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Friday, August 29,2008

Competing proteins pose renewed concerns for beef

by WLJ
Competing proteins pose renewed concerns for beef —Trade issues could flood the U.S. market with lower-priced pork and poultry, limiting beef gains in the fourth quarter. Fed cattle trade wrapped up early last week at mostly steady money despite weakness in the boxed beef complex and a steady decline in the futures market. In Texas and Kansas, cattle traded at $99 live with good volume moving ahead of the holiday. Corn Belt trade was in a spread of $154-156 dressed, with most trade reported at the top of that range. Beef cutout values last week were moving lower for much of the week with disappointing movement out of cold storage warehouses. Midweek trade was light with only 96 fab loads trading, according to last Thursday’s mid-day report. Choice boxed beef was steady with the previous day at $160.98 while Select cuts were off slightly at $154.23. Slaughter volume last week remained robust with 505,000 head processed for the week through Thursday. That number was down from the previous week’s harvest, but it remained above the year-earlier level of 500,000 head. Cow slaughter numbers for the year remain well above year ago totals, indicating that the current downward slide in calf production and total domestic herd size is likely to continue for at least the next year. For the week ending Aug. 9, cow slaughter stood at 132,292 head, sharply higher than year earlier totals of 106,950 head. High input costs are pinching producers and strong cull cow and calf markets are making liquidation and heavy culling an attractive option. The strong cow and cow beef markets are largely the result of a sharp decline in the amount of beef being imported to the U.S., making domestic cull cows a more attractively price option for ground beef producers. Last week’s cow cutout value stood at $139.38, down slightly from the previous week as a result of a decline in demand after buyers met their pre-holiday needs. The 90 percent lean traded at $174.23 while the 50 percent trim was also down slightly from the prior week at $92.71. Most of the wholesale fabricated cut trade for the holiday weekend demand had been filled the previous week, so the light movement was of little surprise to analysts last week. The next key factor in determining market direction will be weekend clearance levels. There have been some excellent beef feature prices advertised recently which should help support retail sales and future packer buying interest. If movement at the retail level is strong, it could provide support going into the fourth quarter. Of particular concern during the last three months of the year will be competing meats. Pork and poultry supplies are expected to surge for the last few months of 2008 and pork especially will pose a significant threat to beef prices. There were reports last week that Russia and China, both large importers of U.S. pork and poultry, will sharply curtail purchases. That could flood the domestic market with cheaper protein options for U.S. consumers who will be the key to sustaining beef prices during the expected tight supplies later this year. Exports have been highly supportive of the domestic beef market this year when consumers have slowed their discretionary spending as a result of a weak economy. Exports have largely picked up the slack with an increase of 31 percent in volume for the first half of the year, totaling 831 million pounds. If consumers, faced with higher living expenses, turn away from beef in favor of pork and poultry, the improvement in cutout prices needed to sustain profit margins in the beef industry could falter. News that China and Russia would cut back their pork buying was adding to the gloom in the hog trade last week and futures markets were trading limit down. To make matters worse, the delisting of several processing plants in Mexico by USDA was adding to trade concerns last week. Analysts noted that the request to block exports from plants that did not meet U.S. standards could cause Mexico to curtail purchases of product from the U.S. As the largest buyer of U.S. beef, Mexico’s withdrawal from the market could have severe consequences for beef prices in the U.S. Feeder cattle Last week’s cash feeder cattle market marked the first time in recent weeks that feeder cattle prices have slipped lower, even as lower corn futures made buyers more optimistic. The trend towards placing heavier feeder cattle continues, with yearlings continuing to be in heavy demand, although quality runs of lighter weight calves have also become a source of appeal to many buyers at local auction markets. "This marks the first time in over two months that the weekly nationwide yearling trend came in lower," points out USDA Market Reporter Greg Harrison. "In fact, several markets noted that the buyer demand for calves was actually better than the yearling feeder demand for the first time in recent memory." Harrison noted that good rains in southern winter grazing regions have given many operators reason to get back into the market for lighter weight calves which can be backgrounded and resold as heavy, placement-ready feeders come spring. "Heavy rains across the southern Plains have perked up the late grass that many backgrounders will use to warm-up lightweight calves before turning them out on early wheat pasture, which should have a good start this year from ample subsoil moisture," he said. Potential feeder cattle buyers are beginning to get used to the roller coaster corn markets, which Wall says now draw less attention than they have during recent periods of high grain futures. "However, drastic grain market volatility is now the norm where only a few years ago, a nickel change would stir attention," said Harrison. "The CBOT [Chicago Board of Trade] September corn contract has settled with more than a 10-cent move on every August trading session but one this month. This has feedlot owners shaking their head in confusion on when is the best time to secure feed inventories." Last week’s auction at the Oklahoma National Stockyards in Oklahoma City, OK, saw 8,583 head of feeder cattle available for sale. Compared to the previous sale, feeder steers and heifers were $1-2 lower, with steer and heifer calves steady with good demand. Recent rains across most of the region, along with cooler temperatures, have revived the grass and improved wheat pasture prospects. Quality of the feeder cattle offered continued to decline with several full or lighter muscled cattle included. Steers weighing an average of 679 lbs. sold for $113.44, while heifers weighing 654 lbs. sold at $108.75. The Joplin Regional Stockyards near Joplin, MO, received 4,900 head for sale last week where steers remained steady and heifers under 500 lbs. were $2-5 lower. Heifers weighing 500-700 lbs. were $1-3 lower, with weights over 700 lbs. steady. Demand and supply was moderate, with the bulk of the offerings being weaned calves and yearlings. Feeder steers weighing 682 lbs. sold for $115.04, while 674 lb. heifers brought $104.40. There were 2,627 head of feeders received last week at the Winter Livestock Feeder Cattle Auction in Dodge City, KS, where compared to the week prior, steers and heifers from 700-950 lbs. sold $1-3 lower, mostly $2 lower. There were not enough steers and heifers of 700 lbs. and under for a good market test, though a lower undertone was noted. Buyers paid $113.22 for steers weighing an average of 738 lbs., and $105.32 for heifers weighing 711 lbs. To the north in McCook, NE, at the Tri-state Livestock Exchange, there were 1,850 head of feeders offered for sale last week, though no comparison was available due to no recent sale. Steers weighing 704 lbs. brought an average of $116.25, while feeder heifers weighing 669 lbs. sold at $113.94. Last week’s sale at the Winter Livestock Auction in La Junta, CO, saw receipts of 1,187 head where trade was active on calves and yearlings and included good demand for both classes. No price comparison was available as the last covered auction was in July. Steers weighing an average of 687 lbs. sold for $116.75, while 669 lb. heifers brought $102.70. There were 961 head available for sale in a light run last week at the Stockland Livestock Auction in Davenport, WA, where feeder cattle were firm in the light test. Trade was active with moderate to good demand. Steers weighing 739 lbs. sold for $100 at this sale, while 731 lb. heifers sold for $98.19. — WLJ

