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Monday, November 26,2007

Border now open to older Canadian cattle

by WLJ
—Shipments began to trickle south on Nov. 19.   USDA moved forward with its planned opening of the border to Canadian imports of live cattle born after March 1, 1999, and beef from cattle of any age last week. However, despite attempts to fight the proposal, analysts said there would likely be little market impact. The number of cattle expected to flow south will be limited by a lack of proper documentation, excess slaughter capacity in Canada, the cost of shipping cattle south, and a surge in the value of the Canadian dollar. Those factors combine to create a financial barrier which will be difficult for cattle owners to hurdle while remaining profitable. Despite attempts by R-CALF United Stockgrowers of America to prevent the border from opening, which included filing for an emergency restraining order on Nov. 16, the courts failed to step into the fray in time to prevent the opening. As of Nov. 19, no action had been recorded on either the emergency restraining order or the group’s lawsuit aimed at preventing over-thirty- month (OTM) cattle and beef shipments. Despite the open border, very few shipments actually occurred, according to USDA’s Animal and Plant Health Inspection Service (APHIS) which is responsible for examining cattle shipments from Canada. APHIS spokesman Ed Curlett said the agency had recorded very few cattle crossing into the U.S. from Canada on the day the border opened last week. Curlett said Monday’s tally of cattle entering the U.S. as a result of the new regulation was 514 head, through seven ports of entry. Curlett said Monday’s reported totals included 35 head at Dunseith, ND; 174 head through the port of entry at Niagra Falls, NY; 37 head at Pembina, ND; 33 head at Port Huron, MI; 77 head at Sumas, WA; 85 head at Raymond, MT; and 78 head at Highgate, VT. However, concern remains among U.S. cattle producers who fear that the Canadian ruminant-to-ruminant feed ban has not been in place long enough, or been enforced stringently enough, to prevent future cases of the disease from being imported. In addition, U.S. Cattlemen’s Association (USCA) officials said last week that the potential losses from lost export markets were an additional consideration. “U.S. Cattlemen’s Association has consistently contended that USDA’s priority should be regaining lost U.S. export markets,” stated Chuck Kiker, USDA director and Animal Health Committee chairman from Beaumont, TX. “It is perplexing that USDA fails to recognize this discrepancy in the Final Rule. This issue continues to serve as a roadblock for regaining lost export markets, a situation exacerbated by quality control issues that have occurred in recent months when export markets received shipments of beef containing banned materials. It’s time for USDA to explain to producers how the decision was made to set an effective feed ban date for Canada well before the feed ban was effectively implemented.” “The March 1, 1999, feed ban implementation date effectively compromises two of these fire walls,” noted Kiker. “Unfortunately, USDA’s decision appears to be politically driven rather than based on the best available science and data.” One possible political motivation often cited by USDA is their ongoing effort to improve international markets for U.S. beef. Those efforts have been frustratingly slow and the move to allow older Canadian imports into the U.S. is considered a key to improving trade. For example, by paving the way for expanded trade, there may be reciprocal benefits in the future for U.S. beef producers, including more relaxed restrictions for breeding stock headed for Mexico. For more than a year, U.S. states bordering Mexico have been pushing the Mexican government to allow shipments of U.S. cattle south. Mexican bull buyers have long been an important source of customers for U.S. cattlemen in Texas, New Mexico, Arizona and California. However, Mexican officials have reportedly tied expanded trade to restoring trade between the U.S. and Canada. But USCA said last week those concerns aren’t enough to override the concerns that beef producers and consumers have on the subject of allowing OTM cattle in from Canada. “Consumer confidence, both domestically and internationally, is something U.S. cattle producers take very seriously,” noted Danni Beer, USCA Region X director from South Dakota. “The U.S. produces the safest beef in the world. Mitigation measures have been implemented and extensive testing has been conducted to ensure the U.S. feed ban has been effective. In the wake of numerous food recalls as well, as consumers’ growing concern about the safety of foreign produced food and goods, this is no time for the U.S. to lower its import standards and risk a negative outcome.” Although there will continue to be concerned cattle producers here in the U.S. as long as the border remains open, producers and government officials from north of the border say they are relived to get the issue put behind them. “This government and our industry partners have worked closely with the American industry and with the USDA to achieve this goal,” said Canadian Agriculture Minister Gerry Ritz. “It’s great to see our work pay off with the USDA Final Rule normalizing trade for all cattle born after March 1, 1999.” — John Robinson, WLJ Editor  

