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Monday, September 24,2007

Study shows ethanol subsidy obsolete

by WLJ
—Transportation and oversupply concerns plague market. Last week, Archer Daniels Midland Co. was passed as the largest producer of ethanol in the U.S. when Poet LLC started production at its new 65 million gallon plant in Portland, IN. The new plant, which will consume an estimated 22 million bushels of corn annually, will increase the company’s annual production to 1.1 billion gallons per year from 22 plants nationwide. The latest plant to come on line this year will boost ethanol availability in the U.S. to 7.2 billion gallons in 2007, a number which industry watchdogs point out exceeds demand of 6.7 billion gallons. In fact, a report issued earlier this year by analysts at the investment firm Lehman Brothers estimated the surplus at about 1 million gallons per day starting in the second half of 2007. The firm’s report attributed part of that to the ethanol plant construction boom, but said transportation bottlenecks are a bigger problem. The ethanol industry, which has faced increasing problems with distribution, now faces over- supply and dwindling margins which has led to a tightening of available capital for construction and expansion as well as a lower investment appeal for existing plants. “Margins certainly have tightened over the last year and will continue to do so in the near future,” said Poet CEO Jeff Broin last week as the company started its newest plant into production. In fact, financial industry analysts have painted a picture of the industry which is far more bleak. “We expect the relentless supply of new ethanol production capacity will lead to a 70 percent decline in margins by 2009,” wrote Bank of America analyst Eric K. Brown in a May 2007 research report on the industry. Ethanol and biodiesel production in the U.S. amounted to little more than a niche market for environmentally conscious consumers prior to the implementation of the government imposed mandate which required U.S. refiners to use 7 billion gallons of renewable fuels annually by 2012. Since then, the industry has been plagued with distribution problems because ethanol cannot be shipped through existing pipelines which criss-cross the nation and are used for moving petroleum products. Instead, because of its corrosive nature, ethanol must be moved by truck or railcar from mostly rural central U.S. production areas to large, often coastal cities for refining or consumption. The transportation issue has led to bottlenecks and increasing costs for the industry. On top of these woes, many energy industry experts are now saying the ethanol business needs to stand on its own, without the lucrative government subsidies which have spurred its growth. In fact, a meat industry-funded study released last week shows that ethanol production, particularly when funded by a government subsidy, may not be the panacea envisioned by some well meaning lawmakers. In fact, the economists who conducted the study found that ethanol is viable without government subsidy so long as the price of oil remains above $65 per barrel. Last week, crude oil set new record highs above $81 a barrel. “Even without subsidies, ethanol production would be expanding at a significant rate due to high gasoline prices and the improvements in ethanol production technology in recent years,” the study’s authors said in their report. The report, authored by Thomas E. Elam, president of FarmEcon.com, and commissioned by a coalition which included American Meat Institute, The National Turkey Federation and the National Chicken Council, argues that government ethanol subsidies should be tied directly to gasoline prices rather than the current flat rate paid to producers. “In fact, if oil prices go high enough, the government should consider taxing ethanol used for fuel to alleviate the effects of ethanol demand on food prices,” Elam wrote. “At $80 per barrel, the U.S. food sector will find itself paying over $5 per bushel for corn. China, having seen what ethanol is doing to food costs, has banned further development of grain-based ethanol production.” Elam contends that the federal 54 cent per gallon ethanol subsidy has the indirect effect of increasing the cost of ethanol and food production by increasing grain prices across the board. “...the federal ethanol subsidy raises the breakeven corn price for ethanol plants by about $1.42 per bushel. If ethanol producers expand production until they bid corn prices up to their breakeven corn price point at today’s gasoline price level, it will take corn prices to near $4.75 per bushel, about double the average price of corn before the increase in gasoline prices,” Elam found. “At the current 12 billion bushels of annual corn production, that amounts to an increased corn cost for all U.S. users and our corn export customers of $17 billion per year. These costs are going up even as corn production increases. Included in those paying higher costs are ethanol producers themselves.” He points out as a part of his research that the industry continues to push for 100 percent market penetration for 10 percent ethanol blend gasoline, known as E10. However, Elam notes that 100 percent penetration may not be feasible. “At 100 percent penetration, the ethanol industry will require over 50 million acres of corn every year and total corn acres will need to be over 120 million. Until 2007, total corn acres rarely exceeded 80 million acres,” Elam pointed out. “Clearly, corn could further displace other crops, reducing their supply and raising their prices.” More specifically, he said, 100 percent E10 penetration would require 200 million tons of corn annually, the equivalent of 10 percent share of global grain supply, creating a significant spike in global food costs. However, according to Elam’s study, the actual cost of the ethanol production subsidy alone may be much higher than anyone anticipated. “In total, the costs of ethanol paid by taxpayers, fuel purchasers and the food system is about $31 billion in 2007, or about $4.40 per gallon of ethanol produced. Corrected for energy content of ethanol relative to gasoline, this is equivalent to a wholesale gasoline price of $6.67 per gallon. Ethanol is not a cheap source of energy; it is about three times as expensive as gasoline,” Elam stated in his report. “Created at a time when the ethanol industry was not profitable, changing circumstances have rendered the current fixed-payment federal ethanol subsidy program obsolete.” — John Robinson, WLJ Editor    

