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Thursday, December 20,2007

Pelton Simmental/Red Angus honored as BIF Seedstock Producer of the Year

by WLJ
The Beef Improvement Federation honored Pelton Simmental/Red Angus with the 2007 Seedstock Producer of the Year Award June 7 during the organization’s 39th annual meeting in Fort Collins, CO. The ranch is owned by the Lynn and Gary Pelton families and managed by Lynn Pelton. Pelton Simmental/Red Angus is a family-owned and operated seedstock business located near Burdett, KS. Gary and Donna Pelton and their sons, Jason, Aaron and Burke, and Lynn and Sue Pelton and their daughter, Shanna, and son, Dustin, began a partnership in 1976 which later was incorporated into a diversified farm and ranch operation. The Pelton business consists of 4,300 acres of grass, 800 acres in the Conservation Reserve Program, 4,700 acres of cultivated land and 500 head of registered Red Angus, SimAngus and Simmental cows. About 200 cows calve in the fall; the remaining 300 calve in the spring. Aaron, Dustin and Dustin’s wife, Kendra, have joined the business full-time. The purebred operation began in 1972 with 12 bulls being sold to local cattlemen. During the 13th annual sale March 22, 2006, 150 Red Angus, Sim Angus and Simmental bulls and 120 females were sold into 13 different states. Including private-treaty sales, a total of 180 bulls were sold in 2006. With the use of an extensive embryo transfer (ET) program and proven, predictable genetics, a genetically strong cowherd has been developed by utilizing every available economic and performance measurement. Along with a strong genetic base, a customer service program was developed and emphasized for the sole purpose of providing “value-added marketing opportunities” for customers. In the past three years, the commitment to helping market customers’ calves through various avenues has been especially rewarding. Two alliances, with which the Peltons are involved, provide feedlot and carcass data on animals going through each program. In addition, a Pelton Program Sale, conducted the first Friday of November, has proven very successful for providing customers an opportunity to market replacement-quality females and performance steers. In 2006, more than 1,250 head were sold during the program sale. Since Lynn’s graduation from Kansas Slate University in 1975, the program has become very hands-on. Whether it be day-to-day care of the cowherd, sire selection and mating decisions, heat detection and artificial insemination work, ET preparation, weaning and development of bulls and replacements, putting up and grinding feed, various aspects of sale management and promotion, financial and breed association bookwork, computer time, customer service and marketing options, or hosting tour stops and judging workouts—the family works together and utilizes the strengths of each person to better enhance the efficiency of the operation. The Kansas Livestock Association nominated Pelton Simmental/Red Angus.

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Thursday, December 20,2007

COMMENTS

by WLJ
June 20, 2005 The market broke last week. We were expecting it to become softer, but the most recent news on the ongoing BSE situation reared its ugly head again—and for no real good reason. The USDA held their BSE roundtable meeting recently in Minneapolis, MN, and a multitude of interested groups played their cards. Then, Friday evening, the Office of the Inspector General (OIG), which is USDA’s watchdog office, made the announcement that they wanted to send samples to Weybridge, England, for more testing on a suspected Texas cow that showed a false positive last November. OIG wanted all three preliminary positive cases in the U.S. tested again with the widely used Western blot test. USDA uses only the immunohistochemistry (IHC) test, which is considered the “Gold Standard” for BSE testing. I have been told that the IHC test is utilized by the USDA because it will specifically identify cattle for BSE, while the Western blot test will uncover a wider variety of prions, such as scrapie and other mutated proteins. This is why Japan has come up with BSE tests in cattle under 30 months of age. Canada also uses this test, which would be why they contend that their testing is better than the USDA’s chosen IHC test. It’s a little perplexing why OIG came out with this announcement the day after Ag Secretary Mike Johanns held his industry roundtable meeting on BSE. Of the nine representatives on the panel, seven felt USDA’s BSE surveillance and firewall systems are working and doing the job well. The two who disagreed that the surveillance and firewalls have been successful were—you guessed it—R-CALF and the National Farmers Union. One could speculate that someone in the OIG may have had an axe to grind. One speaker at the roundtable suggested, there may be a little budget building going on with the OIG. And we’ve heard some rumblings that the company that manufactures the rapid BSE test forced the issue and asked OIG to retest the preliminary positive samples to prove their test is 100 percent accurate. OIG is like Internal Affair in a police department trying to find corruption. Consumers Union had been bantering with USDA since February to test the suspect BSE samples with the Western blot test. OIG felt that since the Texas cow sample tested positive to the rapid BSE test and then tested negative to the IHC test that more testing was justified and decided to test all the samples. The Western blot test showed one sample testing positive and the other two negative. As a tiebreaker, they were trying to send the samples to Weybridge. Now we’re hearing that they may not have enough sample left to send to Weybridge for more testing. It is without question in every cattle producer’s best interest to get this BSE thing settled and agree on the rules. The rub with Canada is just causing more and more press on BSE and creating more market risk for all producers, and I don’t know anyone in this business willing to take on more risk. USDA has gone out of its way to find BSE; nearly 385,000 head of cattle have been tested for the brain wasting disease. One wouldn’t think that there would be any conflicting issues within the cattle and beef industry’s fight to combat the issue. When it comes to eradicating BSE, there is nothing more that anyone knows how to do to prevent BSE from going any further. Statistics show the systems in place are working. The feed systems and the surveillance systems have done a pretty good job. There are 150 people worldwide who have died from Creutzfeldt-Jakob disease (CJD), the human equivalent of BSE. That tells us the odds of anyone getting CJD through BSE infected meat are almost nil. This thing is taking on an ugly complexion. On one hand we have the scientists saying that with these preventative measures in place, the product is safe and poses no human or animal health issues. On the other hand, we have lawyers and the judiciary saying: No, it’s not safe. Could it be possible that this entire issue is about money and not the consumer? My thought is to always follow the money. — PETE CROW

