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Thursday, December 20,2007

USDA extends BSE testing in Washington

by WLJ
The only bovine spongiform encephalopathy (BSE) testing laboratory in the Pacific Northwest will remain open for another six months, but officials insist it isn’t because of increased fears of the chronic brain-wasting disease in the region. The USDA contract for testing at Washington State University’s (WSU) College of Veterinary Medicine expired March 1 as part of the agency’s efforts to scale back monitoring for BSE. USDA has extended the contract through Sept. 30, with the option for further extensions, WSU officials said. “Reports circulated in the media a few months ago that stated the WSU laboratory was shutting down,” said Terry McElwain, executive director of the Washington Animal Disease Diagnostic Laboratory at WSU. “The USDA was simply scaling back the amount of testing being done but was intent on maintaining the capacity and ability to ramp up BSE testing in a moment’s notice.” The WSU lab was opened after the nation’s first BSE case in the Yakima Valley in December 2003 prompted some new safeguards. Since then, it has processed more than 46,000 samples sent from packing plants in five Northwest states. It takes less than eight hours to test for BSE at the lab, which has the capacity to test several hundred samples a day.

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Thursday, December 20,2007

Swift & Co. partners with Optibr and to enhance Japanese beef promotions

by WLJ
Imagine information on the food you eat available literally at your fingertips. It is now possible to use your cell phone to scan a bar code on a package of meat and thereby access all the background information that led up to that product arriving in your home. As food traceability becomes more important to consumers, information delivery becomes critical to market success. Optibrand has partnered with Swift & Company, the U.S.’s third-largest processor of fresh beef and pork, to provide a traceability program that meets the rigorous demands of the Japanese market. For the first time, Japanese distributors and retailers will be able to offer U.S. beef with complete traceability information available via a bar code on the package. Consumers can retrieve the product’s supply chain history, from farm to retail shelf, by scanning the bar code with a cell phone or accessing the information online. The combined technologies of Optibrand and Swift & Company make providing complete product traceability information possible. Optibrand’s Secure Asian Export Solution helps meet the demands of export customers by linking animal identification to age, source and process verification information. Swift’s Swift Trace program allows the processor to trace product from individual age- and source-verified cattle to finished boxed product. “Together, we make available the complete product ‘story’ that, we believe, increases consumers’ trust in the food they’re purchasing,” said Mark Swanson, Optibrand’s chief operating officer. “Trust is key to repeat purchases for consumers worldwide.” The technology proved successful in field tests last month in Japan. The first cattle were enrolled into the program in the fall of 2006 and the first finished product was delivered to Japanese distributors in April of this year. “The program’s successful field tests represent another step in enhancing the capabilities of our existing Swift Trace system,” said Warren Mirtsching, Swift’s senior vice president, Food Safety and Quality Assurance. “We are pleased to partner with Optibrand to demonstrate the efficacy of our combined technologies.” Mark Anderson of Producers Livestock Marketing Association noted, “This is the type of system we, as feedlot operators, have been waiting for. In a cost-effective manner, we can now offer value-added programs on our cattle and to our customers for both the domestic and international markets.” Anderson supplied cattle for the initial product shipments to Japan. “The Optibrand system marries all the data collected at individual points along the supply chain. Retailers who want to receive, and provide to their customers, the assurance gained with traceability information in an easy to use fashion, now have the opportunity with Optibrand’s system,” said Swanson.

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Thursday, December 20,2007

Wyoming officials worry brucellosis rule could affect state's cattle ranchers

by WLJ
State of Wyoming officials say they’re concerned an upcoming federal rule governing brucellosis in wildlife and livestock might threaten the state’s newly regained brucellosis-free status. During a meeting of the state Brucellosis Coordination Team, Wyoming Game and Fish Department Director Terry Cleveland said he’s worried that the new rules might, in effect, punish Wyoming cattle ranchers because of brucellosis in elk. “I don’t want Wyoming livestock producers to lose (brucellosis-free) status because of disease in wildlife,” Cleveland said. Wyoming Gov. Dave Freudenthal also has objected to the rulemaking, saying in a December letter to U.S. Secretary of Agriculture Mike Johanns that a nationwide approach to fighting brucellosis was “a monumental shift in a direction that is unacceptable to the state.” Brett Combs, a veterinarian for USDA’s Animal and Plant Health Inspection Service, said he would relay Wyoming’s concerns to federal officials. Part of the problem, state officials said, is that they haven’t been able to see the draft rules, which are scheduled to be published in the fall. By then, they worry, it might be too late to make substantial changes to protect Wyoming ranchers. Brucellosis infects cattle, elk and bison and can cause cows to abort. Wyoming lost its brucellosis-free status in 2003 when the disease was found in a herd of cattle near Pinedale, WY. The state only regained brucellosis-free status last fall.

