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

Strong corn market takes its toll on feeder cattle

by WLJ
Fed cattle trade broke out earlier than normal last week. Trade and demand was moderate in the Texas Panhandle last Wednesday afternoon and Thursday. Compared to the prior week, live sales were .50 to $1 lower at $89-89.50. Trade was very limited in Kansas with a few early live sales at $89-89.50 and dressed sales at $141. Trading was moderate in central and western Nebraska with live sales mostly steady with last week at $89-89.50. There was also reportedly a light test of dressed sales at $138 in Nebraska. Trade in Colorado was also light with early live sales unevenly steady at $89.50. Trading was light to moderate in the western Corn Belt with live sales steady to $1 lower than the previous week, at $88, with a few dressed sales $1 lower at $137-139 compared to the prior week. The high cost of feeder cattle early in the year and skyrocketing corn prices have resulted in a rising cost of gain for feedlots. Higher breakevens have kept cattle feeders in the red for a good portion of the year. Packer unwillingness to raise offers last week indicates a standoff could be developing, despite a reportedly declining supply of market-ready cattle which should give feedlots the upper hand in the weeks ahead. Packers were reluctant to pay more money for cattle last week and early trade was expected to set the tone. The rise in beef cutout values has packers back closer to positive margins, although according to HedgersEdge.com, last Thursday they were still in the red, losing $10.35 per head despite a Choice cutout value above $148. Demand at the consumer level has been declining steadily and packers have been working hard to maintain product movement. According to Livestock Marketing Information Center Economist Erica Rosa, packers are working hard to overcome that demand issue. “The most recent third quarter demand index shows a decline. Not as severe as the second quarter decline, but it was still lower. That weaker demand will be a problem going into the first quarter of 2007,” Rosa said. She said efforts to maintain profit margins and cutout values going into the holiday season are important for packers who are trying to make up for losses early in the year. Part of that defensive strategy has been talk of cutbacks in slaughter volume. “Despite the talk, there hasn’t been much of a cutback in harvest,” Rosa said. Kill levels for last week totaled 125,000 head last Thursday, up 1,000 from the week prior and 121,000 in 2005. For the week to date last Thursday, harvest was 504,000 head, 6,000 ahead of the previous week and well above the 491,000 slaughtered in 2005. At those volumes, cutout values increased slightly last week. As of Thursday, Choice product was up 57 cents, to $148.27, and Select was up 23 cents, trading at $135.72 on moderate demand and offerings. According to USDA, Select and Choice rib, chuck, round and loin cuts were steady to weak. Beef trimmings were called generally steady on moderate demand and offerings. The cow beef cutout values were also lower on the week. Last Thursday, the 90 percent lean cutout value was $103.25, fully $3 lower than the prior week. Buyers last week at the wholesale level were actively buying rib and loin packages to fill upcoming holiday demand, which lent some support to those primals. Demand for end meats however, was weak. The boneless beef markets for the most part traded steady, with a softer tone to the 90 percent lean cow beef market. Imported beef values were called firm due to a lack of supply coming into U.S. ports. Rosa said much of the weakness in the retail beef market was directly attributable to the competing proteins. Chicken, in particular, continues to be a strong market competitor and the low cost has been a difficult factor to overcome in the market. “Boneless/skinless breast prices continue to fall. Supply has been the main issue in the chicken market and producers are cutting back on egg sets in an effort to improve wholesale prices,” Rosa said. On the Chicago Mercantile Exchange (CME) last Thursday, live cattle contracts were mixed. December live cattle settled at $86.75, a loss of 80 points. February live cattle settled down 57 points at $90.10 and the April contract was down 20 points at $89.75. Feeder cattle In the feeder cattle market, the strength of corn was the news of the week and big gains in the December new crop corn on the Chigago Board of Trade last Wednesday and Thursday resulted in a beating for the feeder calf market. On CME last Thursday, feeder cattle declined sharply across the board. The November contract closed off 242 points at $101.95. January and March contracts both shed 300 points, closing at $98.42 and $97.17, respectively. April was down 292 points at $97.17 and May gave up 275 points, closing at $97.27. Cash feeder cattle prices were also lower across much of the country last week as prospects of weather related illness in newly purchased calves and the steep rise in corn prices kept demand for calves at a minimum. Demand in most markets was much higher for long-weaned calves with at least one round of vaccinations. In fact in some instances, the only steady prices to be found were for calves meeting that set of criteria. Out west in Vale, OR, the calf market last week was $1-3 lower on weaned calves and $2-5 lower on loud lots fresh off the cow. The largest decline was on calves carrying heavy flesh and body fat. In Madera, CA, stockers and feeders were steady to $2 lower than the prior week in a light test. In Clayton, NM, compared to a week prior, feeder steers and heifers under 600 lbs. were mostly steady; those over 600 lbs. were $1-2 lower. Trade and demand were called active. Farther to the southeast in Texas, weather conditions have generated rain showers and in parts of the state, grass pastures have rebounded some from the poor conditions faced for much of the past year. Wheat grass grazing in the south is reportedly spotty, but pasture conditions are allowing for at least some stocking although prices continue to trend lower in some markets. In San Angelo, TX, compared with the prior week, feeder steers and heifers under 600 lbs. were firm to $1 higher; calves over 600 lbs. were weak to $1 lower. In Crockett, TX, last week, feeder steers and heifers were $2-3 lower, with instances of $5 lower, on strong trade and demand. Reports from Oklahoma indicate wheat pastures there are in need of additional moisture in order to allow for any decent grazing prospects. Grazing prospects there got off to a good start, but a lack of significant precipitation has caused crop stress and in some areas, the need for reseeding of fields. According to USDA, the wheat crop in Oklahoma is rated 7 percent excellent, 39 percent good and 33 percent fair. Twenty-three percent of the crop was rated poor or very poor. The El Reno, OK, market was one of the few bright spots in the country last week. Feeder steers and heifers trended steady. Demand was called good for feeders despite the sharp advances made in the corn futures last week. Steer calves were steady and heifer calves steady to $2 lower. Demand was moderate to good for calves. In Dodge City, KS, compared with the previous week, steers from 300-650 lbs. were in light supply and trended $1-4 lower. Cattle in the 650-1,000 lb. range were $2-4 lower. Heifers 300-450 lbs. traded $2-4 higher and those in the range of 450-800 lbs. were called weak to $4 lower. In La Junta, CO, compared with the previous sale, steer and heifer calves were mostly steady with some instances of $1-2 higher except for 600 to 650 lb. steers, which traded $2 lower. Yearling feeder steers and heifers were lightly tested. In Riverton, WY, compared to the prior week, feeder calves from reputation outfits, known for quality, were unevenly steady with lower undertones noted for most classes. Heifer calves were trading with higher undertones for those in the 350-450 lb. range. Heifers over 450 lbs. were under pressure with instances of $3-6 lower. Yearling steers traded steady to instances $1-2 lower. Yearling heifers were steady with instances of $1-4 higher on the better kinds. Weaned, preconditioned calves were in high demand. In Billings, MT, last week, steer and heifer calves were steady, with lesser types selling with lower undertones. These types were too lightly tested on Thursday to make an accurate comparison. Demand was called good on larger packages of high quality black-hided calves, with lighter demand for other types offered in couple head lots and small packages.

