four markers which, together, identify as much as a 15 percent difference in daily feed consumption with no effect on other measures like average daily gain, carcass weight, quality grade or yield grade. An independent study showed that feed efficiency has six times as much effect on feed yard profitability as average daily gain and that a 20 percent improvement in efficiency would equal a $65 improvement in profitability. Since feed costs (grass and purchased feed) are typically more than half of all costs in a cow/calf operation, this test has wide application across all sectors of the industry. Starting Aug. 22, Bovigen will release the new Gene-STAR feed efficiency panel test. As in past new marker releases, producers who have tested in the last 30 days will receive the new information at no additional charge.

Read more
Thursday, December 20,2007

Premium grades add $500 million to cattle business each year

by WLJ
USDA Prime, Choice, Select and Standard have been the staples of graded beef, at least since the system was overhauled in the 1970s. The Choice grade may have been made too broad for effective use because in recent years, its upper two-thirds has further segmented into a kind of fifth grade: premium Choice. The industry is half a billion dollars ahead each year because of that. Cattle-Fax published a paper in July called “Value of Quality Analysis,” which considered what would happen if all the premium quality categories and brands went away. “If we went back to a Choice/Select basis on everything we produce today, it would cost us, on average, $2.59 per hundredweight of carcass,” says Brett Stuart, Cattle-Fax analyst and author of the paper. He compared a weighted Choice/Select cutout to that of the current “premium cutout,” including premium Choice values to get that figure. “The fact that we differentiate higher grading beef, including CAB (Certified Angus Beef), is worth roughly $20 per head,” he says. Multiply that by the annual harvest and it shows that from 2004 to 2007, premium categories added $470 to $601 million each year. “That premium is on the live side of the industry,” Stuart notes. “That is not the meat premium received by the packer, it’s the premium paid by the packer to the seller of the cattle.” Feeders and cow/calf producers retaining calves through harvest take home the biggest share of the added revenue, but Stuart says it’s good for everyone on the cattle side. “Even the guys selling calves at weaning benefit. That $20 a head filters through the live side of our industry,” he says. “If you look at long-term profitability in the feed yard and packing plant, it’s less than $13 a head. Something that adds upwards of $20 per head in total value is highly significant.” More cattle grading premium Choice will strengthen this trend, not derail it. “As more high quality beef is produced, does it saturate the market, creating a decrease in total market value?” Stuart asks. “This research showed, no, it doesn’t. You actually add value with more quality.” Every percent increase in Choice grade is worth 20 cents per head more than the Choice/Select baseline cutout. The converse is also true, showing that a drop in grading will weaken this premium. “Over time, there has been growing demand for high-quality beef,” he says. “If quantities increase over time while this demand builds, the extra product is easily absorbed.” If the percent of Choice-grading cattle increased a couple of points each year, this added value should hold up. “We feel there’s some pent- up demand that’s not being serviced with the current supplies of high-quality beef today,” Stuart says. That sends a clear message to cattle producers that it pays to shoot for premium brand targets such as that represented by CAB. “This demand for higher quality beef will continue to grow in the future,” he says. “As we differentiate, we have more opportunities to add value.”