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Monday, November 19,2007

Fed cattle prices begin long awaited rally

by WLJ
—Choice boxed beef prices gain $4.28 in first three days of last week. The fed cattle market rally looked like it was getting underway last week with some limited higher cash trade reported early in the week, including some grid trade in Texas at the $150 level. Last Thursday, there were a few reports of live cattle moving in Texas at $92.50 and reports of bids at $145-146 live basis by packers. However, upward surging boxed beef prices early in the week, along with strength on the Chicago Mercantile Exchange (CME), had feedlots holding out for better offers. Analysts last week said they expected trade to come in at $93-94 live and $144-146 dressed, compared to the previous week’s trade at the $92 to $93.50 level in the south and $92-93 live, $142-145 dressed paid in the north. Prior week Corn Belt sales were $90-91 live and $142 dressed. Packers have been relying heavily on contract and formula cattle and cash market purchases have been on the light side for several weeks, leading to reports of short bought packers. However, kill levels have also been on the high side, so it was expected last week that packers would have to come to the table and close up the gap between feedlot asking prices and packer offers last week to get cattle bought. Despite expectations of higher cash and continued reports of tight supplies of available, market- ready fed cattle, serious trade wasn’t expected until late in the week, perhaps being delayed until after the release of USDA’s Nov. 1 cattle on feed report due last Friday. That report was expected to show inventory numbers to be below year ago levels. The average of analysts’ expectations was reported by Dow Jones to be 2.1 percent below year ago levels. Placements of cattle into feedlots were expected 11 percent above November 2006 levels as a result of light placements a year earlier and a lack of available wheat pasture in the south, which has led some stocker operators to place cattle directly into feedlots. Marketings were estimated at a robust 7.3 percent above year ago levels, mostly a result of packers vying for market share as they continued heavy slaughter volume despite negative market fundamentals. Although those estimates are positive in terms of on feed and marketing numbers, the expectations of higher placements and strength in the corn market weighed on deferred futures in contract trade on the CME last week. As of last Thursday however, contract trade had firmed up and settling prices were firm, with December closing at $95.32. February live cattle contracts pulled back 10 points, to settle at $97.95, and April ended the day 2 points lower at $98.10. Ehedger.com analyst Troy Vetterkind said the midweek pull back was caused by a combination of factors, including the on feed report expectations. “Apparently the 11 percent increase in placements spooked the market, however I think a lot of us are expecting that, if not more, due to the end of the grass run of yearlings and the fall calf run,” he said. “One thing that we are probably going to see is a pretty sharp increase in lightweight placements due to less cattle going on wheat pasture this year.” He said the contract trade played right into the pre-report expectations, while supporting the case for higher cash cattle trade last week. “Packer interest should start to pick up today (Nov. 15) as many of them are getting short bought, especially on the southern Plains, and I think they could be getting a little short on contract cattle,” Vetterkind said. “They do have this week’s kill back, however, I also think they are also getting pretty good inquiry for beef this week for both spot and forward contract.” That was especially evident in the boxed beef markets last week. The Choice cutout jumped early in the week, adding $4.28 in the first three days of last week before softening Thursday. At the close of business last Thursday, Choice boxed beef was trading at $144.18, while Select was steady at $133.13. Harvest levels fell back as a result of a reduced schedule on Veteran’s Day last Monday. For the week through Thursday, harvest was estimated at 489,000 head, well below week and year earlier numbers of 511,000 head. In the cow beef markets last week, the fall run of culls had increased and pressure was evident in carcass and cutout values as a result of the increased volume. Cash prices paid for culls at auction markets in most areas was $2-3 below the previous week across the board, with prices in areas still affected by drought even lower. The cow beef cutout value was at $103.03 last Thursday, with 90 percent lean selling at $123.16 and the 50 percent trim moving at an average price of $64.73. Despite the slight dip from week earlier levels in all three products, the prices remain near year earlier levels, largely as a result of consumer demand for cow beef products. For the same date in 2006, cow cutout values stood at $100.92, while the 90 percent lean was selling at $124.23. The year-earlier prices for 50 percent trim were sharply lower at $35.19. The continued heavy numbers of cull cows being processed by packers and the number of heifers being placed on feed are a good indicator that herd growth this year will likely be minimal. In fact, a number of analysts have started predicting flat numbers will be reported in the Jan. 1, 2008, U.S. cattle inventory report, paving the way for another good year ahead for cow/calf producers. Feeder cattle Prices paid last week for feeder steers and heifers continue to show strength in more northerly auction markets, as uneven corn markets have some farmers deciding to take advantage of strong cattle prices and market a portion of their harvest through feeder cattle. Harvest has been delayed in some areas due to moisture and as farmers finish up corn and bean harvests, they are starting to show up in the auction barns. USDA Market Reporter Greg Harrison explains that the market remained solid for feeder cattle which were healthy and ready to be put on feed. “The markets here in northern Missouri showed that people were really looking for quality yearling-type feeders and younger calves which have been weaned and have had their shots,” said Harrison. “We are starting to see more yearlings and calves weighing in the 600-700 lb. range, and there is a lot more farmer-feeder activity with the harvest season winding down.” Harrison said that as long as fed prices continue to encourage strong demand from feed yards, it’s likely the recent cash trends for feeder cattle will stay healthy. “There’s some oomph in the fat cattle [market] right now and it’s keeping things going on the feeder side,” said Harrison. “There’s quite a few people right now who feel like we may see prices for feeders on the rise until at least the end of the year, especially as the marketings on the quality cattle become fewer and fewer.” “Overall, things seemed pretty unsteady with more strength in the northern markets,” added Harrison. “I think some of the southern markets have quality issues with leftovers from calves shipped out of the southeast due to drought. To the north, where there were some late harvests, buyers are going to town and keeping demand and prices better there, with the emphasis on quality.” At the Oklahoma National Stockyards in Oklahoma City, OK, last week, there were 10,884 head sold and compared to the previous sale, steers were steady to $1 higher, with heifers mostly steady. Steer and heifer calves of lesser quality were steady to $2 lower except for steers under 500 lbs. which were $2-4 higher. Demand was good for true yearling cattle and light weight steer calves, and moderate for other classes of feeder cattle. Buyers were noted as being very selective, with heavy discounts noted on No. 2, fleshy, full and plainer cattle. Feeder steers at 580 lbs. brought an average of $112.80 at this sale, with 578 lb. heifers following behind at $102.26. In Joplin, MO, last week at the Joplin Regional Stockyards, there were 6,000 head sold with steers and heifers under 600 lbs. steady to $2 lower, with feeders over 600 lbs. $1-3 lower compared to the previous sale. Demand and supply were both moderate, with most weigh-ups average to full. Steers weighing 570 lbs. were worth $110.56 at this sale, with heifers weighing 575 lbs. bringing $99.35. The Winter Livestock feeder cattle auction in Dodge City, KS, saw 5,197 head sell with steers weighing 350-700 lbs. steady to $4 lower, except steers weighing 500-550 lbs. which were steady to $5 higher. Steers weighing 700-750 lbs. were not well tested, but those weighing 750-795 lbs. were steady to $3 lower. Heifers weighing 350-600 lbs. were also steady to $4 lower, with the same exception coming at weights of 500-550 lbs., where they were steady to $1 higher. Examples include fleshy steers weighing 597 lbs. which brought $111, and fleshy heifers weighing 571 lbs. worth $101.74. To the north in Bassett, NE, approximately 2,800 head sold last week with the bulk of the feeder cattle trending steady, the exception being 500 and 550 weight heifers, which advanced $2-3. Overall cattle quality and buyer demand were both good. Steers weighing 605 lbs. were good for $121 at this sale, with lighter heifers weighing 568 lbs. worth $112.03. The Wednesday sale in Torrington, WY, last week saw 5,700 cattle sell, with steer and heifer calves selling $2-4 higher compared to the previous sale, though there were not enough comparable sales on yearling steers and heifers for a good price comparison.  Demand was moderate to good with several long strings of preconditioned and weaned calves, while overall quality was good to fancy. Value-added steer calves weighing 565 lbs. brought $126.25, with heifers of regular quality weighing 577 lbs. bringing $108.25. Last week in La Junta, CO, there were 3,886 head put up for sale, with steer calves under 550 lbs. steady to $1 lower, while steers over 550 lbs. were steady and, in instances, $1-2 higher. Heifer calves under 500 lbs. were $3 higher, with weights over 500 lbs. steady to $1 higher. Yearling feeder steers and heifers were scarce, though there was good demand. Five hundred fifty to 590 weight steers went for $109-115.50, with 615-640 weight heifers bringing around $101. — WLJ  