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Friday, August 29,2008

Beef Checkoff revamps, revitalizes and relaunches BSE Web site

by WLJ
Beef Checkoff revamps, revitalizes and relaunches BSE Web site Oftentimes, information is outdated by the time it reaches the mailbox. In an effort to provide the latest facts about bovine spongiform encephalopathy (BSE, commonly called "mad cow disease"), the Beef Checkoff-funded Web site BSEInfo.org recently was overhauled to include new and updated content and an easy-to-search Web structure. Although the U.S. hasn’t had a case of BSE since 2006, this disease remains important to the beef industry and the scientific community and frequently receives media attention. "The latest update to BSEInfo.org reflects the industry’s commitment to providing the most current, scientifically valid information about these diseases. The Beef Checkoff is dedicated to investing in educational tools such as the site in order to eliminate confusion and misinformation among numerous audiences," says cow/calf producer Austin Brown III, Cattlemen’s Beef Board member from Beeville, TX. "The site also explains the measures we take to protect beef safety. We rely on our industry and media partners to share the facts about beef, and want to be sure to provide credible and complete information about how animal health and public health are protected from this disease." A highlight of the site is the Scientific Resource, which was reviewed by nine leading international experts in BSE and related diseases. These transmissible spongiform encephalopathy experts served as scientific reviewers for sections about prions, BSE, Creutzfeldt-Jakob disease, variant Creutzfeldt-Jakob disease, scrapie and chronic wasting disease. "The validation from these folks not only lends credibility to the site among external audiences, but also speaks to the standing of this resource within the scientific community," continues Brown. Media partners worldwide covering BSE can locate the best resources, determine who to contact to arrange an interview, and find the foremost experts through this site. In addition, the revised Web site now contains updated BSE basics; information about BSE in the news; beef industry statements; answers to frequently asked questions; and beef industry facts. BSEInfo.org also serves as a portal to other government, international and industry Web sites, and interactive maps highlight the geographic distribution of BSE cases. A premiere Web site in its subject area, BSEInfo.org continues to be one of a very few sites to offer a comprehensive range of scientific information about BSE and related disease, typically hosting more than 2,000 unique visitors per week, many from other countries. Visit the revised site at www.BSEInfo.org. For more information about checkoff-funded programs, visit www.MyBeefCheckoff.com. — WLJ