Read more
Thursday, December 20,2007

Fed cattle trade stalls ahead of report

by WLJ
After the packer buying spree of the previous week, fed cattle trade was all quiet in advance of last week’s much-anticipated cattle on feed report. Packers had a large supply of cattle procured and show lists at feedlots were generally smaller so both sides appeared content to wait until Friday to trade cattle. As of Thursday afternoon last week, cattle were offered at $88-89 live basis and $140-141 dressed. Packer bids were very light and several dollars below asking prices at $83-84 and $134-135. Analysts last week were expecting trade to occur at prices mostly $1 higher than the prior week at $86-87 live and $138-139 dressed when it did finally occur. According to Glenn Grimes and Ron Plain at University of Missouri, the American Agricultural Economics Association annual outlook survey for the remainder of the year and 2007 for livestock and the marketing year of 2006-2007 for crops shows the average Nebraska fed cattle price for 2006 at $83.20 and for 2007 at $81.82. “If these estimates turn out to be accurate, the year 2007 will be a similar year to a little lower profits or more losses than 2006. The estimated decrease in cost of feeder cattle at a short $4 per cwt. would be about $26 to 28 per head. However, the increase in costs of corn would add nearly $18 per head for feed costs. The lower fed cattle price would reduce sale value by $16 to $17 per head,” they said last week. Packer margins, estimated by HedgersEdge.com last Thursday, were still positive with a margin of $24.05 per head and plants were taking advantage of the profit by increasing harvest levels. Boxed beef cutout values moved higher much of last week with Choice trading up for the week to $151.09, higher by more than $3 from the previous Thursday. Select cutout values rose $3.81 from the prior week to trade at $139.92 last Thursday. According to USDA data, the percentage of harvested cattle grading Choice or better has been increasing on a weekly basis and recently has been above 55 percent, although still averaging two percentage points below the average of 57 percent for July 2005. As a result, the spread between Choice and Select beef cutout values is getting smaller. Harvest for last Thursday was estimated by USDA at 121,000 head, down 6,000 from the prior week and 4,000 from a year ago. For the week-to-date kill, USDA estimated packers harvested 497,000 as of Thursday, down 5,000 head from the prior week, but 3,000 more than the same week in 2005. Beef demand at the retail level last week was called moderate and it appeared that the cutout values were close to topping out for the near-term. Buyers for retail stores last week reportedly weren’t willing to pay any more for beef than in recent weeks and were wary of buying more than needed to meet immediate demand. Most wholesale purchases were being delayed in hopes that there would be some weakness in cutout values down the road. It appeared that may become a possibility last Wednesday, with middle meats dropping in price. According to USDA reports, the Choice rib and loin primal, specifically Choice ribeyes, fell $12 cwt. Choice strip loins lost $15 cwt. and choice top butts were down $10 cwt. which contributed to the losses Thursday in the cutout value. The only positive news in the boxed beef market could be found in the chuck and round primals. Cow cutouts Cow values last week moved higher with most trade moving up by $1 as a result of demand for cow beef from the grinding sector in advance of the Labor Day holiday and the start of the school year which adds strength because of the volume used by school lunch programs. Cow carcass values were up 60 cents last Thursday to $106.47. The 90 percent lean product was also higher by more than $2, to $132.76. As a result of the pending cattle on feed report and the absence of cash fed cattle trade, trading on the Chicago Mercantile Exchange was mostly sideways to slightly lower last week. In last Thursday’s session, the August contract trade was down 82 points to settle at $87.10. October was higher by 25 points, closing at $92.05 and December was off 5 points, closing at $90.90. Feeder cattle Compared to two weeks ago, feeder and stocker cattle sold steady to $4 higher with the best gains coming early in the week last week. Demand was reportedly best for yearlings which are in short supply as a result of the dry conditions that have sent cattle to feedlots early this year. Larger strings of calves are being weaned now and sent to town for sale and the runs are growing, particularly in the northern tier. Calves found solid demand because feedlots apparently have ample pen space available. The continuation of the hot and dry weather across the central U.S. has been taking its toll on health because of heat stress and that has caused sick pens to bulge. On the upside for feedlots, the drought hasn’t taken its toll on the corn crop this year and the crop report issued by USDA showed this year’s crop is expected to be the third largest on record. That information was bearish for new crop December corn futures which slipped last week and lent strength to the feeder cattle market. The result has been prices which remain above last year’s levels, no doubt giving cow/calf producers something to smile about. In auction market trade last week in Amarillo, TX, compared to the prior week, feeder steers and heifers sold at prices steady to $3 higher on a limited test. Trade was called active on good demand. In Oklahoma City, OK, compared to the prior week, feeder steers and heifers were steady. Steer and heifer calves sold $1-4 higher, with the most advance on steers. Demand was good for all classes. Weather continues hot and dry across the state, however significant rainfall occurred in some areas Monday night which added to the positive sentiments of those on the seats. In Dodge City, KS, compared with the prior week, feeder steers 350-550 lbs. and heifers 350-500 lbs. last week were steady to $3 higher on a light test. Steers 750-925 lbs. were called steady to weak on a light test. Heifers 500-800 lbs. sold for prices steady to $1 higher, with those in the 800- 900-lb. class weak to $1 lower on a light test. To the east in Joplin, MO, steers and heifers under 600 lbs. sold steady to $2 higher with a heavy supply of calves weaned right off the cow as a result of some producers weaning calves earlier than normal due to lack of grass and high hay prices. Last week, yearlings sold steady to firm with several load lots trading and several carrying extra flesh. Demand and supply were called moderate. In Bassett, NE, feeder steers and heifers trended predominantly steady, with only 750- to 800-lb. steers trading $1-2 lower. There was no appreciable test on weights over 900 lbs. from the previous sale, but it should be noted that demand was very good for the few offered lots. The run was comprised of good quality, yearling steers and mostly spayed heifers. In the northern states, runs of cattle are still light, however, some states are starting to show increases in the number of cattle offered. In Hub City, SD, last week, a good sized run of feeder steers and heifers sold steady to $2 higher with most of the offering comprised of long strings of feeder cattle coming off grass pastures. Just as live cattle contract traded sideways, feeder cattle futures were also mixed last week despite good news on the upcoming corn crop and November through May feeder cattle futures reaching new contract highs in early trade last Thursday. August feeder contracts dropped 10 points to close at $115.57. September, October, November and January contracts were all higher with October feeder contracts as the biggest winner in last Thursday’s session, closing up 40 points at $117.22, just short of a contract record.