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Monday, November 12,2007

Panorama Beef receives wetlands award

by WLJ
Darrell Wood of Pete’s Creek Partnership, one of the founding ranches of Panorama Meats, Inc., the Angus grass-fed beef company based in Vina, CA, last week received one of three 2006 National Wetlands Conservation Awards from the U.S. Fish and Wildlife Service (USFWS), Department of the Interior. Wood received the award at a ceremony in Oklahoma City, OK, for his management of the Pete’s Creek Wetland and Riparian Restoration Project on 1,262 acres of the partnership’s ranch located in Lassen County just north of Susanville, CA. This land was also certified as organic grazing land for Panorama Grass-Fed Beef cattle in July 2006. Wood is a fifth-generation California cattle rancher whose family has been grazing cattle on this land almost continually since the 1930s. He is president of Panorama Meats, Inc. and is one of 43 family ranchers who raise Panorama Grass-Fed Beef, which is sold at Whole Foods Markets in northern California, Oregon and Washington, at many HEB stores in Texas, and at 188 Trader Joe’s stores in the western U.S. More information about Panorama Meats can be found at www.panoramameats.com. The annual award recognizes the contributions by private-sector individuals and organizations to the development, restoration and enhancement of wetlands. Wetlands are biologically diverse and dynamic ecosystems that support diverse populations of fish, wildlife and plants. According to USFWS, “wetlands provide habitat for more than 40 percent of the nation’s endangered and threatened species. They also help protect water quality by filtering out pollutants, provide natural flood control by absorbing excess water, buffer coastal areas from erosion, and offer scenic and recreational opportunities.” A special panel of national and regional Fish and Wildlife Service officials and nongovernmental personnel recognizes one individual every year for having made worthy contributions to wetlands conservation. Two additional awards go to a “group-assisted individual” and a “group.” In addition to his work to preserve wetlands, Wood is a leader in the preservation of California’s rangelands. He is board chairman for the California Rangeland Trust and past president of the Lassen County Cattleman’s Association. Both groups work closely with rangeland owners to protect and enhance the environmental and economic quality of the land. He has also been honored for grassland stewardship by the Society for Range Management.