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Thursday, December 20,2007

LETTERS

by WLJ
June 20, 2005 Dear Pete: I just finished reading Steve Kay’s last article in the (June 6) Journal where he says the beef checkoff should be $2 or $3 a head. I heartily agree. In fact, when someone comes up to me and says, “What do you think of that damn $1 checkoff?,” I say I don’t agree with it. “I think it should be $2,” I usually say. That usually ends the conversation. I did think Steve had a point that LMA should get a small percentage, say 10 percent, of the checkoff for doing paperwork. Actually, $2 per head at today’s prices is less than the $1 was, percentage-wise, when it was put in. I do think the checkoff has done the most good on the research part rather than the advertising part. Sincerely, Bob Dickinson Gorham, Kansas

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Thursday, December 20,2007

PASTURE MANAGEMENT

by WLJ
June 20, 2005 Don’t monitor pastures after problems, monitor before they occur. This statement makes a lot of sense to me. However, most land monitoring is conducted after problems have occurred. Monitoring land health conditions has been a passion of mine for a long time. Conventional land monitoring, similar to what most government agencies do, usually is conducted after something has happened or changed. We taxpayers send out our range scientists to document environmental changes and conditions. We do a lot of monitoring this way to defend ourselves. I view this as wasteful, expensive and time consuming, which is totally non-proactive. Rangeland monitoring folks layout transects (a line or plot with points on the land). They inventory the vegetation’s ecological state, habitat types, plant species, plant density, plant frequency, canopy cover, basal area, trends and take a host of other measurements. They often compare their findings with ecological climax (peak) plant communities, particular plant species that would be growing in that spot if there were no disturbances. When they find big differences, they document a problem after the problem has taken hold. I know from experience—and it should be obvious—that this kind of monitoring is down-right slow in addressing, finding and fixing problems. I do know that certain organizations and people need to defend themselves. However, these studies can, and do, overlook obvious problems, such as new invasive plants, spot overgrazing, poor water cycling, inadequate organic matter or plants dying from a lack of disturbances. Instead of coming onto the land after livestock have left, wouldn’t it be worthwhile to simply observe animals while they are grazing? And wander around conducting what I call pasture walking to prevent problems? Try this as an example of proactive land monitoring: Get a pair of field glasses, get as close to the animals as you can and zoom in on what they are eating. Sit there for awhile and watch them closely. Then walk over to where they were grazing and closely examine the plants they were biting. If you find big patches of what was fast-growing, green grass, chopped off at ground level and the animals have been in that area for quite some time, I’d say, they are overgrazing. You have just found a problem. If you do this early enough in the game, and have an alternative plan to deal with these findings, you save badly needed future forage production. Proactive monitoring is really an ongoing effort to directly tie management to monitoring. Right now, on the spot, today, adjust your grazing management to prevent common problems from occurring or prevent them from becoming big. I know that this is somewhat time consuming, but perhaps by becoming an astute grass manager you can graze longer into the fall and save expensive hay feeding that greatly reduces wintering costs. In other words, give proactive monitoring a focused purpose that grows more grass, which becomes well worth your time and effort. Conventional land monitoring records end-results, collects data after treatment, determines what has happened, proves results and recommends change after problems occur. This is slow to make changes and does not fix problems. Proactive land monitoring controls results, collects data during treatment, monitors to make things happen and prevents negative results. Changes are made before problems occur or become significant. Here is a suggestion on how to make a proactive land monitoring program pay for itself. While the livestock are still in the pasture, observe them grazing. Note the location they prefer to graze. Your purpose is to visit these areas often enough to check the livestock grazing progression toward some predetermine early warning indicators. Early warning indicators to look for include: 3 Spot over grazing —Check for small areas where the livestock seem to concentrate. Use a quick portable electric fence to let these areas recover. 3 Down yellow colored litter—Look between the live plants to keep the soil surface covered. 3 Stubble height—Leave enough green grass leaves behind for quick regrowth so that you can come back to this area again. 3 Too much trampling—Prevent soil compaction and excessive livestock trailing from hungry cows. Move them often during fast plant growth. 3 Standing grass—Leave enough grass behind to prevent wind and water from removing valuable soils. 3 Gray-colored dead grass––Locate hard to graze spots and move livestock there to rest the overgrazed spots. Be innovative using low-stress livestock handling and herd placement. In other words, become a better herder. You want to prevent things like very short green grass, bare soil, or areas with no litter present. That is the future organic energy that healthy profitable grassland needs. Look for the right time to move livestock before they get hungry. Check to see if they still can get full-mouth bites of grass, and move them before they start wandering around pressuring fences looking for greener pastures. To do this you must have a flexible grazing plan that will allow for early adjustments. Proactive monitoring will also help you to know when it’s safe to come back to a previously-grazed pasture. I know that I came down hard on conventional land monitoring. I know conventional monitoring keeps track of long-term vegetational change. But, I also know from experience that this expensive data goes all too often unused. So please consider proactive monitoring and good grass management to prevent problems. This kind of on-the-spot monitoring can, and will, pay big time dividends. — Wayne Burleson (Wayne Burleson is a land management consultant working out of Absarokee, MT. If you have any questions, feel free to contact Wayne at 406/328-6808 or e-mail him at rutbuster@montana.net. He also has an educational Web site at www.pasturemanagement.com.)