Read more
Thursday, December 20,2007

COMMENTS

by WLJ
August 22, 2005 Last week, Western Video Market held its annual two day sale at Little America in Cheyenne, WY. At the onset, sellers were a little nervous. However, as the sale progressed, the market was established and many yearling steers were trading at that $1-plus level; one set of 900-pound steers brought $114.25. On the calves, 400-pounders traded in the $140s, 500-pounders in the $130s, and the 600-pound calves in the $120s. In the broad picture, the market was good. Perhaps not as good as it was 10 weeks ago, but still very solid. Fuel and freight were big elements weighing on the market and the basis on which cattle are traded. West Coast cattle were selling at an $8-10 discount to western Plains cattle. In northern California, diesel is costing $3.25 a gallon; one cattleman said it cost him $3.10 per loaded mile to ship a load to an auction market 180 miles away. Corn prices have traditionally been one of the elements that would influence the feeder cattle markets. The rule of thumb is that for every dime increase in corn prices, a $1 per cwt decrease in feeder cattle prices can be expected. Now it would seem that every dime in fuel prices may have a similar effect. I asked around to see if any of the cattle market analysts have figured in fuel costs as a market influence, and no one had. Andy Gottschalk, analyst at HedgersEdge, did say that for every $10 increase in crude oil price, $50 billion in discretionary spending was taken away. Unfortunately, that hurts the cattle industry in two ways—the cost of getting cattle to market and the amount of money consumers will be spending on beef. I spoke with several auction market operators about the Canadian border situation. Some said it had a major effect, while some said it had little to no impact. However, they all had the idea that the packing industry was going to inflict downward pressure on the market because of it. I’m not sure if the relationship between an auction market man and a packer will ever find harmony. The slaughter cow market in the northern Plains and Northwest is in a precarious situation. The closing of Swift’s Nampa, ID, plant and Smithfield’s Gering, NE, plant has left the regions with few outfits to process cows. Shawn Madden, market operator from Torrington, WY, said they are shipping cows to BPI in Fresno, CA; Smithfield’s Green Bay, WI, and Phoenix, AZ, plants; and also to Caviness Packing in Hereford, TX. These cow processors are putting a lot of freight on those cows, which will ultimately influence the price. I wouldn’t think it bodes well for cull cow season. Each of these cow processing plants is between 600-800 miles from Torrington. On the more positive side of things, Darrell Wood, cow/calf producer from Susanville, CA, is busy trying to carve out his niche in the beef business. His group sells Western Grasslands Beef into a high-end grocery chain in California, “Trader Joe’s,” and several independent markets and restaurants. Wood said that they have been processing about 80 head a week and are about to go to 120 head a week. He said they are paying $180 per cwt on the rail. The product is labeled as “grass fed,” and carries Carolyn Carey’s “Born in the USA” label. Wood said getting into the meat business is a whole new world and that he’s getting a real education about the packing and meat business. He’s been attending National Meat Association meetings and getting new perspectives about the packing industry and their issues. Mac Graves, also with Latigo Marketing, is the CEO of Western Grasslands Beef. He started as a consultant but was interested in the challenge of getting this product to market. He was on his way to Bentonville, AR, to talk with WalMart about taking on their grass fed hamburger line. Graves also said that they will have an organic product on the market by the end of the year. While many in the business are attempting to sue companies and the government for their perceived problems in the cattle markets, it’s refreshing to watch the development of small companies like Western Grasslands Beef and others. The meat business is a tough business, but those niche markets are there and many smaller, more independent processors and producers are learning how to access them. — PETE CROW