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Monday, November 5,2007

Study highlights needs of renewable fuels industry

by WLJ
—Rural communities shown to benefit from renewable fuel boom. A new study has identified the required private capital investment necessary for the renewable fuels industry to achieve the production goals established in the proposed Energy Bill. “The capital cost to meet the 36 billion gallon renewable fuels target by 2022 amounts to $105.5 billion (2007 dollars),” the study completed by John Urbanchuk, a leading analyst of the biofuels industry and a director for LECG, LLC, a global expert services consulting firm, concludes. “Providing the Farm Credit System with greater flexibility to support the financial requirements of the biofuels industry by enabling them to provide financing to a wider range of borrowers will facilitate ethanol and biodiesel industry expansion,” the study said. The Farm Credit System has been a major source of financing for the ethanol industry for well over a decade and reported, at June 30, 2007, $1.668 billion in loans outstanding relating to biofuels products and another $2.238 billion in loan commitments to extend credit to the industry. These outstanding loans represented 1.3 percent of the Farm Credit System’s total loan portfolio. Urbanchuk’s analysis shows that the Farm Credit System’s support for the ethanol industry over the years has helped provide $23.2 billion in gross economic output, $5.5 billion in household income, and 136,345 new jobs in the construction of ethanol plants; $317 million in annual transportation revenue to ship ethanol; $24.8 billion in gross economic output, $3.6 billion in household income, and 99,188 new jobs in the operation of the plants; as well as $4.3 billion in annual farm revenue for corn to make ethanol. “This study shows directly how the rural economy benefits from the Farm Credit System’s support of agricultural-based business and farmers. Farm Credit was there fifteen years ago, taking the risk to finance the early ethanol plants when others would not. Now that Congress is looking to agriculture and the renewable fuels industry to make a major contribution to our nation’s energy independence, it is important that this experienced lender be able to continue to support the industry going forward,” said Ken Auer, president & CEO of The Farm Credit Council, the national trade association representing the Farm Credit System. The study identifies how a 50-million-gallon per year ethanol facility employs 40 people with about a $1.9 million annual payroll. Such a plant will create nearly $89 million in demand for local business and an additional $31.5 million in household income. These “Main Street” business activities largely will benefit local community banks with increased deposits of payrolls and lending as local business activity increases. The Urbanchuk study also reviews the capacity of community banks to support the industry, noting that: “the debt cost for a new ethanol plant can easily exceed $130 million. If a typical community bank has a lending limit of $2 million, it would require a syndicate of 65 community banks to fund one new plant.” It would take another 290 plants, each with 100 million gallons of capacity, to achieve the production capacity recommended in the Senate version of the energy bill (H.R. 6). The study also highlights how the rising cost of new ethanol facilities has changed the composition of the equity partners. A typical plant today requires investors to come up with about $95 million before going to the credit markets for the other $130 million in debt necessary to construct a plant, the study said. These higher equity threshold levels mean farmers are no longer in the position to be the major equity providers for the ethanol industry and that other non- farmer investors must play a role if the industry is to continue to grow. The ability of the Farm Credit System to provide financing to this broader base of owners that include more non-farmers will be crucial to the ability of the industry to expand to meet the legislated target of 36 billion gallons by 2022, the Urbanchuk study points out. — WLJ  

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Monday, November 5,2007

Study points to red meat as a cause of cancer

by WLJ
—Industry advocates blast report, calling it anti-meat. An alarming study published last week by the World Cancer Research Fund (WCRF) pointed to a potential link between red meat consumption and cancer development. The report, which was an update to a study conducted a decade earlier, caused ripples of concern in many consumer media outlets and rankled meat and beef industry experts who called the report alarmist, unfounded and biased against meat consumption. The WCRF study focused on a vast number of outside research on the possible cancer-causing effects of an array of different foods, including meat, vegetables and fish, as well as individual vitamins and minerals, in their study. The findings, according to the group, indicate that the evidence linking meat consumption to certain types of cancer is “stronger than it was in the mid-1990s.” The panel of researchers concluded that: “There is limited evidence suggesting that red meat is a cause of cancers of the oesophagus, lung, pancreas and endometrium; that processed meat is a cause of cancers of the oesophagus, lung, stomach and prostate; and that foods containing iron are a cause of colorectal cancer. There is also limited, inconsistent evidence, mostly from case-control studies, that animal foods that are grilled, barbequed, or smoked, are a cause of stomach cancer.” The study’s authors concluded that the evidence of cancer caused by poultry, fish and eggs is insubstantial. Following the release of the report, several cattle and meat industry groups, including the Cattlemen’s Beef Board and American Meat Institute (AMI), labeled the study biased and dismissed its finding as a tactic meant to scare consumers away from meat consumption. “WCRF’s conclusions are extreme, unfounded and out of step with dietary guidelines,” said AMI Foundation Vice President of Scientific Affairs Randy Huffman, Ph.D. “Headlines associated with this report may give consumers another case of nutrition whiplash. The consistent finding in diet and cancer research is inconsistency,” he added. “No health groups should be dispensing clear-cut recommendations on specific foods when studies continue to contradict each other time after time.” Huffman stressed that the recommendations stand in sharp contrast to mainstream advice in the U.S. Dietary Guidelines. “The causes of cancer are extremely complex and involve factors like genetics, the environment, lifestyle and a host of other issues, Huffman noted. “Given the complexities and conflicting research findings, it is inconceivable that WCRF could draw definitive conclusions and make such precise recommendations about specific food categories.” He also stressed that he was extremely concerned that some contrary studies were left out of the WCRF review. In particular, Huffman said that the largest study ever done on red meat consumption and its impact on colon cancer, conducted in 2004 by the Harvard School of Public Health, was left out of the report. The Harvard analysis involved 725,000 men and women and was presented at the 2004 American Association for Cancer Research Conference. That study showed no relationship between red meat consumption and colon cancer. The Harvard study, titled, “Meat and fat intake and colorectal cancer risk: A pooled analysis of 14 prospective studies,” was not included in the WCRF findings, Huffman said. “This study uses what is considered perhaps the most reliable approach to analyzing relationships: pooling original data together and analyzing it,” Huffman said. “Given the study’s size, approach and very important finding, we’d like to know why it hasn’t published. WCRF and consumers deserve access to this federally-funded data which shows that red meat and processed meat were not associated with colon cancer.” “When this Harvard data showing no relationship between red meat and cancer is coupled with studies that found no association or only weak associations between red meat and cancer, we must absolutely dispute WCRF’s conclusions,” Huffman said.—John Robinson, WLJ Editor.  