Read more
Thursday, December 20,2007

Higher fed prices look likely

by WLJ
October 29, 2007 Feedlots, helped by an on feed number which shows tight supplies ahead, dug in their heels last week in their efforts to increase fed cattle prices. Trade was at a standstill as packers looked for any available bargain cattle before coming to the table in earnest, something that looked to be a Friday affair last week. The previous week, the tactic worked in favor of feeders who pushed trade as much as $4 higher. The last established trade in the southern Plains was in a narrow range of $94-94.50. Live sales in Nebraska sold from $93-93.50 and dressed trade was at $145. Colorado live sales were in the $93-93.50 range and dressed trade was at $145. Fed cattle in Iowa and Minnesota sold from $90-92 with dressed sales at $143-145. EHedger.com analyst Troy Vetterkind said last week that while higher prices were likely for the week, the weeks ahead could be difficult for cattle feeders. “Next week concerns me a little bit as not only will October go off the board next Wednesday, but packers will be able to draw off of November contract and formula cattle,” Vetterkind said, pointing out that those supplies could be used to leverage cash prices lower after the first of November. Packer margins continue to be a source of concern for the industry. Packers are chasing Choice beef right now and too much competing protein has prevented packers from pushing beef cutout prices high enough to sustain the higher cattle prices being commanded in the country. End meats continue to drag on the cutout values as warm temperatures and low-priced pork and poultry cut into demand. Last Thursday, the mid-day cutout values were lower again with Choice boxed beef dropping another 52 cents to $143.56, while Select shed 92 cents to trade down to $130.36 on light to moderate trade in the midst of moderate to heavy offerings by packers who are continuing the practice of fire sale trade in an effort to move any significant quantity. One of the few upsides for packers is the drop value, which is trading at all-time highs. Last week, the by-product drop value was trading near the $10 per cwt. level, helping to ease the strain. Some of the problem is the result of heavy slaughter numbers by packers who are harvesting record-heavy carcasses for this time of year. The week-to-date harvest through last Thursday was estimated at 517,000 head, compared to 516,000 for the same period a week earlier and 502,000 head for the same period a year earlier. Last week, average live weights were seven lbs. heavier than the previous year’s record weights. That is contributing to an enormous amount of beef production, which is meeting with sub-par consumer demand. Coupled with the difficult nature of the current export situation, it amounts to a bad situation for the packing sector which remains caught in the middle and is bleeding red ink as a result. The picture doesn’t appear likely to change in the near future with tight supplies of fed cattle likely to continue into 2008 and a retail consumer which is, arguably, unwilling or unable to pay more for higher priced beef cuts. That market scenario is likely to make achieving, let alone sustaining, fed cattle prices in the high-$90 to low-$100 levels difficult this winter or next spring barring any significant changes in the U.S. economy or international trade picture. The cow beef markets have regained some footing over the past two weeks and prices have stabilized despite increases in harvest as fall culling sends more cattle to town. Cull cow prices have been steady at the mid-$40 to low-$50 level for much of the fall. Meanwhile, the cow beef cutout value was steady at $104.50 last Thursday and the 90 percent lean was trading at $123.80, while the 50 percent trim sold at $47.93. Those prices are only slightly lower than last year’s levels despite gloomy predictions of a market decline until the Canadian border issue is resolved next month. The consensus among analysts is for the possibility of a short-term price impact on cull cow prices once the border opens to older Canadian cattle. However, there are likely to be fewer cattle shipped south than many expect and the impact should be minimal and short-lived as those cattle work their way through the supply chain. Meanwhile on the Chicago Mercantile Exchange last week, live cattle contracts were trending lower as the end of the month forced fund liquidations of long contract positions and basis adjustments took their toll on prices, Vetterkind said. “We continue to see long liquidation in the front month live and feeder cattle issues as open interest in these contracts continues to decline on the down days. Technically, the market is starting to look a little tough with December live cattle closing under its 200-day moving average at $96.25 and April taking out the low set two Wednesdays ago,” Vetterkind said. “I believe the live cattle futures market is in the process of adjusting the basis in December-April futures as we have been carrying a pretty hefty premium in those contracts for the last several months. If we were to trade some $95 cattle this week and come back next week and trade some $93-94 cattle, then December should find some support at $94-95 by the first part of next week.” Feeder cattle The cash trade for feeder cattle gave up some, if not most, of the strength it gained the previous week and in areas of the country, weather is still the motivating factor for most buyers. Grain prices and the low availability of wheat pasture continue to keep feeder cattle prices depressed, although feeder cattle placements begin to look like a more viable option as feedlots continue to look for cattle to fill pens, artificially bolstering cash feeder cattle prices in some areas. Western Video Market offered 13,000 head on video in a sale which recently concluded on Oct. 18 and owner Ellington Peek said that despite severe drought in many western regions, the prices paid for feeders seems to remain slightly above actual demand. “The prices we’re seeing are really not too bad, considering the drought that people are suffering through in a lot of areas out west,” Peek said. “There’s not a bit of feed in California, and the same goes for most of Nevada where they are really short on grass after a tough summer, and hay prices are through the roof. There’s a pretty large area out here where the absolute worst hay is going for $150 per ton,” said Peek. Peek explained that some of the better deals to be had right now are for lighter heifers, assuming you have a place to put them. “Right now, you can buy a lot of good heifer calves for $95, which compares pretty favorably to some of the steers. Probably the top 4-5 weight steers are bringing $1.28 or so, and the top natural steers are bringing $1.14 for a 6-7 weight. That’s still better than $1.38 or $1.25 for those same steers not too long ago,” Peek explained. Peek also says that a stronger undertone would probably be felt if some areas could receive enough rain to satisfy ranchers for at least a short time. “If we would get a few good rains to drop in this fall, I think the market would get stronger for two to three weeks, but as it is now, every week is a little bit worse than the last,” said Peek. “There’s some good-looking calves out there, but there’s simply no place to put them where you can afford to feed them through the winter.” Last week at the Oklahoma National Stockyards in Oklahoma City, OK, steer and heifer calves were uneven to mostly steady, some going for $2 lower than in the last sale. Of the 9,282 head offered at last week’s sale, a large amount of the supply consisted of large frame 1-2 calves with numerous Brahman crosses. A group of feeder steers weighing an average of 575 lbs. brought an average of $115.98 at this sale, with feeder heifers of similar condition weighing 581 lbs. bringing $108.38. Just to the east at the Joplin Regional Stockyards in Joplin, MO, 3,914 head were offered last week and compared to the last sale, steer and heifer calves were $2-4 lower, with most yearlings steady. Demand was good for yearlings, but only moderate for calves on moderate supply. A load of 800 lb. steers brought $111.25 at this sale, reflecting the desire of buyers to search for full loads of heavier cattle to place in feedlots. At Winter Livestock Inc. in La Junta, CO, last week, 4,689 head were offered for sale where more of the thin steer calves under 600 lbs. were selling for $1-2 lower than compared to the previous sale. Cattle in full or fleshy conditions were $5 lower, and those over 600 lbs. were steady to $1 lower. Smaller heifer calves of under 450 lbs. sold $5 lower and heifers over that weight were steady to $2 lower. Trade was moderate to active with the bulk of the offerings being in full and fleshy conditions, with moderate to good demand. Buyers were paying $103-107 for 650-700 lb. steers, and $96-99.50 for heifers weighing 650-680 lbs. At the Five States Livestock Auction in Clayton, NM, last week, there were 1,972 head offered for sale, with feeder steers and heifers under 500 lbs. $2-4 lower, with cattle over 500 lbs. steady to $2 higher on active trade and demand. A group of 616 lb. steers brought $113 at this sale, with buyers paying $105 for heifers weighing 633 lbs. At the Stockland Livestock Auction in Davenport, WA, there were 1,875 head offered last week with feeder steer and heifer calves steady to $3 lower compared to the last sale. Most of the declines were on heifers, with yearlings not being well tested. Trade was moderate to active with moderate to good demand.