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Thursday, September 20,2007

Beef Bits

by WLJ
27, 2004 Brazilian exports doubled Brazil exported nearly $243 million in beef products during August, a rise of 121.5 percent compared to August of 2003, according to Brazil's Beef Exporters Association. Through August, the industry has exported $1.55 billion worth of beef in 2004, more than it exported all last year. Roughly 80 percent of exports are bulk beef products, with the remainder processed products. Brazil's major customers this year are Russia, the Netherlands and Chile. ‘Hot and Beefy' promo planned Sobik's Subs, a Florida chain of franchised restaurants run by Quality Restaurant Ventures, will roll out a "Hot and Beefy at Sobik's" promotion beginning next month. Three new hot beef sandwiches will be added to the chain's menu—Italian Beef, Russian Beef and Hot Beef and Cheddar. Sobik's already offers a Cheese Steak sandwich and meatballs in their menu's beef segment. Quiznos, Checkoff partnering In a partnership with the Beef Checkoff Program, Quiznos Sub is introducing a new steakhouse Beef Dip Sub. The promotion began Sept. 6 and runs through Oct. 17 at participating Quiznos Sub stores in the U.S. During the promotion, the beef sub will be promoted nationally via radio and TV spots, and newspaper coupons in freestanding inserts. The Beef Checkoff logo will appear on all marketing materials. "We are extremely happy to be partnering with the Cattlemen's Beef Board to promote our new Steakhouse Beef Dip sub," said Trey Hall, chief marketing officer at Quiznos Sub. "We want to help support the great beef produced across the U.S. by America's cattle farmers and ranchers." Krystal expanding in Texas Three franchise groups have inked deals with Chattanooga, TN-based Krystal Company to open 18 new Krystal hamburger restaurants across Texas over the next four years. Texas currently has two Krystal restaurants—one in Beaumont and one in the Waco/Killeen area. The first of the new restaurants are set to debut in Dallas and Houston in November, followed by Austin early next year. The chain is known for serving its specialty of small, square steamed hamburgers. George Jones' burgers unveiled Williams Sausage Company recently announced it is adding a couple new hamburger products to its George Jones brand name product line that are scheduled to hit customers starting sometime next month. The two new beef products are hamburger steaks and hamburger patties marinated with George Jones Good on Anything Sauce. The new beef products will be sold in boxes of 12 4-ounce patties or six half-pound steaks. McD's raises dividend 38 percent McDonald's Corp. hiked its annual dividend 15 cents, from 40 cents to 55 cents, payable on December 1 to shareholders of record as of November 15. The dividend has more than doubled in two years, from 23.5 cents in 2002. The payout to shareholders will total nearly $690 million. "(The) 38 percent dividend increase—our second largest since 1980—reflects our ongoing confidence in the business and is another sign that we're making significant progress revitalizing McDonald's," said Charlie Bell, McDonald's CEO. Jack in the Box expanding San Diego-based Jack in the Box Inc. projects same-store sales increases of between 2.5-3 percent in fiscal 2005 and will debut 45 to 50 new Jack in the Box stores, remodel another 50 and open approximately 75 more Qdoba Mexican Grill locations. The new stores will be a mix of franchised and company-owned locations. The company said that it will beat analysts' projections for the first quarter of 2005, although it will miss by a penny projections for the fourth quarter of this year. Jack in the Box also said that it expects its profit margin to increase by 80 basis points due in part to lower beef prices and development of new premium products. The company is also testing a new casual dining format in several U.S. markets, with Dallas scheduled to be next. The others are San Diego and Bakersfield, CA, and Boise, ID. Jack in the Box will operate over 2,000 restaurants by the end of the fourth quarter, the company indicated.

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Thursday, September 20,2007

Obit

by WLJ
20, 2004 Thomas D. Guerin Thomas D. Guerin passed away on August 25, 2004 in Roseburg, OR. Born in Oakland, CA, Guerin knew nothing about cattle and ranching when he took over his father's ranch in 1943. Guerin had a commercial beef cattle operation and in his early years operated a small feedlot and sold locker beef to the hospitals and nursing homes. Recently, after he fell and broke his hip, all he wanted was to get well so that he could get back to the ranch and see his cattle. Guerin also served on numerous boards pertaining to Agriculture and Agriculture Conservation. He is survived by his wife, Arlene, Myrtle Point, OR; daughters Cheryl (Bill), Tigard, OR, and Anne, Langlois, OR; step daughter, Dani Hanson, Myrtle Point; and several grandsons and two great-grandsons.