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Monday, November 5,2007

Harvest levels remain high

by WLJ
—Late week fed cattle trade expected steady to lower. Fed cattle trade was once again a late week affair last week, with very little trade occurring in the major cattle feeding areas. Analysts last week said they expected trade steady to weaker than the prior week’s level. The last established market was Oct. 26, with live cattle trading in a range of $92-93.50, with the exception of Iowa/Minnesota, where live sales traded from $90-91. Prior week dressed sales in the northern tier ranged from $139-143. Dressed sales in Kansas sold at $146.50. The current drive for packers to obtain fed cattle at any cost to keep them away from competitors, despite substantial negative margins, continues to define the fed cattle markets. That heavy slaughter volume was preventing packers from being able to push the cutout values higher last week and Choice boxed beef dropped below the $140 level last week, slipping $1.21 last Thursday to $139.46 at mid-day. Select was also lower, losing 23 cents to trade at $127.92. There was little reduction in slaughter levels last week, with the week-to-date total through Thursday last week running 6,000 head above the year ago levels at 514,000 head, although packers were able to draw off supplies of contract cattle. In fact, according to Ehedger.com analyst Troy Vetterkind, one major packer last week was drawing on supplies of Canadian fed cattle to fill supply chains. He said that same packer would be dark Friday and Saturday last week for routine maintenance functions, limiting their harvest for the week. “The beef market continues to stumble and packers can draw from November contract cattle this week, so all of this combined will keep them less aggressive in the cash market this week, despite smaller showlists in most major feeding areas,” Vetterkind said. “It’s not to say that cattle feeders don’t have any bargaining power this week, as most feed yards remain fairly current and numbers should stay manageable for another couple of weeks.” He said the focus last week would be on the performance of the new December contract on the Chicago Mercantile Exchange. “I think there could be some more downside, however, I would really want to see the December contract hold the $94 level in order to keep both cash and futures markets stable,” Vetterkind said. The cow beef markets last week continued to be a bright spot in the cattle markets. The cow beef cutout last Thursday was trading at $103.64, while the 90 percent lean sold at $122.64 and 50 percent trim, $44.68. Feeder cattle Cash prices paid for feeder cattle were mixed this week, with weather and corn prices causing different price trends in different areas. The undertone of the market continues to be one of strong prices feeding off of low supply, as feedlots continue to work hard to fill pens even though the number of steers and heifers available to put on feed is low. Stephen R. Koontz, professor of Agricultural Marketing at Colorado State University, said that this year marks a place in the marketing cycle where demand for feeder cattle is high, almost no matter what the offering is. “This is the interesting part of the cycle where the meat side of the industry has to compete with the cow herd side,” says Koontz. “The packers and feed yards are looking pretty hard for cattle to go to slaughter but, unfortunately for them, cow/calf operators are looking for replacements and retained ownership,” Koontz said. Koontz explained that although margins are tight for feed yards right now, they will continue to try and fill pen space as they look ahead at future markets. “It’s going to continue to be pretty tough for feed yard managers to look at a budget and say it’s going to work, but with a pen-full mentality, I think most feedlots will try and stay as full as possible and look forward to what might be some pretty attractive fed cattle prices next year,” said Koontz. According to Koontz, the future continues to look bright for cow/calf operations for as long as the U.S. herd size remains small. “This is a trend which looks to be pretty favorable for cow/calf and stocker operators while the cow herd stays under the level it needs to be. The people who will get burned are the ones who look at owning the cattle while they’re on feed. They won’t be tough to market, but the price of feed isn’t going to go down considerably for awhile,” Koontz said. In Oklahoma City, OK, last week, feeder cattle were $1-2 lower following a steady to $2 higher trend on sale morning. Steer calves were $1-2 higher, with heifer calves steady to $2 higher. Demand for feeders was moderated as corn prices continued to climb higher. Demand was good for calves, and especially good for steers. In Joplin, MO, there were 6,000 head offered for sale last week, with steers and heifers under 600 lbs. steady to $2 lower, with weights over 600 lbs. $1-3 lower. Demand and supply was moderate with the calf trade opening lower, but gaining momentum as the day went along. The yearling trade was lower as buyers are working against a lower fed cattle market and higher corn prices. A noticeably higher percentage of yearlings and wean-vac calves were offered compared to the previous sale. A group of steers weighing an average of 626 lbs. brought $113.71 on this sale day, while heifers weighing 635 lbs. brought $102.17. At Faith Livestock Commission’s sale in Faith, SD, there were 5,534 head sold last week, with steer calves under 700 lbs. selling steady to $2 lower. Heifer calves under 600 lbs. sold fully $2 lower. A fancy 600 lb. steer was good for $126 at the Monday sale, while a group of fancy 561 lb. heifers were bringing $118. At last week’s sale at the Stockland Livestock Auction in Davenport, WA, the 1,617 head offered sold steady to $2 higher, yearlings were not well tested. Trade was moderate to active with moderate to good demand, with a group of steer calves weighing an average of 628 lbs. going for $95.84 at this sale. At Western Stockman’s Market in Famoso, CA, prices were $2 lower on feeder cattle and $5 lower on the stockers out of the 2,229 cattle available at the Monday sale. Good demand was exhibited for the feeders, especially quality 700-800 lb. steers and heifers. — WLJ  