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Thursday, December 20,2007

Bill will remove restrictions on state inspected meat

by WLJ
Congressman Zack Space, D-OH, was expected to introduce legislation last week that would allow meat processed at a state facility meeting federal inspection requirements to be shipped across state lines. This will dramatically reduce the distance producers will have to travel to sell their products, dramatically expand the market, and generally reduce costs. “Requiring federal inspection for interstate sale has created an unnecessary burden on our farm producers,” Space said. “State facilities use federal guidelines as a baseline standard, and many facilities exceed those requirements.” “During my Farm Tour earlier this year, the number one request from livestock producers I spoke with was changing this policy so state facilities can approve meat for shipment across state lines. This will reduce the distance farmers have to travel to bring their products to market, greatly increase the markets to which they can sell, and bring down costs,” Space said. This bill removes unnecessary restrictions on intrastate meat and poultry shipment for states that are able to prove to USDA that their meat and poultry inspection programs are equal to federal inspection standards. This legislation gives USDA the authority to perform random inspections of state-inspected plants to ensure their inspection requirements are equal to federal inspection requirements. If USDA finds that a state meat inspection facility is not equal to the federal inspection requirements, interstate meat restrictions will be imposed on the facility.

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Thursday, December 20,2007

Trent Stewart named 2007 WorldLivestock Auctioneer Champion

by WLJ
Trent Stewart didn’t prepare a victory speech for the 2007 World Livestock Auctioneer Championship (WLAC), saying he felt it would be “almost like bad karma” to do so. He may not have been prepared to speak, but he was ready for the contest. Stewart, of Redmond, OR, was named world champion after competition June 16 at the Springfield, MO, Livestock Marketing Center. The reserve world champion in the 44th annual WLAC was Ty Thompson, Billings, MT, and the runner-up world champion was Tom Frey, Creston, IA. Livestock Marketing Association (LMA) created and conducts the annual contest. Stewart, 32, was sponsored by the market he’s owned since 1997, Central Oregon Livestock Auction, Inc., Madras. This was his eighth year in the contest, and he won the reserve title in 2002 and 2006. An auctioneer for 14 years, Stewart attended the Missouri Auction School in Kansas City, and the World Champion College of Auctioneering in Bakersfield, CA. He told the audience at the evening awards banquet that he dedicated his victory to “everybody else who’s ever competed in this contest,” and he pledged, “I’ll try and be a great champion.” Thompson, 34, has been auctioneering since he was 19. He was sponsored by Public Auction Yards, Billings Live Stock Commission, and Northern Livestock Video Auction, all of Billings, and Winter Livestock, Inc., d/b/a Riverton Livestock Auction, Riverton, WY. Thompson has come close to the top title, finishing in the top 10 finalists six times, and taking home the reserve champion title twice. Not surprisingly, he said, “Sure, I’ll be back.” Frey, 46, was sponsored by the market he owns, Creston Livestock Auction, Inc., and Unionville Livestock Market, Inc., Unionville, MO. He’s also been among the top 10 finalists several times. The self-taught auctioneer has been in the profession for 30 years and also pledged to enter again. From LMA, World Champion Stewart won $5,000, a 2007 Chevrolet Silverado Extended Cab LT, and a custom-designed champions’ sculpture. The Silverado, given to the champion for one year, was provided by Lindsay Chevrolet, Lebanon, MO, the Official Dealership of the 2007 WLAC. The host Springfield Market awarded Stewart a custom-designed, championship diamond ring. From the Missouri Auction School, he was given the gold microphone award, and from the World Wide College of Auctioneering, the golden gavel award. The Resistol Hat Company, the world’s largest western hat maker, provided the three world titlists with custom-fit hats, valued at $1,000 for the world champ, $550 for the reserve champ, and $450 for the runner-up. The three champions and the seven other finalists received custom-designed belt buckles from LMA. LMA also awards the reserve champ $2,000 and Waterford crystal, and the runner-up champ a crystal gavel and $1,000. The Championship is an actual livestock sale, with buyers on the seats. The semi-finalists are judged on vocal clarity and quality, talent at keeping the sale moving, and bid-catching ability. Next year’s regional contests will be in Fort Payne, AL, Lamoni, IA, Dalhart, TX, and Turlock, CA. The June WLAC will be conducted at Durant Stockyards, Durant, OK.