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Thursday, September 20,2007

Beef Bits

by WLJ
20, 2004 OBC exec. moving on The Oklahoma Beef Council (OBC) announced last week that Michael Kelsey has resigned as the group's executive director, effective October 29, 2004, and that he has accepted the position of executive vice president of the Nebraska Cattlemen. Kelsey has been with the OBC since August of 2000 as executive director and has played an important role in guiding Oklahoma's beef industry through some of its key milestones and achievements. Programs and activities of the OBC will continue under the leadership of Melissa Morton, collections and compliance officer, who has been named interim executive director. The OBC Board of Directors is forming a search committee to accept and review resumes for the executive director position. Resumes are currently being accepted and the search committee will begin review on October 15, 2004. Applications may be sent to Executive Director Search Committee, c/o James Campbell, 2312 Exchange Ave., Oklahoma City, OK 73108. Morton's growing by five Morton's Restaurant Group, New Hyde Park, NY, will add new upscale steakhouse restaurants in Chicago; Atlantic City, NJ; Charlotte, NC; Bethesda, MD; and Fort Lauderdale, FL, the company recently announced. The Chicago restaurant will be the second in that city's downtown. The new facility in Charlotte will also be that city's second Morton's restaurant, and the new addition in Washington, DC, will be that metro area's sixth such restaurant. In Atlantic City, the restaurant will be inside Caesar's Hotel and Casino, while the Fort Lauderdale Morton's will occupy Las Olas River House, a downtown luxury mixed-use condo complex. The additions will bring its count of upper-end steakhouses to 70 worldwide. CKE sales soar, profits plunge CKE Restaurants, the operator of the Carl's Jr. and Hardee's chains, reported strong same-store sales growth at both chains during the second quarter, but registered a net loss of $11.4 million in the period, which ended August 9. Same-store sales rose 8.1 percent at Carl's Jr. and 6.2 percent at Hardee's. The overall loss was attributable to payments to settle three wage and hour class action lawsuits, a previously announced pre-payment premium on outstanding debt and other one-time charges. Without those, the company would have reported a net profit of approximately $10.8 million, or 17 cents per share. The company operates 3,206 franchised or company-owned restaurants in 44 states and 14 countries, including 2,067 Hardee's, 1,016 Carl's Jr.'s and 105 La Salsa Fresh Mexican Grill locations. BK's August sales stronger Miami-based Burger King's company owned stores saw an 11.1 percent same-store sales increase in August, while franchised stores grew at a 4.5 percent rate, for an overall growth rate of 5.1 percent over the year-ago period. The announcement marks the seventh consecutive month of positive same-store growth results. Among the new products driving the chain's growth, has been the new Angus beef hamburger products. Kroger Q2 earnings decline Beset by labor unrest that hammered sales at the company's Ralph's and Food 4 Less stores in California and rising product costs, Cincinnati-based Kroger reported net earnings of $142.4 million for the second quarter ended August 14, down from $190.4 million in the same quarter a year ago. The company said its earnings were affected not only by the recently resolved strikes and their aftermath, but also by a premium of $15.3 million paid to retire $750 million in debt. Sales increased 5.1 percent to $13 billion in the quarter, but same-store sales growth, excluding gasoline, was an anemic 0.6 percent. Without the California stores included same-store sales grew 1.1 percent, which was called respectable. All breed tour in Lisbon, ND Fourteen seedstock operations representing the Angus, Buelingo, Chiangus, Longhorn, Lowline, Red Angus, Simmental, and Shorthorn breeds will be featured on the 2004 All Breeds Cattle Tour. The 18th annual event will be held Oct. 4-5 in the Lisbon, ND, area. "The All Breeds Cattle Tour is an excellent way to view the herds of multiple operations and compare multiple breeds in a short amount of time," said Tracey Koester, of the North Dakota Stockmen's Association. Visits will include: Melroe Farms, Gwinner; Alamo Farms, Ransom Angus, Bear Creek Beef, Wendel Livestock, and Schmit Farm, Oakes; Crete Grain Westgate and James Valley Grain, Crete; and Spring Valley Angus, LaMoure, ND, where a Pfizer Excede demonstration will be conducted. The final tour stop will be at the Ransom County Expo Center in Lisbon, where exhibits from Black Tie Simmental, Erdmann Angus and Hieggelke Simmentals will be displayed. For more information call 701/223-2522.