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Friday, August 29,2008

Costa Rica, Belize, Qatar and Ghana open to U.S. beef

by WLJ
Costa Rica, Belize, Qatar and Ghana open to U.S. beef Agriculture Secretary Ed Schafer last week reviewed the success from recent openings of U.S. beef markets into Costa Rica, Belize, Qatar and Ghana recognizing international trade standards for U.S. beef and beef products from cattle of all ages. "The opening of these diverse markets demonstrates the global appetite for U.S. beef and the understanding and confidence nations place in America’s science-based international standards for safety," said Schafer. "I think it is important to review this pattern of opened markets for their strategic placement in the world marketplace where surrounding nations and world travelers can once again enjoy the quality of American beef." Officials from the USDA and the Office of the U.S. Trade Representative have made a concerted effort to restore markets for U.S. beef and beef products from cattle of all ages in line with international standards of the World Organization for Animal Health. More than 100 countries currently allow the entry of U.S. beef and beef products. Costa Rica and Belize are both Central American countries with strong tourism sectors. In addition, Costa Rica is an important port and gateway to other Latin American markets. In calendar year 2003, the U.S. exported more than $2.6 million in beef and beef products to Costa Rica. Belize, the second smallest and least populated country in Central America, relies on foreign imports from countries such as the U.S., Belize’s number one trading partner. Qatar, bordering the Persian Gulf and Saudi Arabia, has one of the highest per capita income levels in the world and blossoming hotel and tourism industries. Exports of U.S. beef and beef products to Qatar topped $1.2 million in 2003, and strong growth is expected. The West African nation of Ghana has become an important trading partner in Africa due, in large part, to a stable and vibrant democracy, and economic reform. The Ghanaian market is a relatively new one for U.S. beef. — WLJ

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Friday, August 29,2008

Grazing wheat likely offers profits this winter

by WLJ
Grazing wheat likely offers profits this winter With grain and harvested forage prices likely to stay quite high throughout the next few months, producers looking for profitable opportunities should take a good look at grazing winter wheat, say experts. Though the costs of grazing cattle are higher than in recent years due to elevated wheat prices, feeder cattle prices have kept in step and may still offer attractive profit margins to good managers. Derrell Peel, ag marketing specialist with Oklahoma State University, said that uncertainty abounds in both the wheat and cattle markets. This makes it difficult to predict how good the wheat grazing prospects look, but for those with sharp pencils, good opportunities will surely appear. "The situation’s pretty volatile right now with all there is going on in the futures markets," he said. "In general, it’s more expensive to do everything now, but that shouldn’t keep producers from looking for opportunities. Even though it costs more to grow the wheat for farmers, the forage is worth more as well." Nervous bankers, along with wheat farmers who might not want to take chances with their valuable wheat crops, could put a dent in the number of acres available for grazing, Peel said. "A lot of wheat farmers, and particularly their lenders, are suffering from sticker shock when they look at the input costs as planting rolls around," he said. "But, by the same token, the value of grazing is high and there are some real opportunities. The budgets that we’ve run show that it looks good for both the farmer and the cattleman to graze the wheat." Ranchers must pay attention to the futures markets to reduce the risk of buying feeders just for winter grazing, and farmers must decide whether revenue from grazing is worth risking lower yields. "There’s definitely a way to pencil in some profits, because the margins are there, but the question becomes whether either party is willing to take the risk," Peel explained. "Is the farmer willing to put up with the additional fertilizer costs and decreased yields, and is the cattle producer willing to go out and buy expensive feeder cattle to graze the wheat with?" Just as all input costs have risen over recent years, so has the cost of grazing wheat, but not without an equal rise in cattle prices—and potential profits. "We used to look at the cost of grazing wheat on a per-pound of gain basis in the area of 30-35 cents," he notes. "Now we’re at least up around 40-45 cents per pound of gain just to pay the production costs. On the other hand, the value of that gain is potentially up around 80-85 cents. Those figures are based on March feeder futures that were up around $115. Since we figured those numbers out, the futures have dropped, but it shows that there are definitely opportunities to lock in some profits if you jump on the futures at the right point." Peel said not using the futures market to reduce the risk of purchasing feeding cattle is unlikely to lead to disaster, but that playing the markets to your advantage is helpful when deciding whether the venture is worth it. "The lesson is it’s one thing to notice futures being elevated to a certain price point, but it’s quite another to act on it. You have to look for opportunities in the market and take them when you can," said Peel. "If you just go out and buy feeders to put out on wheat and don’t hedge them, it’s unlikely that prices will drop significantly by the time you market the cattle. If you can live with that much risk, maybe you don’t need to hedge, but it’s better to just lock something in when you get the chance." The increased costs of grazing wheat are not limited to the cattle producer, notes Peel, who says farmers face additional risk along with discouraging lenders. "Wheat farmers, once they figure in the cost of fertilizer, loss of yield and other factors, are looking at spending about an extra $80 per acre to graze the wheat, but that doesn’t mean they can’t recoup that much and more," he explained. "It costs more money to play the game nowadays, and neither the farmers or the ranchers should ignore an opportunity just because it seems too expensive." Peel said that because of the way the feeder cattle market is rewarding heavier cattle with equal or better price-per-cwt. numbers than lightweight calves, there may not be a large demand for wheat grazing this winter. "We’re also not sure how many calves we will even have out on wheat this year because when you look at the incentives to retain ownership, we really may not see a very big calf run," noted Peel. "In many cases it’s paying for producers to just background the calves and put a couple extra hundred pounds on them rather than to sell them after weaning." Higher input costs may make wheat grazing seem riskier than ever, says Peel, but the tools to manage those risks are still around for good managers to use. "There is opportunity in the wheat pasture situation. The costs may scare some people, but the input costs and your gross revenues are unimportant. The margin is what’s important, and that’s what you need to look for to take advantage of today’s market," he said. "Business as usual is something different than what it used to be." — Tait Berlier, WLJ Editor