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Thursday, December 20,2007

Prices closer to summer low

by WLJ
An active fed cattle trade developed in the northern region at midweek with prices trending $2-$3 lower for live cattle and $4 lower dressed. Nebraska feedlots sold 45,000 head at $86-$87 live and $1.37-$1.38 dressed. Colorado sold fed cattle at $86.50 live and $1.37 dressed, and Iowa feedlots sold 6,000 head at $1.36-$1.38 dressed. Trade in the southern Plains was still at a standstill with feedlots rejecting bids of $87 at midday last Thursday. Analysts were expecting trade in the $89 range when it finally occurred. The rapid decline has some market analysts scratching their heads at the fall. “The recent fed cattle price drop from the mid $90s to the low $90s occurred sooner than expected and raises questions about whether markets are merely weakening seasonally or as a result of something more fundamental,” said Oklahoma State University Agricultural Economist Derrell Peel. “Feeder cattle markets remain generally strong and, while no clear threats can be identified at this time, there is a lengthy list of factors that could inject volatility into cattle markets in the coming weeks and months.” Peel said some of the weakness is tied to the slumping boxed beef market. “The recent weakness in fed cattle prices is tied to a corresponding slump in boxed beef prices, the latest in a series of roller coaster of increases and decreases in wholesale beef prices this year. The current drop in boxed beef price raises questions about beef demand going into the summer. Memorial Day holiday beef sales appear to have been rather lackluster,” Peel said. “Sluggish macroeconomic indicators, high gas prices, and weaker pork exports are likely contributing to beef demand pressure. Anticipated increases in broiler production in the second half of the year will add additional pressure to meat supplies.” The Choice cutout dropped to $141.63 last Thursday. Select fell nearly a dollar to $136.01 in Thursday trade last week. However, volume remained lackluster and clearance levels indicate that the cutout will need to slide farther to increase sales and promote contracting. One bright spot for the beef trade is the continued strength in the boneless 50 and 90 percent trim as producers fill demand for grind product in advance of the Fourth of July holiday. With packer margins in the red, and heavy harvest volumes, the summer low might not be too far off. Retail demand should pick up going into July and wholesale buyers are likely to find value in the upper $130 range. Likewise, the fed cattle market has already slid the typical 14 percent from the winter/spring high of $100 to near the $86 mark, meaning fed cattle trends could reverse quickly, particularly as supplies tighten. According to University of Missouri Economists Glenn Grimes and Ron Plain, total cow slaughter for the year through the week ending May 26 was up 15.2 percent. “Daily cow slaughter was up 14.2 percent for the period, and beef-cow slaughter was up 16 percent. For the four-week period ending May 26, total cow slaughter was up 15.1 percent, dairy- cow slaughter was up 7.1 percent, and beef-cow slaughter was up 21.1 percent. The large beef- cow slaughter is probably due to the drought in the southeastern U.S. Calf slaughter through April for the year is up 25 percent from 2006,” Plain said. “This larger calf-slaughter and large cow- slaughter suggests the cattle herd is probably shrinking at a slow rate.” Adding to what could be a very tight supply of feeder cattle this fall, imports of feeder cattle have been running behind year-ago levels. “Feeder cattle imports from Mexico for January-April were down 21.4 percent. However, April feeder cattle imports from Mexico were up 3.8 percent from last