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Thursday, September 20,2007

Beef Bits

by WLJ
13, 2004 McDonald's sees its 16th consecutive increase McDonald's Corp. reported its 16th consecutive increase in monthly same-store sales despite a slight drop in Europe, reports the Associated Press. The fast-food chain said its comparable sales were up 7.2 percent at its U.S. restaurants and 3.9 percent worldwide. Sales in Europe fell 2.1 percent, a drop the company blamed on weak performance in Germany, poor weather, and a decline in tourism across the continent. The latest strong performance at U.S. McDonald's was credited to improved service, marketing, and expanded menu variety, including the recent launch of Chicken Selects. McDonald's stock rose 52 cents, or 1.9 percent, to $27.90 in morning trading on the New York Stock Exchange, September 9. Beef spending up $22B in 10 years Consumers will spend $68 billion on beef in 2004, according to a report released from the Texas Beef Council. If the beef industry were a private corporation, those revenues would rank it ninth, right behind IBM, in the Fortune 500 list. The 2004 figures represent a $22 billion increase over 1995, which was three years before the beef checkoff program helped stabilize beef demand after 20 years of decline. The projections were made by Cattle-Fax, the beef industry economic analysis arm. Packers charged with fraud Criminal charges have been brought against three Canadian meat processors who sold possibly tainted meat. The provincial police in Ontario, Canada, brought criminal fraud charges against Walter Clare and his sons, Jeffrey and Jay. All three are owners of Alymer Meat Packers Inc., a slaughter and meat-processing company in the southwest region of the province. The men were also criminally charged under the Food and Drugs Act with selling meat unfit for human consumption and labeling meat in a manner that was false, misleading, or deceptive regarding its safety. They are scheduled to appear in St. Thomas court on October 19, 2004. The company was separately charged with fraud and conspiracy to commit fraud. The government alleges that Alymer employees last summer knowingly accepted and processed cattle that were dead when they arrived at the plant. Meat from the carcasses was then mixed with carcasses from animals that entered the plant alive. The plant's license was suspended after a search August 21, 2003. Tyson makes FORTUNE list Tyson Foods has been listed by FORTUNE magazine as one of America's fastest growing companies. The Springdale, AR-based company ranks 44th on FORTUNE's list of "The 100 Fastest Growing Companies." Tyson is the highest ranked food company and the only meat protein company to be included. "It's an honor to be recognized for the progress we've been making since our acquisition of IBP three years ago," said John Tyson, chairman and CEO. "We're continuing our aggressive campaign to increase our value-added product sales over the next three to five years and believe our recently unveiled 'Powered by Tyson' marketing campaign will boost our efforts." Over the past three years Tyson has experienced a 41 percent earnings-per-share growth, 49 percent increase in revenue and a total return of 32 percent. Aussie beef exports slip Beef exports from Australia, a major global exporter, slipped a little in August from July, but remain well up on shipments in August 2003, according to the latest official figures. Exports to the U.S. grew sharply in August from July, while exports to Japan fell, resulting in the U.S. overtaking Japan as the major beef export destination, the figures show. The figures confirm the overwhelming reliance of these two major markets on the overall trade. Total beef exports in the first eight months of this year of 591,243 metric tons were up 7.4 percent from the year-earlier period, mostly reflecting sharply higher exports to Japan. Carl's Jr. on the road Fast-food burger chain Carl's Jr., Carpintera, CA, is taking its signature hamburgers, fries and several other menu items beverages on the road to select football games this season. Carl's Jr. traveling Star Diner restaurant-on-wheels visited the University of Utah versus Texas A&M tailgate party on Thursday, September 2. Typically, the Star Diner will stay fairly close to its home base in California, but Carl's Jr. believes the Utah trek was a fun, innovative way to allow loyal customers, and potential customers, to sample its Six Dollar Burger, Famous Star hamburger, and Western Bacon Cheeseburger. The diner's final destination will be Magna, UT, where a recently opened Carl's Jr. franchise "adopted" a local high school. The restaurant will kick off assistance for Cypress High School with a visit from the Star Diner to raise funds for the athletic department.

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Thursday, September 20,2007

Willing to negotiate

by WLJ
13, 2004 The past few weeks have been a real seesaw when it comes U.S. beef regaining the Japanese market. One week the news is that it's gonna take 100 percent BSE testing to access the market. Then, we hear the Japanese are considering excluding cattle under 20 months old with specified risk materials removed. It has been a long summer for USDA and trade negotiators, but it does appear that they are making some significant headway. Last week, a Japanese panel of food safety experts said that they can't find any scientific justification to test cattle for BSE that are younger than 20 months old. There is speculation that the report, requested by the Japanese Food Safety Commission (FSC), would give that agency reason to drop the government's requirement of 100 percent BSE testing on that class of cattle, therefore easing the ban on U.S. beef. The Japanese testing hangup on the younger cattle is because they claim to have found BSE in a 21-month-old animal. Canada and the European Union have all been comfortable with not testing cattle 30 months and younger, which the U.S. has maintained a strong position on. After last week's news, it appears that the Japanese may settle on some other age threshold soon. That could be somewhere between 20 and 30 months old. Then the question will be how to determine that age. Most likely, those efforts will focus on dentition, more commonly known as "mouthing," and/or bone ossification tests, which have been considered unreliable in the past. The FSC concluded last Thursday that current testing technology isn't sensitive enough to detect the bovine illness in cows younger than 20 months, and that excluding the young and newborn cattle from testing "won't increase the risk" of transmission to humans. President Bush and Japanese Prime Minister Koizumi are scheduled to meet next week during the United Nations General Assembly in New York. It appears that the beef industry will get some special attention in this meeting. President Bush could create a nice positive outlook for the beef industry by announcing that some agreement with the Japanese government on beef imports has been made. There is also speculation that the U.S. and Japan may have already come to some sort of tentative agreement about beef trade that will be announced during this meeting. We have been told that heads of state don't necessarily like surprises during these types of meetings, which are usually well orchestrated so there are no curve balls thrown. It will be interesting to see where this age line is drawn. The U.S. has been importing beef from Canada from cattle under 30 months of age for nearly a year. If there is a special age threshold made for the Japanese market, what will the ramifications be for Canadian beef. It appears that 24 months may be where the line is drawn and that the bone ossification test will be the testing method used. If that is the case, will it send a message to consumers that there is some question over beef that is between 24 and 30 months of age that they have already consumed? Anti-beef consumer groups may have a problem with that idea. Also would the 24-month-old criteria be temporary, to the extent that USDA has tested nearly 50,000 head of cattle without any BSE turning up. If we reach 250,000 head, will that mean that the U.S. is BSE free and that we won't have to test at all for the Japanese market? Even though Japan has exposed a crack in their demands for 100 percent BSE testing, there are still a lot of un-answered questions about the protocol in exporting beef to Japan. There has been a variety of signals coming from Japan, with this latest report and reactions from several weeks ago when a group of Japanese officials toured the U.S. on a fact finding mission in which they claimed they wanted full compliance on the testing issue. For the most part, this trade issue appears very political, which is clearly where the remedies will come from. This next meeting with Bush and the Japanese Prime Minister hopefully exposes the politics, and gives Bush something to show agriculture, which is an important campaign issue in this election. It's encouraging that Japan is starting to back away from their testing demands. — PETE CROW