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Thursday, December 20,2007

Modern grass cattle concepts

by WLJ
Cattle genetics have changed and backgrounders may need to react. Frank Brazle, retired Kansas State University Extension beef specialist, has studied the stocker industry for more than 30 years. “There used to be just acres and acres of light-weight cattle, and they had to be backgrounded,” he says. “The cows didn’t milk as well and the calves didn’t have the growth.” Now most of those lighter calves are specific to the “fescue belt”—from southeast Kansas to the southern Appalachians—where endophyte fungus can retard milk production. Otherwise, calves are coming off the cow weighing more than ever before, says Brazle. Mark McCully, supply development director for Certified Angus Beef LLC (CAB), notes that the American Angus Association has documented genetic improvement over time. “From 1985 to 2005, the adjusted yearling weight EPD [expected progeny difference] climbed by 175 pounds,” he says. “That suggests the traditional methods for backgrounding Angus calves may need a little modification.” Feedlot owner-manger Steve Peterson works with a number of backgrounding yards near his 4,400-head Lebanon, KS, finishing yard. “We try to maximize energy without pushing the cattle so hard that they finish at lighter weights. It all depends on the genetics and type of cattle,” he says. “I want them to have plenty of energy, which is very important if you’re feeding cattle toward a high grading endpoint.” The CAB-licensed feeder says he grows some of the top cattle at 2.5 to 3 pounds a day and still feeds them 120 days in the feedlot. Research shows supplementation on grazing programs benefits both the quality grade of those calves and carrying capacity of the land. University of Nebraska data found supplemented calves graded 67 percent Choice, compared to 51 percent on grass alone. The carrying capacity on that pasture also increased by 40 percent. “You don’t ever want to slow down on nutrition because it’s costly to play catch up,” Peterson says. “Once you stop that marbling process, whether it’s stress or other factors, you’ve got several days to catch up. Sometimes you never do.” McCully says today’s practice of assembling groups of calves over time may need to be revisited. “Many backgrounders gradually purchase calves and put them on a maintenance ration, or the bare minimum, while they’re gathering enough animals to turn out together,” he says. “Any time a calf is put on a restricted diet, it hurts marbling.” Health and stress can also suppress appetite and grade, Brazle says. “If calves get sick and they’re not performing up to a pretty decent level, that will affect grade later on,” he says, suggesting growers place calves in a feedlot pen for a few days to “get the bawl and run out of them.” In his backgrounding yard, animals are then moved to 10-acre grass traps, out of the mud and with room to roam. “The spread of viruses is slowed down because they’re not in such close proximity to each other,” Brazle says. “It allows the viral vaccinations we give to start building up immunity to protect those calves.” With high corn prices and predictions of $20 Choice-Select spreads, coordinating management between stockers and feeders could really add up. “There will be more emphasis on performance, both the ability to gain and convert,” Brazle says. “Cutability and grade will have more value, too.”