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Monday, November 5,2007

Colorado producer is Red Angus Breeder of the Year

by WLJ
Larry and Jean Croissant were honored by their peers by earning the Red Angus Association of America’s (RAAA) Breeder of the Year Award. The Croissants received the award at the 2007 National RAAA Convention held in Dodge City, KS, Sept. 26-29 at the historic Dodge House Hotel and Convention Center. They were presented the award by Donnell and Kelli Brown, RA Brown Ranch of Throckmorton, TX, long time friends, customers and one of the industry’s largest seedstock producers. Croissant Red Angus is a family owned and operated seedstock operation located in Briggsdale, CO. Larry and Jean, along with their son-in-law and daughter, Kevin and Sallie Miller, strive for disciplined and balanced trait selection. They are committed to raising efficient and maternal-based cattle whose progeny possess superior carcass traits. Croissant Red Angus has a standing policy of culling all open females, allowing no excuses as to the reasons why the animal(s) failed to breed. This has accelerated their cattle’s fertility and earned their program credibility from their customers. Other Red Angus producers have taken notice of Croissant’s breeding program and taken advantage by utilizing their genetics in their own seedstock operations. Croissant Red Angus hosts an annual sale in March—last year they sold approximately 50 head of bulls raised in their operation—and offer animals private treaty throughout the year. Croissant’s mission statement reads, “Our goal is to produce the best possible seedstock in a commercial production environment without excess feeding and pampering. We use proven AI sires, manage our cattle in large contemporary groups, and collect all data from birth to harvest, providing the best described seedstock possible.” The Croissants understand the needs of their customers, the commercial cattlemen. They treat their herd the same way their customers do, forcing their females to produce within the environment they are raised. This strict dedication to producing efficient cattle has allowed the program to receive the attention of the nation’s bull studs. They currently have two bulls, LJC Javelin M08 and LJC Mission Statement P27, being collected and marketed by Genex Cooperative, Inc. “We feed out all our non-selected registered seedstock and commercial calves to harvest at our ranch. We also purchase calves from some of our customers and add them to this group. This allows us to get performance data including carcass data to harvest. This data is invaluable to us, our customers, and the breed. It is not only tied to individual bulls, but is also tied back to our individual cows to more accurately describe their contribution to the calf crop,” states Larry. The quality of Croissant bred feeder cattle earned two RAAA GridMaster Carcass Awards this past year after being harvested on the Angus America Grid. Along with his dedication to their program, as well as their customers’ success, Larry has served on RAAA’s Board of Directors for multiple terms, taking a leadership role and personal commitment to the direction the RAAA is headed in the beef industry. His input and energy have been greatly appreciated by the association and his fellow producers. The RAAA is excited to have a member as progressive in their approach to producing better beef as Croissant Red Angus and honored to present them with the Breeder of the Year Award for 2007.

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Monday, November 5,2007

Cattle-Fax predicts little change in 2008

by WLJ
Prices for fed cattle will go up slightly in 2008, according to the prognosis offered at the 2007 Texas Cattle Feeders Association Annual Convention by Randy Blach, executive vice president of Cattle-Fax. Blach predicted the 2008 average price would be around $92 to $94 per cwt. “I don’t think you should be surprised if we sell cattle into the low dollar area into the spring and when we’re in our biggest supplies, we may very well be trading cattle in the mid-to-upper 80s. “With feeder cattle and calf prices, they’re likely to stay close to the same levels they’ve been at here in the last few years, too,” he said. Blach also advised cattlemen to expect to continue paying high prices for commodities like feed grains. “All these other markets are demanding more and more of our grains and protein supplies. That’s driven by the weak dollar. If you think we’re going back to the days when we had cheaper grains and cheaper protein sources, it’s not likely to happen any time soon,” he said. However, the weak dollar can also be an ally for cattlemen as more foreign markets for beef become open. “I would argue, if we had a level playing field, with the dollar where it is today, we may very well eclipse” the export levels projected for the next few years, Blach said. As for the size of the beef cow herd, Blach predicted it will be “down a couple hundred thousand head” on Jan. 1, 2008, when compared to Jan. 1, 2007. However, that decline is expected to be offset by an increase in dairy cow numbers. Meanwhile, the numbers of commercial steers and heifers headed to harvest will remain level, Blach predicted. “For the last couple of years, we’ve basically been sitting here at 27.7 to 27.8 million head. We don’t see that changing next year… We don’t have any more of them to feed; we don’t have any more of them to process. So, some of those challenges with excess capacity are going to continue,” Blach said. He also expects the trend toward heavier cattle to continue with cold carcass weights climbing by 12 to 14 pounds next year. “We’ve been incentivized with cattle trading in the $90s and cost of gains in the $60s to the low $80s depending on the region of the country. We’ve been incentivized to make them big. I don’t believe that incentive is going to go away,” Blach said.