year. Live-cattle imports from Canada in April were up 11.3 percent and total cattle imports for April were up 7.3 percent from 2006. However, total live-cattle imports were still down 7.1 percent for January-April compared to a year earlier,” Grimes and Plain said. The tight supply of cattle in the U.S. comes at a time when imports of beef coming from Australia, New Zealand, Canada and Uruguay are declining. “Overall shipments from these four countries, which account for 95 percent of fresh/frozen beef imports to the U.S., are down 5 percent through the middle of June,” according to Steve Meyer and Len Steiner, Chicago Mercantile Exchange (CME) analysts. The declining value of the U.S. dollar on the world market is reducing the profitability of bringing beef into the U.S. for sale. “Assuming everything else remains the same as in the latest USDA supply and use table, if beef imports are flat, it would remove about five points from per capita consumption, to about 64.8 lbs., and 1.4 percent lower than a year ago,” they said. The current USDA estimate places per capita consumption 0.6 percent below last year. Feeder cattle Feeder cattle prices remained strong last week in much of the country as feedlots jump into the process of contracting calves for the fall and winter months. Tight supplies of feeder cattle are expected to be supportive and herd expansion will add further upward price pressure. Peel said the cyclically low inventories, which were forced lower again last year by drought, are expected to begin building again in the second half of the year. “The question of the extent to which herd expansion resumes this year will have implications beyond this year but also immediately as renewed heifer retention will further limit feeder cattle supplies in 2007,” he said. “Forage conditions are significantly improved in the southern and northern Plains this year but the drought has emerged as a major factor in the Southeast. While cow herd expansion has clearly resumed in the center part of the country, offsetting liquidation in the Southeast may temper herd expansion once again.” Prices paid for feeder cattle in cash markets, which were mostly reporting light runs, closely mirrored contract trade on the CME. The CME cash index last Thursday stood at $107.39, while August contracts settled last Thursday at $108.10. September traded 7 points lower during the day, ending at $108.32, October feeders dropped 10 points, closing at $108.40, and November slid 50 points, ending the day at $108.20. Meanwhile, in auction market trade, feeder cattle receipts remain seasonally low. In Amarillo, TX, steers weren’t present in enough quantity to determine a market trend, however, feeder heifers under 600 lbs. were called steady on a limited test, while those over 600 lbs. were called steady to $2 higher. At Oklahoma City, OK, where producers continue to experience good precipitation, feeder steers and steer calves sold firm to $2 higher last week, with the exception of a few six weight steer calves which were $2 lower. Feeder heifer and heifer calves sold steady with the prior week, with moderate to good demand on all classes with the heaviest action of steers over 800 lbs. In Springfield, MO, last week, sliding fed cattle prices and high corn took their toll with steer calves moving $3-6 lower. Yearling steers were called steady to $3 lower and heifers were steady to $3 lower, with only the front end kind trading at steady money on moderate to light demand and moderate to heavy supply, including a number of program cattle included in the offering. To the west in Hub City, SD, last week, feeder steers and heifers sold $2-3 lower on several long strings of steers and heifers and farther south in La Junta, CO, steer and heifer calves were reportedly selling for mostly steady money.