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Thursday, December 20,2007

Fed cattle market slips, feeders continue strong

by WLJ
A moderate to fairly active trade got underway last Thursday following a sharp drop in the live cattle futures during the day. Dressed sales were called steady to $1 lower than the prior week at $154-155.50 dressed and $94-95.50 live in the north. The South saw some very limited trade in Texas at $95.50, which was $1 lower than the prior week when live sales traded from $96 to $97 and dressed ranged from $153 to $155. Many southern feedlots, however, were still holding out for better money last Thursday, with some expecting that significant trade could hold off until Friday last week. The Chicago Mercantile Exchange (CME) saw long liquidations, substantial corn price increases, and the triggering of sell stops cause a sharp drop in live cattle contracts last Thursday. At the close of the day, June was down $2.12, closing at $91.27. August fell 200 points, ending the session at $90.57 and October shed 165 points, closing at $94.42. At the close of business last Thursday, all but the August 2008 contract showed triple digit losses for the day. A lack of beef buying interest at the retail and wholesale level, despite large discounts in the beef cutout values, added to the problems last week on CME. The Choice cutout was up slightly at midday last Thursday, trading at $156.10 and Select was down 26 cents to trade at $144.55 with only moderate movement. Those prices represent a drop of more than $6 from week earlier levels. The decline was expected by many to spur some movement out of packers’ cold storage warehouses to fill spot demand, which remained lackluster last week. Meanwhile, forward contracting for the Choice middle meats to fulfill summer demand remained a bright spot in the boxed beef markets. The news that Creekstone had finally managed to move beef into the South Korean marketplace also helped improve the attitude toward some of the end cuts. To add to that sentiment, both Tyson and Swift said last week they would begin preparing shipments intended for Korea. Those cuts bound for the Asian market are out of favor with consumers in the U.S., however, chuck and short ribs items received a boost as a result of an expected surge in demand. That increase in trade will only serve to add value to beef carcasses here in the U.S. Packers, who were once again facing negative margins last week, were expected to begin trimming production schedules in the week ahead. However, through last Thursday, they managed to continue harvesting large numbers of cattle to fill orders. Choice beef in particular is becoming seasonally more difficult to find, leading packers to chase the market for high grading cattle. Last Thursday, packers harvested 123,000 head, compared to 120,000 a week earlier and 126,000 head on the same day in 2006. For the week to date tally, packers had worked through 490,000 head, just 2,000 fewer than the previous week but well above the 2006 period, during which packers killed just 412,000 head. Boneless cow beef markets were mostly steady last week as a result of the continued solid demand from the grinding sector for 90 percent lean cow beef and what may be the start of a slow down in cow slaughter volume. Fed cattle 50 percent trim also bounced back as buyers began securing product for the freezer at low prices. Last Thursday, the cow beef cutout value rose slightly to $115.43 in morning trade. The 90 percent lean moved higher to $144 and the 50 percent trim traded at $57.46. Feeder cattle Feeder cattle prices remained mostly steady and in some instances, $2 to $5 higher across the western region last week. In spite of the higher corn prices last week, feeder cattle prices continue to show strength. Derrell Peel, Oklahoma State University livestock marketing specialist, attributes this to several factors. Fed cattle prices remain strong and there is a noticeable reduction in cattle imports from other countries. In addition, much of the western region continues to receive some much needed moisture and this is leading to an increased demand for stocker cattle to turn out on grass. This is evident as last week, lightweight cattle that were thin in type were worth significantly more than their fleshy counterparts. Furthermore, cattle producers are feeling much more confident about building up their herds by retaining more females as a direct result of the moisture and the coming on of grass. This results in less feeder cattle offerings at auction markets and a decrease in the number of cattle placed on feed. Higher corn prices are still affecting the feeder cattle market. It is becoming more common to retain stocker cattle for a longer amount of time in an effort to place them in feedlots at heavier weights. “The market is encouraging more forage-based stocker gains and heavier placement weights for cattle entering feedlots,” said Peel. “As the price of corn continues to increase,” said Carla Todd, producer from a central Wyoming cow/calf operation that retains ownership of cattle though a family feedlot, “that grass continues to look better and better everyday.” In Famoso, CA, stockers and feeders held steady on a quality run. There was a big demand for stocker cattle, especially the greener kinds weighing 450 to 500 lbs. Many buyers had going to grass orders. There was also a big demand for feeder cattle. Once agin, those thin in type and kind weighing between 700 and 850 lbs. were the most valuable. Stocker steers weighing between 425 and 500 lbs. averaged $125 while thin feeders weighing between 725 and 800 lbs. were worth an average of $101.75. Feeder heifers that weighed 725 to 850 lbs. sold for $90.50. To the north in Davenport, WA, feeder cattle remained steady with light to moderate demand. Steers averaging 450 lbs. sold for $119 and their heifermates were worth $97 to $102.75, with the higher price being paid for thinner cattle. To the east in West Fargo, ND, lighter feeder steers weighing 650 lbs. and less sold $1 higher. Heavier steers sold $2 to $3 lower when compared to the previous week. Feeder heifers sold unevenly steady. There was good demand, especially for lighter weight cattle. Steers averaging 525 lbs. sold for and average of $119.91, while one set of thin steers weighing 750 lbs. called for $106.75. Heifers averaging 582 lbs. were worth $107.74 and females that weighed 720 lbs. sold for $93.93. In La Junta, CO, steers and heifers were steady last week as were the yearling heifers. Steers weighing between 505 and 575 lbs. sold for $125 to $129 and a half load of fancy, five-and-one-half weights, called for $130. Females averaging 590 lbs. sold for $109 and yearlings, weighing between 705 and 745 lbs., were worth $98.75. In McCook, NE, steers and heifers remained steady last week. One set of steers weighing 470 lbs. in thin condition, sold for $147.50. Another set weighing 488 lbs. were only worth $137.79. Heavier weight steers were also steady with 44 head of steers, averaging 761 lbs., sold for $106. Five weight females were worth $119.50. To the south in Salina, KS, feeder steers 350 to 600 lbs. and heifers 400 to 650 lbs. were steady to firm on a fairly light test. Steers that weighed 600 to 1,000 lbs. and females weighing 650 to 850 lbs. were $1 to $2 lower. Steers averaging 525 lbs. sold for $126.98 and their heifermates sold for $115.58. Heavier steers weighing 775 lbs. were worth $106.79 and their female counterparts sold for $97.92. Oklahoma City had another large feeder calf run last week with almost 7,000 head. Feeder steers and heifers were $1 to $3 higher. Stocker cattle were $3 to $5 higher with most advance on the six weights. Demand was very good overall for feeder cattle with several northern orders present. Stocker calves weighing an average of 632 lbs. sold for $128.21. Eight weight steers were worth $106.41 on a weighted average. Five weight females called for $112.85, while their fleshy counterparts sold for only $106.10. The yearling females weighing 865 lbs. sold for $93. Further to the east, in Joplin, MO, steers sold steady, except those weighing 550 to 700 lbs. They were $2 higher with an increase on long time weaned steers. Heifers weighing 400 to 600 lbs. were $2 to $5 lower. Demand and supply was moderate. Steers weighing between 500 and 600 lbs. averaged $123 while those fleshy in type at the same weights averaged $113.75. Yearling steers averaging 750 lbs. were worth $106.25. Five weight females were worth $108 and their fleshy counterparts were only sold for $102.25. Yearling females weighing between 735 and 800 lbs. sold between $93.50 and $97. In Clifton, TX, feeder heifers and steers remained steady last week. Trade was active and demand was good on all classes. Steers weighing between 500 and 600 lbs. sold between $112 and $123.50. Their heifermates were worth $110 to $115.