Read more
Thursday, December 20,2007

Colorado cattlemen team up to earn two GridMaster Awards

by WLJ
October 22, 2007 North Dakota Stockmen’s Association (NDSA) members gave the beef industry’s 21-year-old research, promotion and education program a vote of support at their 78th annual convention in Bismarck, ND, Sept. 29. Members approved the Beef Checkoff Program resolution which celebrates the success of the checkoff in building beef demand and supports the four structural changes recommended by the Industry-Wide Beef Checkoff Task Force last year. “The beef checkoff already has a long list of accomplishments for our industry—from turning around falling beef demand to maintaining consumer confidence during what could have been the BSE crisis,” said NDSA President Mark Huseth of McLeod, ND. “We are looking for more great things in the future as our industry works to improve its position in an increasingly competitive market.” NDSA members have been contemplating their position on the checkoff recommendations, which include increasing the per-head assessment to $2, establishing a system for a periodic checkoff referendum, expanding the criteria for eligible checkoff contractors, and increasing the understanding of the Federation of State Beef Councils, for the last year. At the 2006 annual convention, they directed staff and leaders to find out more about the recommendations and present those findings to them so they could make up their own minds. NDSA issued two member surveys soliciting input on the topic and highlighted the implications of each recommendation at the NDSA Spring Roundups and again at this year’s convention. John Huston, the former National Live Stock & Meat Board and National Cattlemen’s Association executive who served as moderator of the Industry-Wide Checkoff Task Force, led the convention discussion to offer an insider’s perspective to the proposed changes. Huston explained that task force members proposed the increased checkoff investment based largely on inflation since the assessment has not been changed since it was first initiated. It takes $1.90 in 2007 to equal the buying power of $1 in 1986. Task force members suggested that some of the additional funds could be invested to build demand, increase exports and re-establish an advertising presence on network television, Huston said. For the average North Dakota producer, the change would mean an estimated $85 more per year, based on the average herd size in North Dakota. All but the recommendation to increase understanding of the Federation of State Beef Councils would require a federal law change and a producer vote. At the NDSA convention, members also voted to oppose the sale of hunting, recreational and other access rights that effectively sever those from the surface of the land. “Severing certain land-use rights can have a long-term negative impact on a landowner’s or a lessee’s ability to manage his or her operation,” Huseth explained. “Consider the problems when a livestock producer and another who owns the recreational access rights to a parcel, for instance, have competing access needs. And consider when the person who owns the recreational access rights passes away and wills those rights to succeeding generations, and those generations will the rights on to their succeeding generations. Before long, dozens of people could be fighting for access to the same piece of property at the same time. Who decides then who can be on and when? It could make for a very messy situation.” Access rights have become a top-of-mind issue since they were brought up in the House and Senate Natural Resources Committees during this year’s state legislative session. Unable to reach a consensus on the issue, legislators opted to gather more input and study it further during the interim. NDSA will be presenting its Access Rights resolution to the interim committee when it meets sometime in the year ahead. NDSA officers will also be presenting members’ Country-of-Origin Labeling (COOL) and National Animal Identification System (NAIS) resolutions to legislators before the programs are developed and implemented. NDSA’s COOL resolution supports an efficient, accurate and least burdensome program that requires all cattle to be born, fed and processed in the U.S. to receive the USDA grade stamp. It also calls for all live cattle imported into the U.S. to be branded or identified with their country of origin and the balance assumed as U.S. product. Members renewed the resolution, which first passed in 2004, in the wake of the looming COOL implementation day next September. “The policy reiterates our belief that COOL doesn’t have to be a complicated, cumbersome program in order to give consumers the information they want and producers the opportunity to brand their product as American,” Huseth said. NDSA favors the COOL program outlined in the U.S. House’s version of the Farm Bill—a much closer match to its COOL resolution—over what is outlined in the impending rule. “With the COOL rule, the devil is in the details,” Huseth explained. “It requires third-party verification of origin, opens up producers’ records to other industry segments, and exempts key beef products, such as those offered through foodservice, from the labeling requirements.” Huseth is hopeful the U.S. Senate maintains the essence of the House’s version of COOL when it marks up the Farm Bill and adds the other few components NDSA members outlined in their resolution. The NAIS resolution is another policy members renewed at the September convention. “It re-emphasizes the NDSA’s belief that any animal identification program be market driven and incorporate the brand programs that have served as viable traceback systems for nearly eight decades,” Huseth explained. Adequate cell phone coverage is an issue that has emerged over the last decade. At the convention, NDSA members also adopted a new policy encouraging wider-spread cell phone coverage in rural areas to address the needs of rural-based businesses. “A strong communication system is necessary for economic development and maintaining a strong business climate,” the resolution explains. State-of-the-art beef research is also necessary to maintain a strong livestock industry, members maintain in the North Dakota State University (NDSU) Research Facility Construction resolution. In it, members direct university officials to take “quick and decisive action” to replace the condemned Beef Research Laboratory on NDSU’s main campus. The North Dakota Legislature authorized $80,000 for the project and spending authority of $1 million during the 2007 session. Additional funding may also be available through USDA’s formula funding if applied for soon, Huseth said. “A new facility can help move our industry forward by meeting current and future research needs,” he said. A complete list of NDSA’s newly passed and renewed resolutions will be available soon in the 2007 NDSA Resolutions Book. For a free copy, call 701/223-2522 or e-mail ndsa@ndstockmen.org.