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Thursday, December 20,2007

Cattle-on-Feed May marketings down; to pressure summer f

by WLJ
USDA= s June 1 Cattle-on-Feed report was called mostly bearish to the summer and early fall fed markets, while being friendly to cattle marketed at the end of the year, beginning of 2006. Analysts said that May marketings and volume of A heavy-weight@ placements were not friendly at all, while a significant decline in all other weights of cattle placed was very good news. According to USDA= s National Agriculture Statistics Service (NASS), cattle feeders sold 2.0 million head of cattle, one percent below last year and 11 percent below 2003. The large majority of analysts had predicted marketings to be mostly steady with last year, particularly with one extra business day during this past May, compared to last year. AThe fact that we are down, even a little bit, is very disappointing and not good news, especially when there was one more day to sell cattle, compared to (May) 2004,@ said Jeff Ackerman, analyst with A&A Commodities, Des Moines, IA. A On a daily marketing rate basis, cattle feeders sold six percent fewer cattle last month, than May of last year. Even if marketings for the month were steady, on a daily basis that is five percent smaller. That= s not the way to keep show lists current, particularly when beef demand is > sketchy, at best= .@ The number of cattle on feed four months or longer, as of June 1, was 111 percent of last year and 110 percent of the previous five-year average, according to analysts. AFront-end supplies are definitely weighing heavy on the market, and could do so an extra long time this summer,@ Ackerman said. ACome mid- to late-September we could still be trying to get through cattle that have been held an extra two to four weeks by feedlots.@ Andy Gottschalk, analyst with HedgersEdge, indicated that, from a percentage standpoint, the worst is still yet to come. Gottschalk= s projections show that the number of 120-day-plus cattle will drop to 107 and 106 percent of a year ago on July 1 and Aug. 1, respectively. However, he also said that figure would jump up to 118 percent Sept. 1, 115 percent Oct. 1 and 117 percent Nov. 1. In addition to the slower marketings, analysts said the fact that heavy weight placements were much larger last month would add even more price pressure to late summer, early fall fed prices. According to NASS, cattle feeders placed 735,000 head of 800-pound-and-heavier cattle into feedlots last month, 20 percent more than May of last year. Market sources said that a lot of wheat graze-out cattle were sold during May, three to five weeks later than normal, and that led to an overabundance of heavy cattle finding new homes in feedlot pens last month. In addition, Ackerman said that above-normal grazing conditions led to cattle coming off of pasture and range much heavier than normal, and with more condition than is usual for this time of year. AI think producers just let cattle get a lot bigger than normal, before deciding to pull them off of grass and take them to market,@ he said. AIn turn, the number of heavier cattle entering feedlots last month was skewed to the extreme. It will hurt in the long run, because some of those cattle could conceivably be ready to enter the market in September, when front-end supplies are still a concern.@ Gottschalk added, A Placements weights have been front-end loaded, which will only compound the problem with heavy fed cattle carcass weights this fall. The combination of a record total in the extreme front-end fed cattle supply and record carcass weights this fall will limit rebounds (early) this fall.@ Better news late fall, winter While the number of heavy placements last month was overly large, the total number of placement cattle entering feedlots during May was well below last year. NASS indicated that a total of 2.22 million head were placed, six percent below a year ago, and four percent below two years ago. Placements weighing 600 pounds or less totaled 435,000 head, down 12 percent from May 200; cattle weighing 600-699 pounds totaled 390,000 head, down 21 percent; and those weighing 700-799 pounds were figured at 663,000 head, down 14 percent. Analysts were saying that an uptick in fed cattle prices is to be expected during the last quarter of 2005, because of fewer-than-normal cattle expected to be ready for market over that period of time. Jim Robb, chief analyst at the Livestock Marketing Information Center (LMIC), said that fewer feedlot placements last month was the result of more interest from stocker operators, particularly those in the central Plains and Midwest. AThe drop in lightweight placements is indicative of Iowa, Nebraska and Kansas stocker operators coming into the southern Plains and Intermountain West and buying cattle to put back on their pasture and rangeland,@ Robb said. AThat is almost strictly a result of much better-than-normal grazing conditions across the country.@ He also said, however, that last months placement trend appeared to be more normal than abnormal. ARemember, cattle feeders placed a record number of cattle in May of last year, and now we are starting to see things go back to a more seasonal trend, where cattle are going back to grass in the spring to be sold to feedlots in the fall,@ Robb concluded. Cattle and calves on feed for slaughter market in the U.S. totaled 10.77 million head on June 1, one percent above last year and two percent more than two years ago. C Steven D. Vetter, WLJ Editor © 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