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Thursday, December 20,2007

Obituary

by WLJ
May 9, 2005 Well known cattle fieldman William S. Roche, 85, resident of Galt and Lodi, CA, died May 1, after a battle with Alzheimer’s Disease. Born Oct. 26, 1919, in Early, IA, Bill Roche was a true gentleman, who enjoyed the cattle business, his family and painting. Roche graduated from Iowa State University in 1941 with a B.S. in Agriculture and entered the military in 1942 where he received a Bronze Star. After returning home he married Joyce Kischer in 1946. He worked as a fieldman and county youth extension director and later became the Secretary of the Northwest Iowa Angus Association. In 1954 he moved to California to work for the American Aberdeen Angus Breeders Association, then became the West Coast Regional Manager and Western Director of Regional Managers for the American Angus Association. In 2001, Roche was inducted into the Angus Heritage Foundation, which honors and identifies distinguished persons who have made major contributions to the improvement and advancement of Angus in the United States. Roche is survived by his wife of 59 years, Joyce Roche, Galt; daughter Kris Roche, Davis; son Steve Roche (Janet), Davis; grandchildren Joelle and Jacob Roche; sisters Miriam Dokken, Nebraska, and Avis Reid, Kansas, and many cousins. © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Thursday, December 20,2007

Fed cattle prices rise slightly after early trade

by WLJ
After some early week reductions in the number of fed cattle being harvested, the beef cutout value regained traction last week and rose more than $5 in a period of three days. Early in the week, Tyson Foods Inc. confirmed it had closed two plants and reduced the number of hours being worked at others due to packing house loses caused by poor movement of beef at the wholesale and retail levels. The industry’s average margin last Monday was estimated at a negative $18.65 per head, compared with a negative $18.70 on Friday and a negative $7.05 a week ago, according to HedgersEdge.com. The cut backs in harvest to just 106,000 head last Monday were short lived as the cutout rebounded from nearly two weeks of lower trade. However, by midweek, packers were hard at work slaughtering cattle after margins moved back into positive territory. By last Thursday, packers were averaging $18.05 per head and they harvested an estimated 125,000 head, despite continued difficulty moving beef loads out of cold storage warehouses. That compares with 123,000 head for the previous Thursday and 125,000 a year earlier. As mentioned, the beef cutout values rose sharply last week as a result of those slaughter cuts and last Thursday, Choice values again moved higher to $161.32, gaining 46 cents in morning trade. Select prices rose $1.45, to $148.40, although volume for much of the week was light to moderate. The difficulty in the packing sector was not carrying over to other segments of the industry. Early trade in the Corn Belt, Nebraska and Colorado on Wednesday last week, at prices steady with the previous week, fueled speculation that when trade finally broke loose, it would be at better prices. Early prices were 50 cents higher, from $96-97, with dressed sales unevenly steady from $153-155. Feedlots in Iowa and Minnesota sold a few cattle on a live basis at prices steady with the prior week at $96-97. Dressed sales in the region were called $1-2 higher, from $155-156. Trading in the southern Plains last Thursday was reportedly light to moderate at $97- 97.50, which was 50 cents to $1 higher than the prior week when live sales developed in a range of $95.50-96.50. What a difference a year makes—during the same week last year, fed cattle prices averaged $78.37 live and $124.14 dressed. Cow slaughter rates have started to drop off slightly from the higher than normal number seen over the past several months. Last week, that drop added additional support to the surging cow carcass cutout values. Last Thursday, the cutout added $1.24, to trade during the day at $118.57. The 90 percent lean was also higher, trading at $149.24, and the 50 percent at $79.59. Those prices compare with a cow beef cutout at $107.43 with the 50 percent at $49.27 and the 90 percent at $132.22. The volatility in the fed cattle markets is expected to continue through the summer. Weather and beef demand are going to be key considerations going forward. USDA reported last week that 53 percent of the corn crop had been planted. However, rainfall totals in the Midwest, which exceeded seven inches in some places, mean that the crop is going to be replanted due to erosion and seed rot. These setbacks and delays are likely to work against the end of the year yields once they are tallied. Corn prices last week were moving higher and many traders were reportedly waiting on the first 2007/2008 supply and demand report due out last Friday. Analysts expected the planting number to remain steady with the planting intentions report at 12.7 million acres, although many now believe that number is higher than what will actually make it in the ground this year as a result of weather issues. December new crop corn futures last Thursday on the Chicago Board of Trade were trading slightly lower for the day at $3.61. Meanwhile, cattle futures last Thursday were doing better. After downward movement early in the day as a result of funds rolling out of the June contract, prices moved higher to end the day in