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Friday, August 29,2008

47BeefBits2

by WLJ
ICE wants to work with meat packers Addressing the meat industry on the thorny issue of illegal immigration and the difficulty for employers of securing a legitimate workforce, Assistant Secretary of Homeland Security for U.S. Immigrations and Customs Enforcement (ICE) Julie Myers said the agency and industry need to partner to ensure compliance with the related laws. Though she acknowledged that effective immigration law is lacking in the U.S., Myers said companies are best to approach ICE and demonstrate the intent to cooperate and legalize their labor forces prior to potential enforcement actions. Thus far in fiscal 2008, ICE has issued more than 1,000 individual criminal charges related to illegal employment, including 121 against either employers or managers. AMS to educate on COOL USDA’s Agricultural Marketing Service (AMS) will spend the first six months following official implementation of mandatory country-of-origin labeling (COOL) on Sept. 30 conducting outreach at retail establishments rather than focusing on enforcement. AMS Associate Deputy Administrator Bill Sessions told attendees at National Meat Association’s summer conference that his agency will not enforce the law during the first six months. The goal, rather, will be to educate retailers about its requirements. Sessions said AMS has been writing up guidance documents, which should be distributed soon. USDA schedules hearing on irradiated beef The USDA Food Safety and Inspection Service (FSIS) has scheduled a public meeting on a three-year-old petition requesting the approval of irradiation for use on the surface of chilled beef carcasses. FSIS will hold the meeting Sept. 18 at a location yet to be announced. The petition was submitted in 2005 by the American Meat Institute in an effort to further improve beef safety. Irradiation is a safe and simple process that uses energy to destroy E. coli O157:H7, salmonella, listeria and other harmful bacteria on food products. The energy passes through the product the same way as in a microwave oven. Food irradiation has been intensely studied and scrutinized for safety. The energy does not leave any residue nor does it cook the product or alter taste in any demonstrable way. Wyoming Beef Council names USMEF rep Wyoming Beef Council members have reappointed Irv Petsch as the Wyoming representative to the U.S. Meat Export Federation (USMEF). Petsch will serve a three-year term representing Wyoming on the USMEF Board. Contributions of Wyoming checkoff dollars provide for a Wyoming director to serve on the USMEF board. Petsch served the last three years as Wyoming’s representative to USMEF. During his first term, he was appointed to a USMEF steering committee developed to determine market availability and how to best use Beef Checkoff dollars to access foreign markets. In his role as USMEF director, Petsch will work to increase the value and profitability of the U.S. beef industry by enhancing demand for U.S. beef and beef products in targeted export markets. New technology predicts tenderness Fresh meat tenderness may be predicted using hyperspectral imaging, according to new research. The University of Nebraska-Lincoln project uses a combination of video image analysis and spectroscopy to determine the muscle profile and biochemical properties of a steak in order to predict how tender it will become during aging. The system, consisting of a digital video camera and a spectrograph, captures multiple images at hundreds of wavelengths with regular intervals, predicting with 77 percent accuracy which of three categories (tender, intermediate and tough) steaks would fall into once cooked and tested. The technology, still two or three years away from commercial application, would mean a boost to the beef industry as it would allow retailers to charge a premium for "guaranteed tender" meat. FSIS launching new food safety assessments USDA’s Food Safety and Inspection Service (FSIS) is rolling out a new methodology of conducting food safety assessments at 5,300 Hazard Analysis and Critical Control Point meat processing plants aimed at improving the consistency of inspections and documenting findings. Under the new program, those plants can expect a random food safety assessment at least once every four years, creating a set cycle for all plants, which had not been the case in the past. A new set of questions will also provide a structure by which enforcement, investigations and analysis officers can better collect data for input in a database.