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Thursday, September 20,2007

New Products

by WLJ
13, 2004 New cattle cost management software Cattleman's Calculator, Inc., announced the introduction of a new version of its successful and industry accepted Cattleman's Calculator livestock cost-projection software, in use of 16 years, which can now be used on Microsoft Windows handheld Pocket PC. In effect, this new software program creates a handy new cost management tools for the cattle industry: an easy-to-use Windows-based pocket computer that enables cattle ranchers to make off-site cost calculations about cattle operations and integrate these cost projections with their ranch, bank, or computer and financial records for improved cost control and management. Calculations can be saved in the Pocket PC handheld computer and later transferred to a Microsoft spreadsheet. Another new feature is the print capability. For more information visit www.cattlemanscalculator.com. Remote swing gate opener unveiled Tallahassee, FL-based GTO has an affordable way of automating field gates, even if they are out of range of common power sources. The do-it-yourself Mighty Mule automatic swing gate opener is not just an accessory for the rich and famous. Whether it's for a yard, field or orchard, the Mighty Mule makes getting vehicles, tractors and implements through gates affordable and simple. Strong as a mule, the Mighty Mule operates on a low voltage battery that's constantly recharged so it will still work when the power is out. It also works in extreme weather conditions. A Mighty Mule gate can be opened and closed using a transmitter similar to a garage door opener and other accessories include a programmable digital keypad, and an automatic gate lock to provide peace-of-mind security. For gates far from a power source, the optional solar panel will keep the gate's battery charged. For more information about the Mighty Mule line of automatic swing gate openers, the many types and specifications of gates it will handle visit www.gtoinc.com or call 800/543-1236. New worm gear winches Controlled movement of loads with just one hand on the crank handle is what you'll get with Dutton-Lainson Company's worm gear winches. Engineered to provide positive holding of the load while raising or lowering makes the D-L worm gear winches ideal for any application where safe, economical one-man operation is required. Each size is available with a choice of standard winch handle, or with a loop drive. Unlike standard ratchet winches, which depend on a ratchet to prevent uncontrolled reeling-out of cable, the reel on D-L worm gear winches automatically cease turning whenever cranking is stopped. There is no freewheeling mode, and no special mechanism needed to stop reel movement. In addition, worm gear winches do not require a minimum load for operation. All gears are heat treated high carbon steel, and bearings on the drive shaft are permanently lubricated to assure long, trouble-free service life. The D-L line of worm gear winches includes eight models in two sizes: 1,500 lb. (rated dead weight capacity), and a 2,000 lb. capacity. New Lepto vaccine unveiled Pfizer Animal Health last week announced it has been approved to market and distribute Spirovac, a vaccine that helps provide protection against Leptospira borgpetersenii serovar hardjo (Lepto hardjo-bovis). Spirovac contains inactivated whole-cell cultures of hardjo bovis and is approved for administration to open, pregnant and/or lactating cows and heifers, as well as to healthy calves as young as 4 weeks of age. Efficacy studies demonstrate that Spirovac prevents leptospires from harboring in protective sites such as the kidneys and reproductive tract. Additional studies show that Spirovac prevents urinary shedding and does not override maternal-derived antibodies (MDAs). When administered prebreeding, Spirovac can aid in the prevention of in utero transmission of hardjo-bovis bacteria, thus helping prevent the birth of calves born infected with hardjo-bovis. Unique to most leptospiral vaccines, Spirovac has a proven 12-month duration of immunity. For more information, contact a veterinarian, animal health supplier or Pfizer Animal Health representative. New hydraulic push manure spreader Kuhn Knight, Inc. of Brodhead, Wisconsin, adds a new line of hydraulic push manure spreaders to their proven line of solid/semi-solid manure spreaders. The new ProPush features piggyback hydraulic cylinders and a heavy-duty push panel for ultimate simplicity for manure hauling and spreading. The hydraulic cylinder ProPush design means no apron chains, fewer moving parts, simplicity, fast unloading, and a more dependable service life during cold winters. The hydraulic ProPush system has been tested and proven for the heaviest applications. Other features include one-piece solid poly sides, two-piece solid poly floor, and removable beater panels. The poly sides and floor reduce material build-up and the removable beaters allow the spreader to be easily used for stockpiling manure. ProPush spreaders are offered in 440 and 540 heaped cubic foot capacities as trailer models. For more information contact Kuhn Knight, Inc. at 608/897-2131 or Info@kuhnknight.com.