positive territory. The higher cash trade and the upward trend in boxed beef were the major market factors during the session. June live cattle issues ended the session up 30 points, closing at $92.70. August gained 40 points and October closed up 65 points, ending at $92.40 and $96.40 respectively. Feeder cattle Now that most producers have secured the cattle needed to graze summer pastures and the spring runs in most areas have ended, feeder cattle prices have stagnated slightly. Although the trend remains higher in some areas and the Chicago Mercantile Exchange Feeder Cattle index remains above last year at $106.99, compared to $99.40, numbers of cattle moving through auction markets have slowed and trends have become more difficult to calculate. According to Darrell Mark, agricultural economist at University of Nebraska-Lincoln, the improvement in pasture conditions over last year has helped sustain the market in recent weeks with more strong demand for lightweight cattle for grazing ahead. “Across the U.S., pasture and range conditions were slightly better than last year at this time,” Mark said. “Recent rains and good growing conditions in drought-stricken areas have resulted in some of the best grazing conditions in years in some localized areas. This should lend support to the feeder cattle market over the next few weeks as demand for lightweight calves for grass improves.” He noted that the good demand and strong prices are despite a 20-cent rally in the corn market from a sell-off two weeks earlier. “Last week, however, feeder cattle prices in Kansas were $1.50-2 lower, but Nebraska prices were stronger, with steer calf prices steady and yearling steer prices advancing more than $4,” he said. “Interestingly, the price of dry distillers grain (DDG) in Iowa averaged $2.50/ton lower last week even as corn increased. Expressed as a percentage of corn price on a dry matter basis, this is the cheapest DDG price relative to corn so far in 2007.” In California, conditions remain much drier than normal and wild fires have been plaguing the southern portion of the state this spring. According to Jake Parnell, manager of Cattlemen’s Livestock Market (CLM) in Galt, CA, grazing conditions in the central valley have deteriorated to the point that producers are shipping butcher cows and pairs to the market earlier than normal. “Out in the west part of the valley, it's been very dry and the grass is pretty much done. To the east, they got a little rain last week and their grazing conditions are a little better,” he said. “The runs have been pretty good, with most of the cattle heading out of state to places in the central U.S.” Parnell said prices at CLM have been good for much of the spring and continue to average relatively high. “Prices paid for heavy cattle have been very good; light cattle prices this week were steady,” he said. Farther to the north in Vale, OR, prices paid for grass calves and yearling cattle were also reported to be fair and steady. Cattle in the 500-600 lb. range sold between $109 and $121. Those in the 600 to 700 lb. class were $105-115 and seven to eight weight yearlings brought $93-100. In Billings, MT, last week, feeder cattle were too lightly tested to offer any price comparisons. However, demand was reportedly good for stockers and feeders of all weights. There was also moderate to good demand for cow/calf pairs. Many of the young pairs were in thin to very thin flesh condition, however. In Aberdeen, SD, a good run of more than 2,500 head of feeder steers and heifers brought prices steady to $1 higher than the previous week with good demand across all classes of cattle. Feeder cattle prices in La Junta, CO, were called steady with the prior week. Yearling feeder steers and heifers were also steady to $1 lower. To the east in Dodge City, KS, there were not enough steers or heifers of any weight class for an accurate market test. However, in a very limited test, steers in a range of 750-900 lbs. were called firm to $2 higher; heifers 700-800 lbs. were reported to be firm to $1 higher. Despite heavy rain and widespread flooding in Missouri, prices for cattle on offer last week remained strong. In Joplin, MO, compared to the previous week, steers under 650 lbs. were steady to $2 lower, those over 650 lbs. sold steady. Hheifers under 600 lbs. were also steady, while those over 600 lbs. were $2-3 higher. Demand was called moderate to good for weaned, vaccinated calves and yearlings, moderate to light for new crop calves on moderate supply. In Oklahoma and other portions of the southern Plains, continued heavy rainfall last week added to the already good pasture conditions and supported the prices being paid for feeder cattle. In Oklahoma City, OK, feeder steers and heifers sold mostly steady last week. Stocker cattle and calves were steady to as much as $4 lower, with a full decline on six weights. Weigh ups average to gaunt early in the day and mostly average later, contributing to the price swings. The day's supply included a larger percentage of number two muscled cattle compared to recent weeks. Demand good for feeder cattle and light weaned calves, moderate for others. The weather picture was similar farther down in Texas, where severe weather dropped several inches of rain last week. In Abilene, feeder steers under 600 lbs. were $1-2 higher; those over 600 lbs. sold $1-3 higher. Feeder heifers under 600 lbs. were steady, while those over 600 lbs. brought prices called $1-3 higher.