Read more
Thursday, December 20,2007

Cargill earnings up 83 percent

by WLJ
October 22, 2007 U.S. agribusiness Cargill Inc. last Monday said first-quarter net earnings rose 83 percent, led by its origination and processing segment which processes, markets and distributes agricultural commodities. Minneapolis, MN-based Cargill, which provides food, agricultural and trading services, said net earnings in the quarter ended Aug. 31 rose to $917 million from $500 million a year earlier. The results marked the first quarter with Greg Page as chief executive of the second-largest privately held U.S. company. Page took over as Cargill CEO on June 1, replacing Warren Staley who retired as chairman on Sept. 11. Page has also assumed that position. “June through August was an extraordinary period with growing demand for agricultural commodities against tightening supplies and a long-anticipated but dramatic reduction in liquidity and leverage in financial markets,” Page said in a statement. Cargill’s food ingredients and applications and industrial segments also outperformed last year’s earnings. Results at the agricultural services segment were slightly ahead of year-ago figures while results at the risk-management and financial segment were below year-ago levels. The risk-management and financial segment includes some of Cargill’s energy and financial activities. Grain prices soared during the quarter, led by wheat which hit an all-time high of $9.61-3/4 per bushel on the Chicago Board of Trade, the benchmark for world grain prices. At the same time, global financial markets gyrated from troubles stemming from the U.S. subprime mortgage sector as defaults rose. During the first quarter, Cargill began purchasing the remaining shares of Agrograin, a Hungarian grain company in which it bought a minority interest and formed a joint venture in 1995. Cargill also announced plans to double the capacity of its canola processing plant in Clavet, Saskatchewan, to capitalize on strong U.S. demand for healthier cooking oil.

Read more
Thursday, December 20,2007

Retail food prices rise slightly in third quarter

by WLJ
The surveyed items increased $1.18 in the third quarter of 2006, compared to the second quarter when the survey items dropped by 82 cents. Of the 16 items surveyed, nine increased and seven decreased in average price compared to the 2006 second-quarter survey. Red Delicious apples showed the largest increase, up 33 cents to $1.51 per pound. Other items that increased in price: bacon, up 32 cents per pound to $3.39; flour, up 25 cents to $1.88 per five-pound bag; mayonnaise, up 24 cents to $3.37 per 32-oz. jar; toasted oat cereal, up 21 cents to $3.10 per 10-oz. box; whole chicken fryers, up 10 cents to $1.38 per pound; vegetable oil, up four cents to $2.57 per 32-oz. bottle; eggs, up three cents to $1.08 per dozen; and cheddar cheese, up one cent to $3.52 per pound. Items that decreased in price from the first quarter of 2006 were: corn oil, down 10 cents to $2.70 per 32-oz. bottle; bread, down eight cents to $1.44 per 20-oz. loaf; russett potatoes, down six cents to $2.45 for a five-pound bag; pork chops, down five cents to $3.32 per pound; sirloin tip roast, down four cents to $3.70 per pound; and ground chuck and whole milk, each down one cent to $2.65 per pound and $3.03 per gallon, respectively. “Weather-related yield reductions in Washington state, home to nearly 60 percent of U.S. apple production, contributed to the retail price increase for apples,” said AFBF Economist Jim Sartwelle. “Relatively stable retail beef and pork chop prices in the third quarter were not surprising. The supply of cattle and hogs was more than sufficient to satisfy consumer demand,” he said. The share of the average food dollar that America’s farm and ranch families receive has dropped over time, despite gradual increases in retail grocery prices. “If you look back to the mid-1970s, at that time, farmers received an average of one-third of consumer retail food expenditures. That figure has dropped steadily over time and is now just 22 percent, according to Agriculture Department statistics,” Sartwelle said. Using that percentage across-the-board, the farmer’s share of this quarter’s $41.09 Marketbasket total would be $9.04. AFBF, the nation’s largest general farm organization, conducts its informal quarterly Marketbasket Survey as a tool to reflect retail food price trends. According to Agriculture Department statistics, Americans spend just under 10 percent of their disposable income on food annually, the lowest average of any country in the world. A total of 61 volunteer shoppers in 29 states participated in this latest survey, conducted during August.