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Thursday, September 20,2007

Sheep Notes

by WLJ
13, 2004 $18M in assistance proposed As part of the new '2004 Ewe Lamb Replacement and Retention Payment Program' the USDA's Farm Service Agency (FSA) has proposed providing up to $18 million to sheep and lamb producers who have recently experienced reduced production and flock size, low prices, and poor market conditions. This proposed program is designed to encourage the replacement and retention of ewe lamb breeding stock by giving direct cash payments to impacted producers. In order to qualify, producers must have been impacted during the one-year period from August 1, 2003 through July 31, 2004. Sheep and lamb operations may apply in person or via mail, telephone, or fax to FSA county offices once the application period is announced. The application period will follow the closing of two comment periods. Comments on the program specifics must be turned in by October 7. Comments on information collection in this rule must be received by November 8. Comments can be mailed to Grady Bilberry, director, Price Support Division, Farm Service Agency, USDA, STOP 0512 Room 4095-S, 1400 Independence Avenue, SW, Washington, DC 20250-0512; e-mail: danielle_cooke@wdc.fsa.usda.gov; fax: 202/690-3307. Interstate transport amendment proposed USDA's Animal and Plant Health Inspection Service (APHIS) is proposing to require livestock facilities that handle sheep and goats in interstate commerce to follow certain procedures to minimize the potential spread of scrapie. The approval process will ensure that certain uniform practices relating to the identification, record keeping, and handling of sheep and goats are followed. Notice of the proposal was published in the Aug. 26 Federal Register. Public comments will be accepted by FSIS until October 25. ASI budgets unanimously approved The American Sheep Industry Association (ASI) Board of Directors has unanimously approved the 2004-2005 budgets to fund services, programs and operations of the national organization. Fifty-six certified voters were given the annual responsibility of reviewing and casting their votes for the next fiscal year budgets. Three ballots were cast. The first ballot was for the approval of the American Wool Trust budget for the fiscal year beginning October 1 and running through September 30, 2005. Secondly, approval was sought for the Fund II budget of ASI for the legislative and membership activities of the association as well as non-wool trust and association services. The final board vote was in regard to the dues assessment rate. It was recommended that the rate remain the same as the current year—three cents per stock sheep and $6 per member. MPR changes approved Urgings by the American Sheep Industry Association (ASI) and state affiliates to modify the Livestock Mandatory Price Reporting (MPR) regulations as they apply to domestic and imported boxed lamb cut sales have been successful. USDA's Agricultural Marketing Service (AMS) issued its final rule in a recent issue of the Federal Register saying that the new reports will be available starting November 1. Two definitions have been amended. The definition of "carlot-based" is being changed to include language to limit carlot-based sales of boxed lamb cuts to transactions between a buyer and a seller consisting of 1,000 pounds or more of boxed lamb items. The definition of "importer" reduces the volume level of annual lamb imports establishing a person as an importer to 2,500 metric tons of lamb products per year, down from 5,000 metric tons. Menu study shows lamb's use in trendsetting restaurants A recent analysis of lamb on restaurant menus shows that lamb represents more than 10 percent of the protein mentions of high profile, white tablecloth restaurants on Food Beat Inc.'s "Trendspotters" database. Not surprisingly, 84 percent of the mentions of lamb are as entrees, with several lamb appetizers, salads, soups, and sandwiches as well. Trendspotter restaurant menus often highlighted ingredients form local area or regional flavors. Some menu items noted included: • Dijon Crusted Colorado Lamb Chops, Chef Allen's, Miami Beach, FL • Three Preparations of Iowa Lamb, Goodfellow's, Minneapolis, MN • Roasted Rack of Colorado Lamb, Mel's Restaurant & Bar, Denver, CO • Sweet Garlic Crusted Oregon Lamb Chops, Painted Table, Seattle, WA • Wood Grilled Virginia Lamb Chops, Café Annie, Houston, TX Sheep shearers wanted The American Sheep Industry Association (ASI) is compiling a sheep shearer database, which will contain information ranging from a shearer's contact information to what services, supplies and level of skills he or she provides. The organization kicked off the project in mid-August, and said it was needed because of producers having a hard time finding people to shear their sheep for this fall. For more information, contact Bob Padula at 320/269-7973 or by e-mail at padula@starband.net.