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Thursday, December 20,2007

Dressed trade holding steady at $155

by WLJ
A moderate to fairly active trade developed in the northern Plains last Thursday with dressed trade in a range of $154 to $155.50, steady to $1.50 higher than the prior week. The southern feedlot asking prices of $99 and higher remained well above packer bids of mostly $94-94.50. Market analysts last week said they expected much of the week’s trade could hold off until USDA’s cattle on feed report was issued on May 18. With pre-report estimates spread all over the board, the direction the report would provide was unclear. The average estimate for the number of cattle on feed as of May 1 was 97.9 percent, with a range of 95.7 to 100 percent of May 1, 2006. The expectations for April placements were much wider. The average estimate for the number of cattle placed was 96.1 percent of last year, with a broad range of estimates from 83.8 percent to 106 percent of April 2006. According to Erica Rosa, agricultural economist for the Livestock Marketing Information Center, much of the variation between estimates is a result of the differences in pasture and range conditions across the U.S. “There are a lot of people who are looking at forage conditions that are much better than last year, and they are taking advantage of it by holding calves back. On the other hand, there are those areas where range conditions haven’t improved or have gotten worse. Forage supply is tight right now and, in those cases, they are sending calves to feed earlier than normal,” Rosa said. An already tight supply of feeder cattle is also adding to the issue. “Pasture and range conditions across much of the country are well ahead of where we were last year but in some places like the southern Plains, feeder cattle supplies are relatively tight,” Rosa said. “There are some additional factors as well. Feeder cattle imports from Canada are up over last year, and imports from Mexico were up last month; so those factors are all figured into the pre-report numbers and are causing the wide range of estimates.” In the near-term, those factors were giving a boost to feedlots, which have been enjoying solid margins since the start of the year. Packers last week, too, were enjoying profitability. HedgersEdge.com estimated that packer margins were positive at $59.40 per head as of Thursday. In an effort to take advantage of those margins, packers sped up processing chains over the prior week’s level. For the week to date through Thursday, packers had harvested 503,000 head of cattle, 20,000 more than the previous week and even with the same week a year earlier. Retail demand has improved seasonally ahead of the start of grilling season. Rosa said beef cutout prices were strong after some strong fill-in trade before the Memorial Day holiday and graduation. Choice cutouts last week leveled out on Thursday at $166.54 on the Choice, down 63 cents from the prior day, while Select gave back 38 cents, to trade at $153.62 at mid-day. “The Choice cutout has been fairly strong lately,” she said. “We haven’t seen the big gains that we saw a week ago, but the interaction between beef, pork and poultry has been supportive of the cutout values. Chicken is nearly double the level it was at this time last year which has added to the attractiveness of beef for consumers and added to the cutout,” she said. According to National Cattlemen's Beef Association Chief Economist Gregg Doud, another factor supporting the cutout is the continued expansion of Asian trade. According to USDA figures, the amount of beef being shipped to South Korea has exploded in the past month. “Shipments totaling 7,200 metric tons, or 15.9 million pounds, have added as much as $40 to $48 million in sales to the industry. According to the same USDA report, short ribs and short plate ribs sent to Korea have put $16/head on each and every head slaughtered over the past month,” he said. Doud estimates that's approximately $38 million that has been injected back into the industry as a result of Korea alone. On the Chicago Mercantile Exchange (CME) last week, prices were mainly pushed by commodity fund trading and spreads were the main feature for much of the week in advance of the cattle on feed report. At the bell last Thursday, contracts were lower across the board. June was down 52 points, at $92.42. August was the biggest loser of the session, dropping 92 points to close at $91.80, and October shed 52, closing at $96. Feeder cattle Cattle ready to go to grass are still in high demand but futures prices on fall feeder cattle do not look quite as promising as they were a year ago. Feeder cattle prices remained steady throughout last week. The CME index remained unchanged, closing at $107.91 Monday and Tuesday. However, last Thursday, May