Read more
Thursday, December 20,2007

Retail food prices up 2 percent in third quarter

by WLJ
October 15, 2007 Retail food prices at the supermarket increased slightly in the third quarter of 2007, according to the latest American Farm Bureau Federation (AFBF) Marketbasket Survey. The informal survey shows the total cost of 16 basic grocery items in the third quarter of 2007 was $44.03, up about 2 percent, or $1.08, from the second quarter of 2007. Of the 16 items surveyed, eight increased, seven decreased and one stayed the same in average price compared to the 2007 second-quarter survey. Compared to one year ago, the overall cost for the marketbasket items showed an increase of about 7 percent. For the second quarter in a row, regular whole milk showed the largest quarter-to-quarter price increase, up 48 cents to $3.94 per gallon, followed by cheddar cheese, which rose 35 cents per pound to $4.07. Other items that increased in price were: russet potatoes and corn oil, up 23 cents each to $2.57 for five pounds and $3.01 for a 32-oz. bottle, respectively; bacon, up 16 cents to $3.60 per pound; vegetable oil, up 7 cents to $2.73 per 32-oz. bottle; toasted oat cereal and red delicious apples, up 4 cents each to $2.90 and $1.49 for a 10-oz. box and one pound, respectively. Pork chops showed the greatest decrease in price, down 24 cents to $3.39 per pound. Other items that decreased in price were: sirloin tip roast, down 13 cents to $3.86; ground chuck, eggs and white bread, down 4 cents each to $2.81 per pound, $1.51 per dozen and $1.54 for a 20-oz. loaf, respectively; and flour and mayonnaise, down 1 cent each to $1.91 for five pounds and $3.42 for a 32-oz. jar, respectively. One item, whole chicken fryers, stayed the same in price at $1.28 per pound. “Dairy products continue to increase in price,” said AFBF Economist Jim Sartwelle. “Strong competition from overseas consumers for U.S. milk products has helped drive prices to current levels. On the other hand, it was a pretty tough summer for beef and pork demand here at home. This is reflected in the third-quarter price slide for sirloin tip roast, ground beef and pork chops.” As retail grocery prices have gradually increased, the share of the average food dollar that America’s farm and ranch families receive has dropped over time. “In the mid-1970s, farmers received about one-third of consumer retail food expenditures on average. That figure has decreased steadily over time and is now just 22 percent, according to Agriculture Department statistics,” Sartwelle said. Using that percentage across-the-board, the farmer’s share of this quarter’s $44.03 marketbasket total would be $9.69. Americans spend just under 10 percent of their disposable income on food annually, the lowest average of any country in the world. A total of 77 volunteer shoppers in 31 states participated in the latest survey, conducted during August.