Read more
Thursday, December 20,2007

COMMENTS

by WLJ
August 22, 2005 Last week, Western Video Market held its annual two day sale at Little America in Cheyenne, WY. At the onset, sellers were a little nervous. However, as the sale progressed, the market was established and many yearling steers were trading at that $1-plus level; one set of 900-pound steers brought $114.25. On the calves, 400-pounders traded in the $140s, 500-pounders in the $130s, and the 600-pound calves in the $120s. In the broad picture, the market was good. Perhaps not as good as it was 10 weeks ago, but still very solid. Fuel and freight were big elements weighing on the market and the basis on which cattle are traded. West Coast cattle were selling at an $8-10 discount to western Plains cattle. In northern California, diesel is costing $3.25 a gallon; one cattleman said it cost him $3.10 per loaded mile to ship a load to an auction market 180 miles away. Corn prices have traditionally been one of the elements that would influence the feeder cattle markets. The rule of thumb is that for every dime increase in corn prices, a $1 per cwt decrease in feeder cattle prices can be expected. Now it would seem that every dime in fuel prices may have a similar effect. I asked around to see if any of the cattle market analysts have figured in fuel costs as a market influence, and no one had. Andy Gottschalk, analyst at HedgersEdge, did say that for every $10 increase in crude oil price, $50 billion in discretionary spending was taken away. Unfortunately, that hurts the cattle industry in two ways—the cost of getting cattle to market and the amount of money consumers will be spending on beef. I spoke with several auction market operators about the Canadian border situation. Some said it had a major effect, while some said it had little to no impact. However, they all had the idea that the packing industry was going to inflict downward pressure on the market because of it. I’m not sure if the relationship between an auction market man and a packer will ever find harmony. The slaughter cow market in the northern Plains and Northwest is in a precarious situation. The closing of Swift’s Nampa, ID, plant and Smithfield’s Gering, NE, plant has left the regions with few outfits to process cows. Shawn Madden, market operator from Torrington, WY, said they are shipping cows to BPI in Fresno, CA; Smithfield’s Green Bay, WI, and Phoenix, AZ, plants; and also to Caviness Packing in Hereford, TX. These cow processors are putting a lot of freight on those cows, which will ultimately influence the price. I wouldn’t think it bodes well for cull cow season. Each of these cow processing plants is between 600-800 miles from Torrington. On the more positive side of things, Darrell Wood, cow/calf producer from Susanville, CA, is busy trying to carve out his niche in the beef business. His group sells Western Grasslands Beef into a high-end grocery chain in California, “Trader Joe’s,” and several independent markets and restaurants. Wood said that they have been processing about 80 head a week and are about to go to 120 head a week. He said they are paying $180 per cwt on the rail. The product is labeled as “grass fed,” and carries Carolyn Carey’s “Born in the USA” label. Wood said getting into the meat business is a whole new world and that he’s getting a real education about the packing and meat business. He’s been attending National Meat Association meetings and getting new perspectives about the packing industry and their issues. Mac Graves, also with Latigo Marketing, is the CEO of Western Grasslands Beef. He started as a consultant but was interested in the challenge of getting this product to market. He was on his way to Bentonville, AR, to talk with WalMart about taking on their grass fed hamburger line. Graves also said that they will have an organic product on the market by the end of the year. While many in the business are attempting to sue companies and the government for their perceived problems in the cattle markets, it’s refreshing to watch the development of small companies like Western Grasslands Beef and others. The meat business is a tough business, but those niche markets are there and many smaller, more independent processors and producers are learning how to access them. — PETE CROW