COMMENTS

by WLJ
June 27, 2005 The boxed beef cutout fell out of bed last week, getting down to the $133 level on Choice product. The Choice/Select spread got under $2; it was under $2 last July, but is normally between $6-8 this time of year, and carcass weights are going north fast. Father= s day beef sales were good, on ground beef, but not so good on the steak sales. Slaughter levels are staying at high levels for these timesC665,000 head last week. But, the fact of the matter is, cattle are starting to stack up in feed lots. We found an $83 market a lot faster than expected. Now, if you ask a cattle feeder if they= re current he will say yesCthey always say yes. But if you look at the fundamental data, cattle are getting bigger and fatter, and front-end supplies are bigger. We could see the fed market in the $70s later this summer, unless a few things happen. Ironically, the fat off these fed cattle is pretty valuable as 50 percent trim is trading for $75 per cwt. All you can make with that is hamburger, which is in great demand. We= ve seen a $30 slide in the boxed beef cutout in less than 60 days, which I= d have to say exceeds any normal seasonal shift. Packers were losing $21 per head last week. Their normal tactic of slowing down beef production to raise the cutout value and raise their margins hasn= t been working for the past several months. Just over a year ago retailers were caught upside down on the beef market and haven= t been eager to buy much more beef than they need or can effectively feature. By my estimations beef demand is falling out of bed and we need some help. It isn= t that people don= t want to eat beef. Instead, its that the price has risen beyond many house hold budgets. Yes, the steak houses are full, and it looks like there is all kinds of demand for the stuff. However, you have to keep in mind that the steak house isn= t a good indicator of beef demand. Anyway, retailers stepped up to the plate last week and are booking product for late summer featuring. Lower beef prices aren= t what anyone wants to hear about, but the retailers haven= t been eager to sell the stuff at the $150 level; $132 boxed beef is more appealing and allows them to feature. USDA= s last survey showed that average retail beef prices were at $4.25 when a little over a year ago it was just over $3. You could say that beef may have priced itself out of the protein market, or certainly reduced the customer base. With the prospects of rising beef production in the next few years we= re going to need to see some changes in the demand side of this market. I would venture to say we need the export markets to pick up some of the slack. Beef exports are starting to show some real promise in recent months and believe it or not Canada is importing beefCnot very much but they are buying. Exports to Canada are up a whopping 698 percent over the first four months of the year, compared to 2004. But, it= s pretty easy to show percentage gains like that when you were close to zero. Canada imported just over 12,000 metric tons for the first quarter; U.S. imports from Canada are about 10 times that much. Mexican beef imports are almost back to normal and are up 334 percent, from a year ago, at 76,635 metric tons. Overall, beef exports are up 150 percent from the same point a year ago. So I guess you could say that there are a few bright spots in the beef export market. Just think if Japan and Korea started taking product, this could change the prospects for this late summer fed market in a big way. Last week, USDA announced they have budgeted $144 million for the Market Access Program and Quality Samples Programs to promote Ag exports. These programs have been around for a while. Roughly 70 ag organizations will receive funds and you= ll be happy to know that the Meat Export Federation (MEF) gets the single largest share of the pot at $12 million. Ag Secretary Mike Johanns said that agriculture exports account for 25 percent of farm cash receipts, which illustrates just how valuable these export markets are. If you don= t think that creating trade agreements help agriculture, think again. U.S. farm exports are big business and it is vital to put some of these issues like BSE behind us. C PETE CROW