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Friday, August 29,2008

Grazing workshop offers classroom and hands-on opportunities

by WLJ
Grazing workshop offers classroom and hands-on opportunities Livestock and wildlife producers, land managers, and others interested in learning about managing and optimizing their grazing lands are invited to attend a USDA Natural Resources Conservation Service (NRCS) Grazing Lands Conservation Initiative (GLCI) workshop in Cresson, TX, on Sept. 10, 2008, at the Bear Creek Ranch. The "My Piece of Texas" grazing workshops are a series that will teach attendees how to estimate forage production, determine grazeable acres, set proper stocking rates, and other grazing management principles. This workshop is one of five in the grazing workshop series. There is a $25 registration fee which includes lunch and a copy of the newly published handbook titled Managing My Piece of Texas. The handbook was peer reviewed by ranchers throughout Texas after being developed by grazing specialists from the Texas GLCI, Texas AgriLife Extension Service, and NRCS. Attendees can expect to receive valuable information about managing grazing lands through classroom instruction during the morning session. After lunch, outdoor demonstrations will provide hands-on instruction targeting forage production and management presentations in the field. "Balancing animal demand with forage supply has long been a cornerstone principle of grazing management," said Jeff Goodwin, NRCS rangeland management specialist in Corsicana, TX. "This grazing workshop will not only reinforce those principles, but will cover an array of grazing topics that a rancher can take home and implement right away." Sponsors for the grazing workshop are NRCS, Texas GLCI, Texas AgriLife Extension Service, Parker Co. Soil and Water Conservation District (SWCD), and Texas Section of Society for Range Management. For those who plan on attending the grazing workshop, please call the Parker Co. SWCD at 817/594-4672 and RSVP by Sept. 5, 2008. For more information, please contact Jeff Goodwin at 903/874-5131 Ext.3, or Randy Henry at 817/467-3867. GLCI information can be obtained at http://www.glci.org or Texas NRCS Web site at www.tx.usda.nrcs.gov. — WLJ

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Friday, August 29,2008

44 Farms and Ankony Farms merge Angus cattle operations

by WLJ
44 Farms and Ankony Farms merge Angus cattle operations 44 Farms and Ankony Farms announced the merger of their Angus cattle operations. The new combined Angus cattle program represents a total of 166 years in agricultural production in the U.S. and creates an inventory of over 3,000 registered Angus cattle. The merger provides grassroots purebred Angus operations from the Pacific Coast in Terrebonne, OR, to the Atlantic coast in Clarkesville, GA, to a home in the heartland of America in the Sandhills of North Platte, NE, to the rich river bottom land of 44 Farms deep in the heart of Texas. It is the vision and mission of 44 Ankony Farms to provide consumers around the world with the very finest eating experience through nutritious and delicious Angus beef. 44 Ankony Farms is blessed to be able to provide the highest quality Angus genetics and responsive customer service to cattle breeders throughout the U.S. and the world. The genetically strong and high performing Angus herds of 44 Farms and Ankony Farms were further enhanced by the 2007 acquisition of the entire Angus herd of Bill and Barbara Rishel of North Platte, NE. Their lifelong devotion to the Angus breed, teamwork and friendship have been and continue to be instrumental in the furtherance of the quality of the 44 Ankony Farms program and the Angus breed. The Rishel prefix of B/R is found in more than 1,500,000 current Angus three-generation pedigrees. "We are very excited about the opportunities, extraordinary product quality, and outstanding service that this alliance provides our customers. The knowledge, integrity and commitment to customer service that Virgil Lovell, Tom Hill and Bill and Barb Rishel possess inspires us all," said Bob McClaren, CEO of 44 Farms. The merged Angus programs of 44 Farms and Ankony Farms also includes the ownership of over 220 registered Angus females that record a Dollar Beef Index of $60 or more, which places those females in the top 1 percent of the Angus breed, and more than 274 females that score a Marbling EPD in the top 2 percent of the Angus breed. "I have been in Angus business all of my life and these combined operations represent some of the finest cattle that I have ever seen. It is a credit to Bill and Barb Rishel, 44 Farms and the wonderful men and women of Ankony Farms. These proven Angus genetics can help cattle breeders around the world and provide consumers a great tasting product," said Lovell, CEO of Ankony Farms. With the increased number of animal units, 44 Ankony Farms will be able to further enhance its ability to gather structured carcass data through its association with Prather Ranch in California. The merger also provides opportunities for the furtherance of marketing alliances with Niman Ranch Meat Company, Oregon Country Beef, Painted Hills Beef, Superior Livestock Auctions and Western Video Market. — WLJ