Read more
Thursday, December 20,2007

Pasture Management

by WLJ
August 22, 2005 Why pay attention to your soils? Long-term soil health is directly related to how much money you can put into your pockets. Soils and soil quality determine plant vigor. Soil organic matter content is the key indicator of soil health. Soil organic matter is important for maintaining soil structure. Soils with good soil structure generally have lower erosion rates, higher water infiltration rates and higher water-holding capacities and also serve as an important nutrient reservoir. Besides, I say, “If you can learn to feed the soils, the soils will feed you.” Healthy soils equate to a healthy life. Healthy soils are alive with all kinds of small critters living in them, eating away, making carbon, the black color in soils, called carbon sequencing. So it’s just logical, that if we can estimate and learn how to sustain and even improve soil, you can then capture more ‘solar dollars’ (a free source of energy). You won’t have to go to town and buy that same energy with ‘paper dollars’. A client of mine once asked me, “Wayne! What is the fastest way to grow more soils?” I thought about that question and responded: Find a chunk of long-term rested ground, like 10 year old CRP land—highly erode-able land set aside for conservation and government payment. Then graze and trample all that old dead non-cycling plant matter into the ground. Do this during a dry, non-growing time. By doing this, you have just speeded up a healthy soil making process by incorporating new organic matter. The biological principle here to remember is: Down yellow litter, feeds small soil critters. How to determine soil health: I pull a plug of soil, 2” x 2” x 4” deep, that fits nicely into my hand. I then photograph this plug for record keeping. I use a digital camera and snap a picture holding the plug up in the air with the background location of where I dug the plant. This gives me fast visual upper surface soil profile record. I use a small trowel, two inches wide and four inched long that has a bent handle which allows me to tap it into hard ground with a small hammer. This saves me from packing a heavy shovel around in remote pasture locations. I can see and feel certain soil health indicators in this plug (see photo). There are 3 key soil health indicators that I look for using this method: Soil type, soil organic matter content, and soil compaction. I first look for soil compaction, because that is the one healthy indicator that we have some control over. Compaction problems visually show up below the surface organic matter as shiny smooth layers of soil, all pushed together. Monitoring this way I once found heavily compacted soils, where the roots would only grow in the cracks of the clay soil, which was responsible for greatly lowering the forage production. I next look for organic matter content. Organic matter is the vast array of carbon compounds in various stages of decomposition. Visible organic matter shows up as thatch (dead and decaying plant parts in the very top layer), roots, and occasional underground bugs and worms. Another item to look for is the very small black particles that give soils that great earthy smell. These are the results of organic mater decomposition. I also determine the type of soils I sample. Take a small portion the soil from the plug in your fingers, wet it and rub it between your fingers. If the polishes make a shiny smooth sticky coating on your fingers and is grayish brown, it’s probably clay, If it feels very smooth and slippery, but not quite polished and is dark tan, it’s probably silt. If it feels gritty (small sand particles), and is light tan, it’s probably sandy soils. If it crumbles and is dark in color, not especially gritty, smooth and shiny, you probably have a loamy soil. In reality, there are all kinds of different soils. Usually in mixtures of all these different elements, but you can come close to what the major soil types are. Each soil type has their inherited limitations and advantages. What’s handy about this way of assessing soil health is that you can quickly compare one area to others. For example, I thought I had found a compaction problem in one pasture I was inspecting one day. So I dug a soil plug, and found no compaction. This soil was full of small stones, rocks and sand which does not compact. You need that sticky clay particle to form a compaction layer. Another example that surprised me was on inspecting a grazing cell center where the water and fencing configuration is built like the spokes of a wagon wheel. We found tall grass all around the cell center. However, when I went to dig up some chucks of sod to observe the root structures, I had to jump up and down on the shovel like a mad man. We had nice tall healthy looking grass, but the heavy clay soil was very compacted. Just adjacent to this cell center was an area fenced off from livestock grazing, that we called the “TEST REST AREA”. A long-term observation area of what no grazing looks like. I went to jump onto the shovel in this small fenced off area and about fell on my face. My shovel easily fell into this soft fluffy soil. What’s going on here? Compaction on the outside was caused by livestock grazing and soft fluffy soils appeared on the no-grazed area! This cell center was constructed on heavy gumbo clay soils. Gumbo is on of a variety of fine-grained soils that become waxy and very sticky mud when saturated with water. When these soils are highly compacted and dry out, they become very hard, and would make fine bricks. However, comparatively speaking, the grass was much thinner and shorter in the non-grazed area The owner of the non-grazed lands walked by this exclosure and told me, “Long-term rested soils do not grow good cow feed, and Wayne, it doesn’t even pay taxes”. The lesson learned here: If you graze livestock at high stock densities, be careful of compaction. Plan alternative areas and enough rest to allow these compacted soils to fluff with spring and fall frost heaving actions. Bottom line, soil health is the key to growing strong abundant dense vigorous forage for any livestock operation. Next time you walk your pastures, dig some plugs and see what’s happening to the soils below the surface. On top of your soils follow this one controlling rule: Keep the soils covered! —Wayne Burleson Wayne Burleson is a land management consultant working out of Absarokee, Montana. You can visit with Wayne at (406) 328-6808 or E-mail him at rutbuster@montana.net. Wayne also has an educational web site at www.pasturemanagement.com.