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Monday, September 17,2007

Oregon study finds grazing damage in monument

by WLJ
—Findings could prompt movement on grazing buyout proposal. The findings of a recent study commissioned by National Center for Conservation Science and Policy (NCCSP), an Ashland, OR-based environmental group, will be included in a U.S. Bureau of Land Management (BLM) analysis of grazing in the Cascade-Siskiyou National Monument in southern Oregon. Ranchers, who have long been battling to keep cattle on the land, could face severe economic hardship if cattle are forced out of the area. The latest report in the long-running dispute could mean that cattle graziers will be the next group forced out of the monument. The study, released last Monday, was conducted by 10 environmental scientists who worked in cooperation with BLM scientists and Oregon State University researchers to conduct the three- year study which was funded by the World Wildlife Fund. What the researchers concluded was that areas which were heavily grazed by cattle showed significant impacts. As a result, the environmentalists concluded that commercial grazing of cattle is incompatible with the goals contained within the proclamation made by the Clinton administration when the monument was created. Specifically, the research team found that mixed conifers, oak woodlands, small springs and riparian areas showed signs of livestock damage, including soil compaction, reduction of streamside vegetation, increased delivery of sediment to streams, elevated temperatures and reduced dissolved oxygen levels in springs. Small mammals showed the greatest losses from grazing with 38 percent lower cumulative biomass (total weight) and 20 percent lower abundance in heavily grazed areas. Livestock-related losses were greatest to harvest mice, woodrats and long-tailed voles. Livestock grazing may have negative effects on predator-prey dynamics by reducing abundance of small mammals that are important prey of the threatened northern spotted owl in southwest Oregon, particularly woodrats and deer mice. And, bird communities in heavily grazed areas had fewer long-distance migrants, foliage gleaners and shrub-nesting species, but higher numbers of ground nesters. Small springs used heavily by livestock had significantly higher temperatures and lower dissolved oxygen concentrations. The researchers presented the findings to BLM officials last week who will include the results in their own analysis due out later this year. “We’re incorporating their findings with all the information we received that’s pertinent to evaluating rangeland health and whether grazing is compatible with the proclamation,” said John Gerritsma, Ashland Resource Area manager for the BLM’s Medford District. The same proclamation which created the monument in 2000 directed BLM officials to retire grazing allotments if they were found to be incompatible with “protecting objects of biological interest.” Prior to the release of the report, public land grazing has been a touchy subject in the region. Last year, a proposal was floated in Congress by Oregon’s two senators to buy out grazing rights in the monument, a move supported by Oregon Cattlemen’s Association. However, the proposal never made it to the floor during the vote. “I think buyouts should be rare,” Oregon Sen. Gordon Smith, R-OR, said last year when announcing the legislation. “But these circumstances are unique and are putting the squeeze on our ranchers. This legislation is needed to keep them in business and in the saddle. Instead of turning to the courts, two interested parties found common ground to solve this problem. That’s the Oregon way and a great basis for legislation.” Andy Kerr, director of National Public Lands Grazing Campaign, a group which is also working to retire public lands grazing permits, said he is hopeful the bill can be reintroduced before the end of the year. “We hope to get the legislation introduced in the next few months,” Kerr said. “The bill is what we call a ‘two-fer,’ it has bi-partisan support from Oregon’s two senators, one Republican and one Democrat, and it contains something that opposing sides (ranchers and environmentalists) want. Politicians love that and we are optimistic this bill can make it through the congressional gauntlet.” He said time is of the essence in the matter and it would be best for everyone involved in the matter if it is resolved before the release of the BLM study this fall, which he believes will reach similar conclusions to those reported in the NCCSP study . “We want to compensate the ranchers for these leases,” he said. “Is that what the ranchers want? No, it’s not their first choice; they love their work, but they see the handwriting on the wall.” Kerr said the congressional proposal to retire the grazing leases in the monument includes $300 per permitted animal unit month. In addition, he said the Soda Mountain Wilderness Council, another involved environmental organization, will also include what Kerr called a “significant confidential payment,” if the measure makes it through Congress. “It’s critical that this be passed before BLM releases their study because they will want to change how things are done. There will be shorter lease periods, ranchers will have to wait longer in the spring to turn their cattle out, streams will have to be fenced, and BLM will want guys on horseback out there to herd cattle away from riparian areas. None of that’s good for the ranchers and it will be harder to get compensation for these guys. Nobody wants that; we want an equitable solution for the ranchers,” Kerr said. — John Robinson, WLJ Editor    