Read more
Thursday, December 20,2007

Fed cattle trend lower on oversupply of beef

by WLJ
October 15, 2007 Cash fed cattle trade last week was underway by Wednesday as packers managed to pressure feedlot asking prices lower in the north. Although volume was light in the north and not yet established in the south, prices last week were $2-3 lower in Nebraska at $139-141 dressed, with a few reported live sales at $89.50. In Iowa and Minnesota, prices were reportedly $1-4 lower at $138-141 dressed basis, with the few reported live sales $2 lower at $89. An improving live cattle contract trade gave the market pause last week as fund buying and technical support pushed contract trade higher, giving feedlots reason to hold out for better money on the majority of last week’s trade. On the Chicago Mercantile Exchange, October contracts gained 57 points last Thursday to close the session at $94.67, while December tacked on 115 points and February added 117 to close at $97.77 and $99.57 respectively. Feedlots are likely to have a good opportunity during the corn harvest to lock in lower corn prices. Many industry analysts expect USDA to increase their harvest estimates for this year when the report is released Oct. 12. In addition to an increase in harvest forecasts, the world carryover stocks were increased unexpectedly two weeks ago, which has added more cushion to this year’s estimates and put downward pressure on corn prices. That, combined with weakness in other grains and a rising dollar, has caused corn futures to slump, according to Virginia Tech commodity marketing agent Mike Roberts, who predicts further weakness in the corn market. “It might be a good idea to hold off pricing near-term corn inputs if you can. Corn prices are expected to succumb even more to harvest pressure,” he said. Meanwhile, packers finally followed through on their intended harvest cuts last week, with several dark plants reported or scheduled at mid-week. Their efforts cut last Wednesday’s harvest number to just 123,000 head, down from 128,000 head a week earlier, but still above year earlier numbers. For the week-to-date through last Thursday, packers had harvested 502,000 head, compared to 512,000 the previous week. However, their efforts were doing little to immediately trim the large oversupply of beef available to wholesale buyers at offered prices. Beef supply, given the record-high carcass weights, continues to be a burden to boosting the boxed beef price. Until something changes to boost retail demand, packers are not likely to be able to move the cutout high enough to justify the much higher prices expected later this fall as a result of the tight supply expectations. There were two additional concerns weighing on the market last week as well. The stop and start nature of export markets, South Korea in particular, and the news of beef recalls aren’t doing anything to help improve the movement of beef either in the domestic markets or abroad. Although both problems are likely to be short-lived in terms of their market impact, neither is likely to bode well for improving demand and bolstering beef prices. The boxed beef cutout last Thursday continued its downward trend. Choice cutout prices dropped $1.55 to trade at $144.23 at mid-day Thursday. Select lost an additional 74 cents, to trade down to $134.49. However, those firesale prices spurred bargain hunters at the wholesale level and movement was good with 197 loads of Choice cuts, 100 loads of Select cuts, 27 loads of trimmings and 49 loads of coarse grinds trading hands during the morning. Cow beef markets were mixed last week after a drop in the number of cattle being harvested. The cow beef cutout was down slightly from the previous week at $105, while the 50 percent trim moved more than $1 higher to $51.71 and the 90 percent lean gained $8 from the previous week to trade at $133.53 last Thursday. Competing meats will also add problems to the beef market. Pork, in particular, poses a concern for the beef industry. The September market hog inventory report showed the largest number of market hogs on record since USDA began the data series in 1973. That has led to an ample supply of pork on the market which is favored heavily by retailers as a result of increases in the price of both beef and poultry, which are up 6 and 9 percent respectively from last year, according to Shane Ellis, Iowa State University agricultural economist. “Poultry, in particular, has been expensive enough to drive consumers to the ‘other’ white meat,” Ellis said. “Competition from poultry is likely to continue to grow in the coming months as egg sets and chick placements remain consistently higher than a year ago. Generally, an increased supply of meat leads to lower prices, and a moderation in pork prices in the next quarter will be accompanied by additional consumption.” Feeder cattle Feeder cattle trended lower again this