futures dropped 12 points to close at $109.20, August remained steady, and September futures dropped 22 points to close at $112.65. Encouraged by the increase in fed cattle prices, feedlots paid up to $106 last week for eight weight steers and $111 for mid seven weights. “With the increase in the fed cattle prices, we are able to lock in some decent prices for cattle that will be harvested down the line, so it’s a little less risky to put some extra money down for feeder cattle right now,” said Tom Johnson, northeast Colorado cattle feeder. “My only concern is the decreased futures market for feeder cattle. That is going to be a tough deal when guys around here get ready to sell calves this fall.” Grazing conditions remain good in most of the western U.S., prompting an increase in demand for lightweight, thin cattle ready to go to grass. “It’s been a blessing. We’ve got plenty of grass and we’re going to need it,” said one producer in Yuma, CO. “With the increased cost in corn prices, these feedlots are just not going to want these cattle until they are a lot heavier than what we’ve sent in the past.” Rosa agreed, saying that many producers were opting to hold cattle back from the feedlot for a longer period of time, a trend she predicted would continue as long as corn prices remain high. “Plantings have really ramped up in the past week, which should cause corn prices to weaken some. Breakeven prices for commercial feedlots have been in the black since March when they were seeing returns averaging about $40 per head. In May, returns were in the mid-$70s and we expect them to remain in the black through at least mid-June,” She said. That positive news is creating good demand for light stocker cattle and has held prices strong as cattle feeders continue to purchase light calves that are thin in type. With the recent moisture, many herds are looking to rebuild, driving up the value of replacement quality females. In Davenport, WA, feeder cattle were steady to firm in a light test. Trade was moderate with good demand on all classes. Feeder steers averaging 541 lbs. sold for $124 and females that were similar in weight were worth $102. There was an offering of heavier replacements, females weighing 805 lbs., and they sold for an average of $94.82. To the east in Billings, MT, feeder cattle offerings were also limited but the demand on all classes was good. Steers averaging 560 lbs. sold between $119 and $122.50 while heavier weights, averaging 850 lbs., called for $104.50. Heifers averaging 550 lbs. sold for an average of $110. Further east in West Fargo, ND, steers weighing less than 650 lbs. sold $1 higher. Heavier steers weighing 650 to 950 lbs. were $2 to $3 lower. Feeder heifers sold unevenly steady. There was good demand, especially on lighter weight cattle. Five weight steers averaged $119.91 and seven weights sold for an average of $106. Six weight heifers were worth an average of $103.44 and eight weights sold for $93.19. In Torrington, WY, steers and heifers sold for $2 to $3 higher with most of the advance on six and seven weights. Demand was good with the best noted for thin fleshed cattle suitable for grass. Steers averaging 506 lbs. sold for $130.76. Another set of fancy steers that weighed 538 lbs. were worth $151. One thin set of steers averaging 653 lbs. sold for $132 while their value added counterparts were only worth $128. One group of fleshy seven-and-one-half weights sold for $105. Another group of thin females weighing 559 lbs. sold for $124.50. Thin six-and-one-half weight females were worth $117.25. Further south in La Junta, CO, steer calves were steady to $1 higher. Heifers were steady to $2 higher with the advance on six and seven weights. Trade was moderate to active and demand on all classes was good. Steers weighing 510 lbs. were worth $128 and seven weights called for $106. Heifers weighing between 500 and 545 lbs. sold between $114 and $117. Those averaging 670 lbs. were worth $106.50 to $108. In Oklahoma City, OK, with over 7,400 head last week, feeder steers and heifers were steady to $3 higher. Demand was very good for feeder cattle, especially those over 800 lbs. Steers weighing an average of 546 lbs. in fleshy condition sold for an average of $123.21. Steers averaging 831 lbs. were worth $106.18. Five weight heifers sold for an average of $118.70 and their fleshy counterparts only called for $112.76. Eight weight females were worth an average of $98.09. South in Dalhart, TX, feeder steers and heifers under 600 lbs. sold $2 to $4 lower while those over 600 lbs. were $3 to $5 higher. Trade was active and demand was good. Steers weighing between 400 and 500 lbs. sold between $133 and $134. Those averaging 650 lbs. were worth $107.13 and their heifermates sold for $101.50. Five and six weight females sold between $105.50 and $110.50.