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Friday, August 29,2008

Help prevent scours with colostrum management

by WLJ
Help prevent scours with colostrum management Research shows scours can cause up to 18 percent of calf mortality, making it the number one calf killer. A calf’s best defense against scours is colostrum, which carries antibodies that help provide immunity against scours-causing pathogens. "To get the highest levels of colostrum antibodies, you need to start with a quality nutritional program for the mother cows during gestation," said Jon Seeger, DVM, managing veterinarian with Pfizer Animal Health. "Colostrum develops during late gestation at the same time major fetal growth occurs. These activities require significant quantities of energy and protein. Cow management should focus on quality nutrition to support this colostrum development." According to Seeger, colostrum management should also focus on enhancing antibody levels in the colostrum. Vaccinating a dam with a scours vaccine helps produce high levels of antibodies in the dam’s blood stream. The antibodies are then transferred to the calf through colostrum, eventually entering the calf’s blood stream through the GI tract. Cows transfer antibodies from their blood into colostrum two to five weeks prior to calving. Vaccinating against scours before this time helps build up the highest level of antibodies in the cow’s blood during the period that the antibodies are being transferred to the colostrum. "Vaccination timing is really important because all antibody transfer from the dam to calf is done through the colostrum," explained Seeger. "If the vaccination isn’t done at the right time to help build a high level of antibodies in the cow’s blood stream—and in the colostrum—the calf won’t get the best protection possible." Producers should also make sure calves nurse early and properly so they get an adequate quantity of colostrum within two hours of birth. Seeger recommends four quarts of colostrum within the first 12 hours of birth and an additional four to six quarts in the first 24 hours after birth. — WLJ