week, following the downward movement in the fat cattle futures, although few analysts believed the price depression in the feeder cattle trade would be nearly as severe as it turned out to be. Demand for lightweight calves that are either unweaned or have been handled a great deal is very light, something USDA Market Reporter Corbitt Wall says is likely to continue. “The spreads between the preconditioned calves and the calves which are of a plainer type or haven’t been weaned is getting pretty extreme and will probably get even worse as we get later in the year. Things are pretty slow demand-wise right now as most farmer-feeders are busy with harvest, but once harvest is over with, there will probably be a little pump-up in the market when these guys start bidding again,” Wall says. “The difference will be that they are only interested in big, black steers for their feeding purposes, which could keep a pretty big price gap between them and the smaller calves,” said Wall. Wall also explained that auction markets are currently flooded with calves in poor condition. “There’s so many guys getting burned by calves coming out of drought areas it’s not even funny; there were so many calves taken off their mothers early in the southeast, and that flood of sick calves has reached the major auctions all over the country now. The one thing buyers are waiting for is a hard freeze when the market for these calves should pick up just a bit, as it’s easier to straighten the cattle out once it gets cold,” Wall said. With a new harvest report due which could drive corn prices further down, Wall believes the fed cattle will slow or stop their downward slide in price, and feeders should follow suit. “There are some guys out there saying the feeders will be bearish after the new corn numbers come out, but I don’t see how that could happen. I think that although the price gap between types and kinds of feeder cattle will stay the same or get bigger, the overall average for a good steer should jump up just a bit. What will likely keep [feeder prices] from getting too much higher is the lack of places to put these stocker cattle. There’s just not going to be any wheat pasture to be had, though there should be extra corn stalks around,” Wall says. Superior Video Auction held a sale on Oct. 5, which set a partial trend for the next week’s offerings at auction markets around the country. A total of 34,200 head were offered, and moderate trade and demand was observed. Prices continued to be strongest in the north and south Plains states, and weaker in the western regions where distances and drought tend to have a price-depressing effect. At the Oklahoma National Stockyards in Oklahoma City last week, 8,940 head sold in the Monday feeder cattle sale and compared to the previous week, most feeder cattle and calves were $3-5 lower, with some instances of $6-7 lower on fleshy unweaned calves. The demand was moderate, at best, for all classes of cattle with buyers very selective for kind, flesh and weighing conditions. The best action continued to be for calves which have been weaned for longer periods. Much of the wheat in Oklahoma is already planted and some areas have received rain, but there is not a great deal of interest in calves to go on wheat pasture. One lot of 625 lb. feeder steers sold for an average of $117.41, and a similar lot of the same weight heifers sold nearly 10 dollars lower at $108.63. Further east in Joplin, MO, at the Joplin Regional Stockyards, 4,400 head of feeders were sold at last Monday’s sale. Compared to the week previous, steers under 750 lbs. and heifers under 600 lbs. were steady to $3 lower, with the heavier weights mostly steady.  Demand and supply were moderate, with the calf trade being best on weaned, vaccinated offerings. One lot of heavy 900 lb. steers sold at $108.60, with no heifers for comparison of the same weight range. Last week at Winter Livestock’s sale in La Junta, CO, 4,656 head sold where steer and heifer calves under 400 lbs. were steady, while calves over that weight brought $3-5 less compared to the previous week. Trade was active, with calves being in moderate to heavy flesh. Some steers weighing 570 lbs. brought an average of $111.10, and a heavier lot of steers weighing an average of 862 lbs. were sold for $107.86. In McCook, NE, last week, steers and heifers under 700 lbs. were steady to $4 higher, and the trend was higher with good demand for the 2,700 head sold at Tri-State Livestock Auction’s Monday sale. One bunch of steers weighing 578 lbs. brought $119.35, while heifers of a similar weight and type sold six lower at $113.32. A special feeder calf sale was held last week at the Stockland Livestock Auction in Davenport, WA, where the 4,410 head offered were selling on moderate demand, with 668 lb. feeder steers bringing $103.44, while heifers of approximately 620 lbs. were sold for $96.18 in one example.