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Monday, October 29,2007

Cattle on feed numbers up 9 percent

by WLJ
—Cattle 700 pounds and heavier account for 54 percent of total placements. Cattle on feed numbers were down again according to the Oct. 1 USDA cattle on feed report. According to the National Agricultural Statistics Service, total on feed numbers were estimated at 11 million head, 4 percent lower than a year earlier. However, the number remains 5 percent higher than 2005. Total inventory included 6.83 million steers and steer calves, or 62 percent of the on feed numbers, down 5 percent from last year. Heifers and heifer calves accounted for 4.07 million head, down 1 percent from 2006, an indication that U.S. herd numbers will grow only slightly, if at all, when the end of the year inventory report comes out in January. It is likely that high grain prices and a solid calf market are causing some producers to put off herd size increases for the time being. On feed numbers in key states continue to show a preference for states where there are large supplies of less expensive feedstuffs available, particularly those in the north. States reporting a decrease in the number of cattle on feed were led by Idaho, which was down 21 percent. Colorado numbers were down 11 percent, Kansas was down 6 percent, Nebraska was down 4 percent, and Texas was down 3 percent from 2006. Iowa led the way for states increasing in on feed numbers, with an increase of 11 percent. South Dakota and Arizona reported a 4 percent increase and California rose 3 percent. The placement figure was perhaps the only surprising portion of the report, exceeding analysts’ expectations. September feedlot placements totaled 2.43 million head, 9 percent more than September 2006 and 3 percent above the same month in 2005. The shift toward heavier placement weights continued last month. Placements of cattle under 600 pounds totaled 610,000 head, while those in the 600-699 pound range were 505,000 and cattle placed in the 700-799 pound class totaled 570,000. Placements of cattle weighing more than 800 pounds were 740,000 head. As a result of increased feeding costs, feedlots have been showing a preference for heavier weight classes to cut the number of days on feed. Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel noted that as of this most recent report, nearly all placements into feedlots are now yearling cattle. “In many ways, this (the Oct. 1 report) reflects the first chance that the market has had to respond to the signals that started one year ago. It was difficult to provide increased numbers of heavy feeders last winter and spring, especially given the dry conditions and lack of wheat pasture last year,” Peel said. “Placements were low this summer as the growing season provided the first significant opportunity for taking feeder cattle to heavier weights on forage and it is those cattle that were placed in September. Not only were placements higher in September, but placement weights were higher as well. Placements weighing over 700 pounds were up nearly 20 percent, while placements that weighed less than 700 pounds were down 1.5 percent. It has taken a year, but the industry has now transitioned almost entirely to a yearling based flow of feeder cattle.” He said the premium for adding pounds to calves in grazing programs will continue to be a preferred method of lowering feeding costs, particularly in areas where grass and other low-cost forage is available, although he noted there is likely to be a decline in the number of caves heading to wheat grass this year. “There will continue to be an incentive for forage-based gains as long as feedlots keep looking for heavy feeder cattle to place. The lack of wheat pasture in the southern Plains means that more cattle will remain in other stocker and backgrounding programs around the country this winter,” Peel said. American Farm Bureau Federation Chief Economist Jim Sartwelle said the number of lightweight placements will be important next month as producers work to find winter forage for calves, which may be difficult to come by this year as a result of high wheat prices. “Given how tight feeder cattle supplies have been since late summer, and with fall weaning fast approaching, I have to wonder if we may see a larger number of lighter-weight feeders going into the feed yards in the next 30 days,” Sartwelle observed. Further, “as reports come out of Oklahoma indicating less wheat pasture will be made available for grazing this winter, we will watch the placement weight sections of the next two monthly USDA Cattle on Feed reports carefully for indications that light-weight feeders are being diverted from the wheat field to the feed bunk.” Marketings remain a tough spot for the cattle feeding business as cattle are fed to heavier weights to spread expensive cost of gain over more pounds. At the same time, beef demand remains lackluster, making margins in the beef business tough to maintain. The result last month was a drop in marketings from September 2006 levels. Total marketings for the month were reported at 1.71 million head, 3 percent below 2006 and 6 percent lower than two years ago. Although analysts continue to predict tight supplies of fed cattle through the fourth quarter and well into the first quarter of 2008, the failure to market cattle in a timely manner could result in a backlog of fed cattle next summer, hurting prices. Sartwelle said that is the exact scenario analysts are watching for signs of trouble in the feeding industry. “Calf and feeder cattle prices will follow the strong fed cattle market only as long as demand for them remains high,” he said. “We do not expect the profit crunch cattle feeders have endured recently to relax any time soon. Continued red ink in the feeding sector will eventually spill over into the feeder cattle and calf markets. We continue to monitor this sector closely.” However, for now, Sartwelle said he expects the industry to benefit from the tight supply of fed cattle numbers expected through the end of the year. “The bottom line is the trade expects tight supplies to continue into the second quarter of next year, with the April 2008 fed cattle futures contract trading at a $3.50 premium to the June 2008 contract,” Sartwelle said. “I do not see any news in this report that has not likely been built into the recent $90 to $92 fed cattle trade.” — John Robinson, WLJ Editor  