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Thursday, December 20,2007

Export demand supports market

by WLJ
The early fed cattle trade last week occurred at prices which analysts expected to be the seasonal low. Nebraska feedlots reported selling 10,000 head of fed cattle last Wednesday at $83.25-$84 live and $133 dressed. Colorado feedlots reported selling 1,000 head of fed cattle at $84 live and Iowa feedlots reported selling 200 head of fed cattle at $135 dressed. There was very little live trade in the southern Plains as of last Thursday, however, analysts were calling for live trade in the $85 to $86 range as a result of packers being short bought the previous week. Packers, for their part, were expected to begin slowing chain speeds from the prior week’s levels in an effort to stay out of the market as long as possible as well as providing some support for the beef cutout values which, last Thursday, were also nearing the expected seasonal bottom. However, the slowdown had yet to begin by midweek. Week to date harvest through last Thursday was 507,000 head, up 2,000 from the prior week and 3,000 head more than the same week in 2006. The Choice cutout last Thursday was hovering at $139.40, up 11 cents from the prior day. Select cuts gained 37 cents to trade at $132.24. Movement at the wholesale level was still relatively slow however, and it appeared that additional discounting could be in the works before buyers jumped back into the market to contract their product now that most have fulfilled their July 4th holiday needs. Export buying remains one of the bright spots in the beef market right now and is helping to support prices in the face of lackluster domestic demand. Some of that evidence was visible in the sagging middle meat prices, which packers were discounting last week in an effort to keep product moving out of cold storage. Chuck and shoulder cuts, in the meantime, were strong as buyers in Asia continued to demand more beef from the U.S. The lifting of the export ban which Korea had placed on six U.S. plants should add support to the beef complex. Another high note for the market is continued strength in the ground beef and boneless beef segments which are seeing strong demand for product ahead of the holiday.  Shipments of trim and grind were strong throughout the week and the 90 percent lean was still going strong at $137.43, compared to $130.28 last year, while the 50 percent trim traded at $55.71 compared to $38.47 on the same day in 2006. Cow carcass cutout values were trading at $111.83, which was down from early June, but still more than $6 above year ago levels. On the Chicago Mercantile Exchange (CME) last Thursday, contract prices moved higher across the board, rebounding from an early week sell-off following USDA’s cattle on feed report. The bearish report weighed heavily on deferred contracts after placements were reported higher than industry expectations, at 13.5 percent above May 2006.   The spot month contract gained 162 points during the session to close at $86.92, while August rose 90 points, ending at $90.15 and October added 132 points to close the day at $94.45. Feeder cattle While there are tight supplies of fed cattle ahead in the short-term, fall and winter fed cattle contracts lost ground early last week as a result of in increase in the number of cattle moving into feedlots earlier than expected from herds in the southern states. That, in turn, could impact prices paid this fall for feeder calves which have been very strong despite $4 corn prices, particularly when compared to steer prices the last time corn prices spiked. In 1997, 650 lb. steer prices dipped below $60. Thus far, early contract prices for feeder cattle have been reportedly good and video sales are also proving to be strong in advance of some of the season’s largest sales coming in July. University of Iowa Agricultural Economist Shane Ellis said he expects prices for fall calves to be lower than 2006 levels, however, he said prices will remain well above the 10-year trend line. “Third quarter prices are expected to be 5-10 percent lower than a year ago, Fourth quarter feeder cattle prices, on the other hand, will be similar to those of last year after harvest corn prices dramatically increased,” Ellis said. “Finally, beef feeder cattle supplies may be slightly lower this year, with fewer beef cows calving than a year ago. This may also help offset some of the weaker feeder cattle demand created by higher feed costs. In conclusion, cow/calf producers should see yet another profitable year. However, it may be advisable to use some form of marketing strategy that will mitigate the risk of increased corn prices.” Futures contract prices indicate that prices will remain strong into the fall marketing season and moved higher, following live cattle contracts in last Thursday’s session. August feeders jumped 120 points, closing the session at $109.77, while September gained 132 points, ending at $110.42, and October rose 130 points to finish at $110.40. The sharpest rise of the day came on the November contract which ended the day at $110.70, 147 points higher than a day earlier. Meanwhile, cash auction market prices last week rebounded slightly in many areas. The CME index showed feeder cattle prices averaging $108.40 last Thursday. In El Reno, OK, last week, feeder steers and heifers sold for steady money on good demand after a bounce in the futures market. Steer and heifer calves sold $2-4 higher than prior week’s light test, with several reputation brand calves included in the day’s supply. Continued rainy weather has prolonged the grass season and created very good demand for stocker cattle. Meanwhile, at the market in Oklahoma City, OK, feeder steers and heifers were called steady to $2 lower, while steer and heifer calves sold steady. According to market reports, the bulk of feeder receipts at OKC continue to be number one and two crossbred cattle coming from out of state. Demand was called moderate, at best, for feeders and good for calves despite the absence of some northern buyers last week. Farther north, in West Plains, MO, last Tuesday, steers and heifers were unevenly steady, selling from $2 lower to $2 higher throughout the day, with a full advance noted on better quality calves when the market reached its full potential after a slow start. Yearling demand remained good most of the day with several load-lots being absorbed rather handily in spite of the week’s sharply lower fed cattle trade and continued pressure on the cattle board and stronger grain futures. In Loup City, NE, market reports indicated moderate demand for a very short list of yearlings and fall calves, as well as several load lots of Holstein steers. Cattle quality and condition were reportedly average, with fairly good buyer turnout. In addition to the regular list of feeder buyers, there were several people looking to fill out pastures with grass cattle. While in Hub City, NE, compared to the previous week, feeder steers and heifers sold $2-3 higher on offerings consisting of mostly load lots of high quality feeders from reputation consigners. In the western states, prices were also mostly steady to higher last week. In Prescott, AZ, steer and heifer calves and yearlings were reportedly selling for steady money. While prices in Madras, OR, moved lower in a light test of the market. Prices for 500-600 lb. steers were in a range of $104-111, while those in the 600-700 lb. class were mostly $99-105, down $7-8 from the previous week.

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