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Friday, August 22,2008

Grain, transportation costs continue to grip feeder markets

by WLJ
Grain, transportation costs continue to grip feeder markets Last week offered good insight into the current state of the cash feeder cattle markets, especially in the western U.S., as Western Video Market and Superior Livestock Auction both held large sales. As buyers in the Midwest begin to bid up for the higher quality runs of calves they find in local auction markets, the large video sales gave a good sample of what both lightweight and heavier feeder cattle are worth throughout the Plains and West. For weeks now, high grain prices have caused buyers to seek out heavy feeders to reduce the time required the finish the cattle out. Less grain in equals lower input costs, which can help feed yards cut heavy losses and in some cases, help the operation remain in the black. High fuel costs have contributed to a wide basis on cattle coming out of areas far removed from feeding operations and grain production, as evidenced by the heavy discounts on lightweight feeder cattle which often sell below the heavies on a price-per-cwt. basis. Darrell Mark, agricultural economist with the University of Nebraska-Lincoln, says the current state of the feeder cattle market makes sense, given the high cost of inputs. "There are pretty understandable forces driving the feeder cattle market right now," he said. "It’s really Economics 101 in some respects. Softness in the cash market is to be expected, and it gets worse the further away you get from feed yards or grain." Volatility in the corn markets is not through yet, said Mark, who pointed out that even once harvest starts, grains will be on a roller coaster ride until a firm grip on the total harvest amount is established. "There’s so much risk right now in terms of what corn is going to do that the uncertainty in those grain markets will keep feeder cattle on the defensive. The projections are for a corn crop that will be adequate, but there’s still a lot that can happen between now and harvest. There may be some surprises, and the crop is not in the bin yet." High transportation costs and expensive grains are production factors that are not likely to go away any time soon, said Mark, who also mentioned the increased demand for heavier feeder cattle. "People are definitely responding to feed costs by trying to cut the number of days on feed down and especially in areas far removed from grain sources, the heavy feeders are selling at a premium to the lighter calves," Mark pointed out. "I don’t see any reason to believe that this trend will change within the next year. In certain local markets, there may not be a discount for lightweight feeders, but on a national basis, the economic forces that are causing this to happen will likely still be in place for awhile." Despite the way the numbers appear on the surface, Mark says he believes the discounted lightweight cattle may offer savvy buyers an opportunity. "Using numbers penciled out from a couple weeks ago, you may actually be able to take the lighter weight calves at a discount and get better returns on them, even though you’d have to feed them longer," he explained. "At the time, projections showed almost a $40/head difference in favor of a 550 lb. calf versus a heavy yearling." Even so, he adds, the risk in purchasing lightweight calves is high if you are unable to keep a tight lid on feed costs. "Maybe people should be taking a look at these lighter weight calves, but you can’t just throw caution to the wind. You definitely have to buy them at a discount, then hedge your corn and hedge the cattle. The deferred futures look good to be able to do that, but the risk might still be too high." Western Video Market’s Cheyenne sale offered 122,000 head, by far the most ever for that sale. Lots from all over the west and Plains were offered and were met by firm demand. Steers in a lot of 135 head coming out of Nebraska with a base weight of 840 lbs. brought $114.50. Steers with an 800 lb. base weight in a lot of 125 head sold at $114.10, also coming out of Nebraska. A large group of 800 head of Wyoming steers with a 925 lb. base weight sold for $108.60, while another good group of Wyoming feeder steers numbering 410 head sold for $112.50 at an 850 lb. base weight. A lot size of 272 head of Kansas steers weighing 810 lbs. sold at $114.50. Steers from South Dakota in a lot of 148 head sold for $113.85 with a 750 lb. base weight. Montana steers in a lot numbering 140 head and weighing 950 lbs. sold for $108.00, while a group of 109 steers from Idaho and a base weight of 975 lbs. sold at $101.50. Seventy head of weaned steers from Nevada with a base weight of 800 lbs. sold for $107. Oregon steers in a 218-head lot and an 880 lb. base weight sold for $106.10, while another group of 215 head from the same state weighing 900 lbs. sold for $104.25. Steers carrying a base weight of 830 lbs. in a lot of 295 head from California brought $108.75, while a load of 67 steers from the same state weighing 740 lbs. sold for $111. Weaned steers from Colorado in a 65-head group and a base weight of 670 lbs. brought $114.50. Superior Livestock Auction sold 84,000 head of cattle on the first day of their sale which offered 181,000 total head. Averages from region one, which includes California, Nevada, Oregon, Washington and Idaho, saw steers with a base weight of 700-725 lbs. sell between $95-110.50, and 850-890 lb. steers go for $101-105.50. Region two, which includes Montana, the Dakotas, Nebraska, Utah and Colorado, had 700-740 lb. steers selling for $104-115, while 850-885 lb. steers brought $106.75-113.50. Region three, which includes Arizona, New Mexico, Texas, Oklahoma, Arkansas and Louisiana, saw 700-745 lb. feeder steers selling from $95 to $116, while steers at an average base weight of 850 lbs. sold for $101.50-108.25. At the Oklahoma National Stockyards in Oklahoma City, OK, a total of 7,223 head were offered, where compared to the week prior, feeder cattle and calves were steady with good demand for calves. Demand was moderate to good for feeder cattle, despite corn futures which closed sharply higher on sale day. The quality of offerings continued to be below average with many consignments of No. 2 cattle included. Steers weighing an average of 721 lbs. sold for $114.99, while 736 lb. feeder heifers sold for $108.78. The Joplin Regional Stockyards near Joplin, MO, offered 4,711 head for sale last week where steers under 500 lbs. were steady to $2 higher, with weights from 500-700 lbs. steady and weights over 700 lbs. steady to $2 lower. Heifers were mostly steady. Demand and supply were moderate and the bulk of the offering consisted of yearlings or weaned calves. Buyers paid $112.27 for steers weighing an average of 733 lbs. while 717 lb. heifers sold at $105.52. Last week’s Winter Livestock Feeder Cattle Auction in Dodge City, KS, saw receipts of 1,963 head where steers stayed steady on a light offering. Heifers also remained steady. Steers weighing an average of 707 lbs. sold at $114.50 while 745 lb. heifers brought $111. A total of 4,150 head were received last week at the Bassett Livestock Auction in Bassett, NE, where the only testable weights for feeders were for those over 750 lbs. In that category, steers trended fully steady, with heifers trading steady to $2 lower. Receipts included a fairly even mix of fall calves and long yearlings. Feeder steers weighing 716 lbs. sold for $127.41 while heifers weighing 711 lbs. sold at $112.77. Fed cattle Fed cattle trade was mostly lower last week as a sagging cutout and weak futures markets failed to provide any lift ahead of the Labor Day holiday. The majority of trade in the south came in $1-2 lower than the prior week at $98-99 live while the Corn Belt cattle feeders traded steady to $3 lower in a range of $153 to $156.50 dressed and $98-98.50 live last week. Nebraska trade was not fully developed at mid-day last Thursday, although light trade was reported at $155-156 dressed. Packers were buying for a holiday-shortened week and demand was reported to be moderate for cattle as most had already fulfilled orders to meet weekend demand. The lackluster consumer demand also translated into a weakening cutout which was led lower by the middle meat complex, with ribs and loins showing the biggest drop last week. Morning prices last Thursday stood at $162.67 on the Choice product, down 42 cents from the previous day’s level, while Select was up 26 cents at $157.30. Slaughter volume for the week stood at 505,000 head, down 7,000 from the prior week’s robust pace as packers slowed production to match demand and maintain margins ahead of what is largely expected to be slowing domestic demand. Analysts have been cautioning that the pricing structure this fall is most likely to be driven by the demand side of the equation. Fed cattle supplies are predicted to be tight through the fourth quarter, however, they cautioned that any weakness in movement on the consumer side of the equation could translate into weaker prices being paid for fed cattle supplies, regardless of supply levels. Export markets will continue to be a key factor in determining prices into next year as the domestic economy treads water and consumers direct grocery dollars to lower priced competing proteins. Ahead of last Friday’s cattle on feed report, analysts across the board were predicting on feed numbers would continue below year-ago levels while placement numbers and marketing volumes were expected to be significantly stronger than last year. Average estimates for numbers of cattle on feed were expected to be down about 3.5 percent from Aug. 1, 2007, while July placements were predicted to be 6 percent to 7 percent higher than a year earlier. Marketings were estimated 2 percent higher during July than in 2007. Some of that expectation was already priced into the futures markets last week, which were showing some strength. August futures were up 65 points at mid-day last Thursday at $101.35 while October was up 80 points at $105.80 and December traded 60 points higher at $106.95. The higher prices on the Chicago Mercantile Exchange came despite the higher placement expectations and surging corn markets. The belief that USDA’s corn forecast was off the mark, to the high side, added strength to the grain markets last week as crop tours got underway to examine actual crop conditions in the field across the major growing regions. Export sales last week continued to be very supportive of beef prices with net sales of 20,200 metric tons reported by USDA’s Foreign Agriculture Service. South Korea has jumped back into the market as a major player despite reports in the press that demand was weak. Last week, the Koreans were the largest foreign buyers of U.S. beef, with shipments totaling 8,500 metric tons, besting Mexico, the former heavyweight, by 800 metric tons. Cow and bull prices have been one of the highlights during the first half of the year, however, prices were under pressure last week as focus shifted to other meats as a result of the higher prices being paid at the consumer level for ground beef and cow cuts. However, despite the backward slide in the market, prices remain very strong as a result of demand and a lack of significant imports of lean beef for blending from foreign producers. Last week’s cow beef cutout stood at $139.62, compared to just $117.86 a year ago. The 90 percent leans last week was also sharply higher than 2007 levels, trading at $175.08, nearly $30 higher than the same date last year. The 50 percent trim market last Thursday was more than double year-earlier prices at $100.16. — WLJ