Read more
Thursday, December 20,2007

Ethanol plant investments growing

by WLJ
Investments in ethanol plants are growing across the nation—including areas where larger populations need a generous supply of ethanol, according to a new report, “U.S. Ethanol,” by Rabobank. As the demand for ethanol rises, so does the need for processing plants. And, despite rising input costs—such as corn—profits remain obtainable, and investments are seen as favorable. By the first quarter of 2009, more than 200 ethanol plants are expected to be in production, which represents a capacity increase of more than 91 percent during a three-year time frame. Much of this growth in ethanol production is largely driven by demand created by government support. In fact, “government support for ethanol production, and increasing demand for ethanol in all states, will continue to foster growth of destination plants,” said Jennifer Cole, Rabobank Food & Agribusiness Research Associate. (The first ethanol plants—in the Corn Belt—are often referred to as origination plants, whereas plants outside the Corn Belt are often referred to as destination plants.) Investors are finding that the traditional areas for ethanol plants, in the Corn Belt, are becoming saturated, and are looking elsewhere. “One of the main advantages to building plants outside of the Corn Belt is the ability to ship ethanol shorter distances,” said Cole. “It is more practical and less costly to transport corn compared to ethanol.” By moving the final product closer to consumers, investors are able to keep costs in check. Because ethanol is a highly flammable substance, it incurs higher insurance rates than shipping raw corn. So the focus of investments in ethanol plants has shifted from corn producing states—Iowa, Illinois, Nebraska and Minnesota—to areas such as New York, Texas, Oregon, Arizona and Washington. “However, growth in these new regions must be accompanied by investment in infrastructure, just like any new business that requires storage and transportation,” Cole said. Additionally, “when looking at a potential ethanol plant site, the investment must be viable for the long term and perform in a sustainable manner. That is, by the time a plant comes online 12 to 18 months after breaking ground, the cost of production is likely to be different, and these uncertainties must be factored in.” While destination plants are often smaller in capacity compared to origination plants, they are increasing capacity and technological efficiencies with each plant. As more are built, the necessary criteria to support the system is growing. For example, nearby plants must be near major highways or preferably railroads. They also need planned sources for corn, water and other resources necessary for production. So far, the need for plants seems to only be increasing. By 2008, there will be better data available on the profit margins that ethanol plants earn which will determine the pace of growth through 2012.

Read more
Thursday, December 20,2007

Feedlots push fed prices higher

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

Read more
Thursday, December 20,2007

U.S. ag trade strong midway through the year

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

Read more
Thursday, December 20,2007

The right receiving protocols lead to better performance

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

Read more
 
 
User Box (click to open)
 
SEARCH IN WLJ
Get WLJ In Your Inbox!
   
 
S M T W T F S
1 2 3 4 5
6 7 8 9* 10* 11* 12*
13 14* 15* 16 17 18* 19*
20 21* 22* 23 24 25 26*
27 28 29 30
 
 

© Crow Publications - Any reprint of WLJ stories, except for personal use, without permission, written consent and appropriate attribution is prohibited. 2008 Crow Publications. All rights reserved.