Read more
Thursday, December 20,2007

University of Colorado President HankBrown named 2008 Citizen of the West

by WLJ
The National Western Stock Show named University of Colorado (CU) President Hank Brown its 2008 Citizen of the West. Brown will accept the prestigious award at a dinner on Jan. 16, 2008, at the Adam’s Mark Hotel. The Citizen of the West, selected by a committee of community leaders, is an annual award given to a person who embodies the spirit and determination of the Western pioneer and is committed to perpetuating those Western ethics. “Hank has it all,” said former Sen. Alan Simpson, who also was the 1990 Citizen of the West recipient. “He’s the epitome of the old phrase, ‘If you have integrity, nothing else matters; and if you don’t have integrity, nothing else matters.’” A Colorado native and former U.S. senator, Brown entered CU in 1957 on a football scholarship and helped pay his way through school by working 30 hours a week.  Academically, he was on the faculty honor roll for four semesters and participated in the honors program. While at CU, as student body president, he secured the passage of the first complete reorganization of student government since the late 1930s. He also holds a bachelor’s degree in accounting, a juris doctorate degree from the University of Colorado Law School, and a master of law degree from George Washington University. After serving in the U.S. House of Representatives, Brown was elected to the U.S. Senate in 1990, becoming Colorado’s 30th senator. He was chairman of the Middle East Subcommittee on Foreign Relations and chairman of the Constitutional Law Subcommittee on Judiciary. Numerous bills were passed with his leadership, but among legislation most pertinent to the American West, Brown was the prime sponsor of Colorado’s only Wild and Scenic River and the only Heritage area designation, the 1994 Colorado Wilderness Bill, and the American, Santa Fe and Oregon Trails bills. “I’m delighted at Hank Brown’s selection into this important fellowship of effective leaders who have had a major impact on the quality of life in this region,” said Wayne Hutchens, president of the CU Foundation. “His rare blend of experiences of corporate and public life have provided him with an uncommon perspective on what’s important to balance and maintain the priorities that are unique to the American West.” Brown served as president of the University of Northern Colorado from 1998 to 2002, and as president and CEO for the Daniels Fund, a billion-dollar foundation, from 2002 to 2005, when he was asked by the CU Board of Regents to serve as interim president. A short time later, he was appointed CU’s 21st president. Typifying the hometown loyalty and leadership he is recognized for, Brown’s tenure at CU has marked a renaissance for the school. Enrollment, donations, and student diversity have celebrated sharp increases since Brown took the reins, and the university recently received its largest increase in state funding in its 131-year history. “If you were able to boil down and distill the values and ethics of our Western heritage,” said Pat Grant, National Western president and CEO, “you’d get Hank Brown. He sets the citizenship standard, not only for Westerners, but for all Americans. We are very pleased to have the opportunity to honor this great American in 2008.” Born in 1940 in Denver, Brown is a highly decorated veteran of the U.S. Navy. He was a forward air controller along the coastal areas outside DaNang during the Vietnam War. Among other awards for his military service, he is the recipient of the Air Medal with two Gold Stars and the Naval Unit Citation. In 1967, he married Nan Morrison of Springfield, CO. The couple has three children and three grandchildren. The Browns make their home in Denver.

Read more
Thursday, December 20,2007

U.S. Cattlemen launch campaign to amend Beef Act

by WLJ
At a meeting held in Lewistown, MT, on Tuesday, Sept. 25, the United States Cattlemen’s Association (USCA) launched a nationwide initiative seeking changes to the mandatory Beef Checkoff Program that will permit a portion of checkoff funds to promote domestic beef. Leo McDonnell, USCA director emeritus, Columbus, MT, was the featured speaker at the Lewistown meeting. McDonnell told participants that the time is right for U.S. producers to ask Congress for modifications to the Beef Act that will permit development of national and international marketing programs supporting domestic beef actually derived from cattle born, raised and processed in the U.S. “Never before have producers had so much opportunity on Capitol Hill,” noted McDonnell. “There are many positive things happening. We are on the cusp of seeing mandatory country of origin labeling implemented. It only makes sense for U.S. producers to direct their checkoff dollars towards supporting their domestically born and raised product. It is important that we let Congress know the changes we are seeking and this initiative is the method to accomplish that.” USCA’s proposal would earmark a portion of checkoff funds collected from U.S. cattle producers for use in promoting products from cattle specifically born and raised in the U.S. The beef checkoff was established in 1986 and has had little significant modification since then. As written, the Beef Promotion Act does not currently allow checkoff funds to distinguish U.S. born and raised beef from imported product. Only beef in a generic sense can be promoted, regardless of what country the cattle originate in. USCA Director and Checkoff Committee Chairman Jim Hanna, Nebraska, said the initiative seeks changes to the law that producers overwhelmingly support. “We have bulletproof survey results that show over 92 percent of cattlemen nationwide support this concept.  We want to back those results up with boxes of letters with producer signatures that we can show to Congress when we press for changes in the Beef Act,” noted Hanna. “We have a number of other important changes that need to be made to the program, but the born and raised concept is the most critical at this time.” “No one should construe this as an attack on the checkoff,” continued Hanna. “In fact, it’s far from it. USCA has policy that clearly shows our support for the program. Our goal is to simply make the checkoff more responsive to those who pay the dollar per head fee.” “Participating is easy,” said Hanna. “All we’re asking is that producers across the nation sign on to a letter addressed to Congress seeking this simple change in the Beef Act.” For information, contact USCA at usca@uscattlemen.org or call Jim Hanna at 308/748-2233.

Read more
Thursday, December 20,2007

Demand is primary market driver

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

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.