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Monday, October 22,2007

Stockmen’s association supports checkoff changes

by WLJ
—Studies begin to question sustainability of the ethanol industry. FUSDA moved its corn crop expectations higher as part of the Oct. 1 Crop Production report. According to National Agricultural Statistics Service (NASS), the total national corn production will reach 13.3 billion bushels, up 26 percent from 2006. The number was on the low end of analysts’ expectations and the news spurred corn prices to move slightly higher following the report, according to Virginia Tech Commodity Marketing Agent Mike Roberts. Based on crop conditions when the report was compiled, yield will average 154.7 billion bushels of corn per acre nationally, up 5.6 bushels from last year’s average with much of the increase coming in the Plains, central Corn Belt and Mississippi Delta. According to NASS, there are 86.07 million acres planted to corn this year in the U.S., a substantial increase from last year’s 70.6 million acres, as farmers take advantage of the ethanol-fueled increase in corn prices. Already, as a result of favorable harvest weather conditions, corn harvest is well ahead of normal, reaching 53 percent complete last week, 14 percent ahead of last year and 12 percent higher than the five-year average. In the central Corn Belt where the crop maturity was promoted by favorable harvesting conditions, harvest was 20 percent ahead of 2006. In other regions, harvest progress last week was reported from 1 percent to 12 percent ahead of last year. In Kentucky, North Carolina, Tennessee, and Texas, corn harvest was reportedly near completion. Although harvest was looking good, wet weather in the forecast late last week threatened to derail farmers’ efforts. Across the Midwest, growers were working to get as much grain harvested as possible in an effort to avoid rewetting the crop and the potential for mold that comes with precipitation. Roberts said producers may want to lock in corn crop prices soon to protect profits from any downside pressure during harvest. “Producers having sold 60-70 percent of this year’s crop are in good shape as this market trades sideways. If you have any corn left un-priced, now would be a good time to consider locking it in,” he said. In addition to the crop condition report, NASS issued the World Agricultural Supply and Demand Estimate (WASDE) last week which added fuel to the bullish corn news. USDA raised its forecasts for U.S. corn exports, predicting U.S. corn exports could reach their highest levels in nearly two decades. The possibility that European Union nations could lift their ban on genetically modified imports could quickly build on that number if the news comes as expected in the next few weeks. According to the WASDE report, exports of U.S. corn are expected to increase by 100 million bushels during the 2007/2008 marketing year, which is likely to offset the reduced expectations for usage by the ethanol industry which has cooled off in the second half of the year. NASS lowered expected ethanol corn usage by 100 million bushels for the second month in a row. U.S. corn exports are expected to reach 2.35 billion bushels during the ’07/’08 marketing year as a result of a sliding U.S. dollar in the currency markets and poor growing conditions in several countries which impacted foreign production. According to Mike Woolverton, Extension grain economist at Kansas State University, China, in particular, was hit by weather related crop reductions. “China just announced they will export no more corn this year. Drought in the North China Plain reduced corn yields and even though China is not a large corn exporter, it leaves the United States as the major corn exporter in the world. By the end of the ’07/’08 marketing year, U.S. exports of corn may be far greater than the current WASDE projection,” he said. Woolverton also noted the reduction in expected corn usage by the ethanol industry in his report. Domestic ethanol plant usage of corn will need to be watched closely,” he said. “Higher corn price, given the low ethanol price, is pushing ethanol producers even more into the red. The USDA dropped projected ethanol purchases of corn by 100 million bushels in this report. Unless the profit picture improves, it could go lower.” That profit picture looks grim for much of the ethanol industry, according to several analysts. The news that several ethanol plants are either slowing their plans for expansion or cancelling construction altogether could further reduce usage estimates and cause farmers to shift acreage to other crops next year. According to a research note published by Wells Fargo analyst Michael Swanson, the corn usage by the ethanol industry, as calculated by USDA, could be overstated. “The USDA’s 3.2 billion bushel estimate implies another 2.1 billion gallons of supply. My estimate of balance ethanol production needs calls for 2.4 billion bushels of corn usage. And that estimate might be too aggressive to recover the historical (ethanol versus crude oil price) spreads,” Swanson said. He said a better estimate of ethanol usage of corn, which includes factoring in the usage of co- products by the animal feeding industry, indicates that only 82 million acres of corn will be needed next year to meet all demands. “That wouldn’t do anything to reduce corn stocks,” Swanson said. “I am sure that this represents the most bearish analysis in the market. Even so, I will put my detailed weekly analysis of gasoline with ethanol distribution up against most of the warm and fuzzy hopes for China to ride to the rescue with huge export demand.” He said that a swing of 15 million corn acres back into wheat and soybean production next year will cause rapid corrections in both markets. “This means producers need to be aggressively marketing on all fronts,” Swanson said. “If ethanol can’t pull the corn train at $4 a bushel, all bets are off.” — John Robinson, WLJ Editor  

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