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Thursday, December 20,2007

State meat inspection bill introduced

by WLJ
A bill introduced in the U.S. House of Representatives last week would allow state-inspected processing plants to ship beef across state lines just like federally inspected plants. Reps. Earl Pomeroy, D-ND, and Roy Blunt, R-MO, introduced H.R. 2315, the New Markets for State-Inspected Meat and Poultry Act of 2007, along with 15 other cosponsors.   Federal law requires USDA to inspect all meat products. In the 1960s, Congress created state inspection programs that are mandated to be “at least equal to” the federal inspection program. Perishable products—including milk and other dairy items, fruit, vegetables, and fish—are freely shipped across state lines after state inspection. But standard meat products, like poultry, beef, and pork, are prohibited from interstate commerce despite decades of meeting or surpassing the federal inspection standards. This bill would remove that prohibition. “It’s unfair that smaller beef producers are not able to ship and sell their products outside their own state when interstate sales of other food products aren’t restricted at all,” says Colin Woodall, National Cattlemen’s Beef Association’s executive director of legislative affairs. “This outdated policy hurts many of our country’s small businesses who deserve an equal right to compete in the national market.” Currently, state-regulated inspection programs exist in 28 states. These programs serve about 2,000 small or very small establishments. Blunt says the existing law penalizes smaller companies while companies from 30 foreign nations are permitted to sell meats freely in any state. “If my family in Texas enjoys safe, delicious beef from a local, state-inspected business in Amarillo, why can’t a family in Oklahoma buy the same beef?” asks Woodall.

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Thursday, December 20,2007

USDA clears swine for processing

by WLJ
Human health risk assessment updated. Testing confirms that meat from swine fed rations supplemented with pet food scraps containing melamine and related compounds is safe for human consumption, prompting USDA to allow swine held on farms to be released and approved for processing. Testing of meat from swine exposed to the feed in question confirms that melamine and melamine compounds do not accumulate in pork and are filtered out of the body by the action of the kidneys. The testing also bolsters the conclusions reached by a human health risk assessment that there is a very low risk of human illness from the consumption of meat from animals exposed to the feed in question. Swine known to have eaten this feed appear healthy, which will be confirmed as these animals undergo the rigorous inspection that USDA’s Food Safety and Inspection Service (FSIS) provides for all meat and poultry prior to processing. There were approximately 56,000 swine that consumed the feed in question and were held on farms in California, North Carolina, South Carolina, New York, Kansas, Utah and Illinois. USDA will provide compensation to producers for certain additional costs incurred as a result of voluntarily holding the animals. Approximately 100 million swine are processed each year in the U.S. The process for testing meat from swine was validated by FSIS. Human health risk assessment The human health risk assessment announced by the Food and Drug Administration (FDA) and USDA last week has been updated. It still concludes that there is very low risk of harm to humans from eating food containing low levels of melamine or related compounds. The updated risk assessment concludes that in the most extreme risk assessment scenario, when scientists assumed that all the solid food a person consumes in an entire day contained melamine and the melamine compound cyanuric acid at levels potentially present in the meat, the potential exposure is about 250 times lower than the dose considered safe. Translated to consumption levels, this means that a person weighing 132 pounds would have to eat more than 800 pounds per day of pork or other food containing melamine and its compounds to approach a level of consumption that would cause a health concern. Previously, the agencies reported that the potential exposure was about 2,500 times lower than the safe level. The initial human risk assessment assumed that tests of swine meat detected melamine and its compounds. The testing validation process, completed on May 12, revealed that while the swine meat test detects melamine, it cannot detect melamine related compounds. The updated assessment calculates risk based on the new updated laboratory information that accounts for the presence of melamine and cyanuric acid, a melamine related compound detected in the contaminated feed. In addition, the original risk assessment assumed that testing could detect levels of melamine and related compounds as low as 10 parts per billion (ppb) in pork. The new assessment assumes that testing can detect levels only as low as 50 ppb in pork, a more conservative assumption, and an even higher level of 100 ppb is assumed in order to account for the potential presence of cyanuric acid, in addition to melamine. FDA and USDA are in the process of identifying scientific experts who would be charged with reviewing the updated risk assessment. They will be asked to provide their views to FDA as quickly as possible, with the intent of finalizing the risk assessment within several weeks. Update on other affected products Approximately 80,000 poultry continue to be held at USDA’s request at farms in Indiana while a validated test for detecting melamine in poultry meat is developed. That test is expected later this week. FDA is continuing its investigation into the presence of melamine and its compounds in fish feed manufactured by the Canadian company Skretting. The company is recalling all fish feed from all commercial fisheries and fish hatcheries that may have received it, including those in the U.S. FDA has confirmed there are two U.S. commercial aquaculture establishments that received the feed. The fish in those two establishments are on hold and samples of the fish and the feed are being tested for melamine levels. Based on the human risk assessment, there is very low risk from eating fish that consumed feed containing melamine. USDA and FDA continue to conduct a full and comprehensive investigation. As additional information is confirmed, updates will be provided and decisions will be made using the best available science to protect the public’s health.

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