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Monday, September 17,2007

Market steps back

by WLJ
—Surge in corn adds to caution in cattle markets. —Fed cattle supply supportive of higher cash ahead. Packers slowed their chain speeds last week in an effort to stay out of the market as long as possible. There were reports of dark plants last Monday and USDA pegged the harvest at just 113,000 head. For the week through Thursday, the tally was just 490,000 head compared to 502,000 during the same period in 2006. Packers were working to prevent the beef cutout from sliding any further as a result of soft retail movement. The added bonus for them came in the form of pressuring feedlots to lower asking prices. By mid-day last Thursday, there were reports of some trade in the north at $144-145 dressed, along with some light live cattle trade at $91-91.50. Trade in the south Plains had yet to develop, although the consensus was for trade to break out in the $93-94 range late in the week despite light trade and moderate carry over from the prior week when cattle traded at $95 live in the south and $147-148 dressed and $93-94.75 live in the north. Analysts last week said they expected steady to higher trade coming into the week, however, the eroding cutout and weak trade on the Chicago Mercantile Exchange (CME) caused them to re- evaluate that position. “I thought coming into the week we’d see at least steady and perhaps $1 higher,” said Cattle-Fax market analyst Troy Applehans. “But now I think we’re going to have to take a step back for the next one to three weeks.” He said the supply side of the fed cattle business was very supportive of cattle feeders in the weeks and months ahead and particularly good for late fourth quarter marketings. The current state of feedlots and light placement numbers are also helping to support their trading position. Estimates for Sept. 1 cattle on feed numbers by Livestock Marketing Information Center were 6.4 percent below last year. Placements were expected at 7.6 percent of year-ago levels. “I think we will wander in the $92-95 range for awhile before picking up toward the end of the year and testing the high-$90s and even $1,” Applehans said. “I think cattle feeders are pulling quite a few cattle forward right now but they’re still pretty green, so there’s no big rush to sell them, particularly when the board is supportive. That said, I think there is more downside risk in this market than there is upside potential.” He added that the retail situation, although difficult to pinpoint, appears to be improving going into fall, which will add some support. “There is a lot of out-front business being done right now—21 or more days into the future, so it’s a little difficult to get a handle on—but beef featuring looks pretty good and retailers are switching away from middle meats and toward end meats for their fall lineup,” Applehans said. “Right now, beef is competitive with pork and poultry, more so than we have been so far this year, which has helped with movement at the retail level.” Last Thursday, Choice boxed beef traded lower. Looking ahead, Applehans said he expects cash to become the predominant driver in the marketplace as basis narrows. “There are a lot of hedged cattle out there in the country but for now, basis is still a risk,” he said. “As the board starts to trade in line with cash, feedlots will probably become more willing sellers.” Last Thursday on CME, October contracts closed at $94.67, down five points from the previous close. December live cattle were down 37 cents to $98.62 and February contracts shed 150 points to end the session at $100.22. The June contract was the session’s only upward-moving contract, which gained 7 points to close the day at $96.32. The cow markets last week bounced back to regain some of the prior week loses despite cull sale numbers which are beginning to creep higher. The cow beef cutout increased to $113.03, 90 percent lean sold higher at $136.99, and the 50 percent gained slightly to reach $49.39. Compared to last year, prices remain strong. The cutout during the same week in 2006 sat at $107.81, while the 90s were at $133.88 and the 50s at $40.56. Feeder cattle With the rally in corn prices following a record-breaking USDA corn report, Troy Vetterkind of Ehedger.com believes that maybe the cash trade on feeder cattle will finally begin to soften a little bit. “The September corn report should slow things down on the feeder cattle side of things. In both August and September, we saw the market rally after what most analysts believed were optimistic corn reports, leading me to believe it’s the market’s way of telling us that people don’t have a lot of faith in the USDA’s big corn numbers,” said Vetterkind. “Regardless, the price jump in corn was real, for whatever reason, and I think cattle feeders were caught a little bit off guard by the reversal in the corn market—it had been slipping,” Vetterkind explains. Vetterkind said he believes this will ultimately lead to lower cash trades at auction markets around the country because of tight margins throughout the production and processing industries. “There’s definitely a fair amount of risk in buying feeder cattle right now. I still believe that because of corn prices, there has been a delay in some placements. We’re getting down to the end of summer and privately held as well as feed yard-owned cattle coming off of grass, along with fall calves, will start to flood the market to some degree,” Vetterkind says. Although margins are tight, Vetterkind says it won’t stop feed yards from placing large numbers of feeders. “With corn prices going up again, margins for people feeding cattle are getting tighter, but there are a lot of empty pens around. Corn prices aren’t going to stop the yards from taking most of these cattle. Yearlings have been especially strong recently, but the sales we saw where yearlings were lower is showing to me that reality is beginning to catch up with people who have been paying exorbitant prices for some of these feeder cattle,” explained Vetterkind. In the cash trade at auction markets around the country, feeder prices were mostly steady to lower, following a bullish September USDA corn report. In Oklahoma City last week, 11,703 head sold, and feeders were mostly steady to $1-3 lower. Demand was good for feeders and moderate for calves, with buyers being very selective for flesh and quality. Many lots came from out of the state, and the supply was heavy with reputation ranch calves. Fill conditions ranged from gaunt to full, and flesh conditions ranged from thin to fleshy, but a number of thin or very thin cattle were offered. Six weight fleshy steers brought prices ranging from $120-126, with heifers falling in at $111-117. A cold front pushing through the Oklahoma area, coupled with moisture from the Gulf of Mexico due to a dissipating hurricane, has provided much of Oklahoma and parts of Texas with heavy rains. Extremely high wheat prices and the heavy moisture may be tempering local demand for calves to put on wheat pasture later in the coming months. In Joplin, MO, receipts totaling 6,776 were seen last week, with steer and heifer calves under 650 lbs. steady to $2 lower. Steers over 650 lbs. were steady, and heifers of the same weights were $1-2 higher. Demand was good for yearlings and weaned and vaccinated calves, but moderate for all others. Supply was moderate to heavy. Fall pastures in the area have benefitted from recent rains and cooler temperatures. Some very heavy rains in a few places caused fences, hay bales, and roads to wash away. Large steers 600-700 lbs. were selling mostly between $117-125.50, and heifers sold $111-113. A run of 1,664 head was seen last week in Clovis, NM, where feeder steers and heifers were mostly steady on active trade and good demand. Feeder steers and calves between 600 lbs. and 700 lbs. sold between $111.50-118, with feeder heifers going for $102-111. In Davenport, WA, feeders last week were very uneven compared to the last sale, with a slight trend of lower prices paid on lighter weight steer and heifer calves, and some instances of up to $2 higher on feeders above 600 lbs. The feeder cattle trade was moderate to active with moderate demand for the total run of 1,642 head. Prices paid for nearly all weights of steers between 600- 900 lbs. bottomed a little over $100, with six weight steers bringing up to $112. Heifers trailed about $5-10 lower in most cases with some lots bringing $108. — WLJ    

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