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Friday, August 22,2008

USDA-NRCS announces ranch economics conference

by WLJ
USDA-NRCS announces ranch economics conference Landowners, ranchers and producers are invited to attend the Blackland Prairie Ranch Economics Conference which will be held at the Fletcher-Warren Civic Center located in Greenville, TX, on Sept. 19, 2008. The cost of the conference is $5 per person. Registration starts at 8:00 a.m. and the workshop will be held from 8:00 a.m. through 3:30 p.m. at the civic center. Lunch is planned for all registered attendees. All attendees will receive valuable information about ranch economics and profitability from presentations by conservation professionals. Additionally, three hours of pesticide applicator’s license continuing education units will be offered during the conference. The USDA Natural Resources Conservation Service (NRCS) will present discussions regarding getting started with stocking rates, economical alternatives to inorganic fertilizers, and federal assistance through Farm Bill programs. Other conservation presentations include maintaining profitability in forage-based production systems, economics of forage fertilization and hay production, and adding value and marketing beef cattle. "The goal of the conference will be to address very timely issues and provide Blackland Prairie ranchers and landowners with the economic tools to help make ecologically sound decisions while remaining economically feasible," said Jeff Goodwin, NRCS rangeland management specialist in Corsicana, TX. To end the conference, a rancher’s panel will discuss staying profitable in your ranch operation. The panel will include Chip Merrill, who operates the XXX Ranch in Tarrant County, Kenneth Braddock, manager for Rosewood Ranches in Navarro County, and Jim Russell, owner of Jim Russell Hay and Sprig Farm in Hopkins County. Sponsors for the Blackland Prairie Ranch Economics Conference include NRCS, The Samuel Roberts Noble Foundation, Texas AgriLife Extension, Texas GLCI, Blackland Prairie GLCI, Upper Sabine Soil and Water Conservation District, and Hunt County Farm Supply. For those who plan on attending the conference, please RSVP by Sept. 12, 2008, at 903/455-6212 Ext.3. For more information, please contact Jeff Goodwin at 903/874-5131 Ext.3, or Randy Henry at 817/467-3867. GLCI information can be obtained at www.glci.org and www.tx.usda.nrcs.gov or contact your local NRCS service center for details. — WLJ

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