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Wednesday, June 20,2007

Beef Board 2006 budget proposed

by WLJ
20, 2005 The Beef Promotion Operating Committee has recommended a $50 million Cattlemen’s Beef Board (CBB) budget for fiscal year 2006, reflecting a slight decrease from the $50.5 million budget for fiscal 2005. The Beef Board, which administers the national checkoff program, projects revenue of $45.4 million for fiscal 2005, plus $4.6 million to be available from current program budgets as a result of projects costing less than originally estimated. The breakdown of the budget recommendation, which must be approved by the full Beef Board and USDA before any funds are expended, includes the following budget elements: promotion, $25.5 million; research, $7.3 million; consumer information, $5.8 million; industry information, $1.35 million; foreign marketing, $5.1 million; producer communications, $2.2 million; evaluation, $230,000; program development, $120,000; USDA oversight, $200,000; and administration, $2.25 million. The 2006 fiscal year begins Oct. 1, 2005. “We looked carefully at challenges and opportunities in the marketplace to determine what areas we need to emphasize to give cattlemen the best return on their checkoff dollar,” said Al Svajgr, a producer from Cozad, NE, and chairman of CBB and the Beef Promotion Operating Committee, which met in Kansas City June 8-9, 2005. “With the recent decision from the Supreme Court that our checkoff program is constitutional, we wanted a budget that will continue concentrating on building demand for beef. It allows us to do this through a combination of promotion, research and information programs that aim to keep beef at the center of the plate.” The recommended research budget for fiscal 2006 represents an increase in funding for additional market research in such areas as developing “kid-friendly” beef product concepts, as well as strategies to integrate beef enjoyment and nutrition messages and enhance program concepts for ground beef. Meanwhile, the committee is recommending slight decreases in the budgets for consumer information, industry information and foreign marketing, based both on increased research needs and on generally tight revenues. In the coming stages of the fiscal 2006 budgeting process, the full Beef Board will be asked to approve the budget at its meeting in Denver in late July. Joint industry advisory committees and subcommittees also will meet in Denver to prepare recommendations for specific program proposals that are funded with that budget. Those proposals will be considered by the Operating Committee in September, before the Oct. 1 beginning of the fiscal year, and must finally be approved by USDA before any checkoff dollars may be spent. Funds from the Beef Board for national checkoff programs will be augmented by $10.3 million in voluntary contributions from state beef councils to their national Federation of State Beef Councils, a division of the National Cattlemen’s Beef Association (NCBA). In addition to the budget recommendation for fiscal 2006, the Operating Committee recommended approval of the following amendments to the current fiscal 2005 budget: • Reallocation of $25,000 in producer communications funding from the producer communications program contracted through NCBA to fund additional activity for the “Beefmobile.” NCBA requested reallocation of the funds based on an abundance of requests for Beefmobile visits to events and auction market sales. The funds were made available from other producer communications efforts managed by NCBA coming in under budget. • A request from the U.S. Meat Export Federation (MEF) to reallocate about $44,000 in Beef Board funding originally planned for beef-promotion programs in China to promotion programs in the Middle East, based on the continued closure of the Chinese market to U.S. beef products and the re-opening of the Egyptian market. • A request from MEF to transfer about $880,000 in Beef Board funding previously approved for retail and menu promotions in Japan to programs for trade and educational activities in the same country. Because the market is not yet open to U.S. beef, MEF said there is less imminent need for promotion in retail and menu promotion and more to be used to prepare importers there for the market reopening and to reassure consumers about the safety and quality of U.S. beef. — WLJ © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

BSE retest positive; criticism rampant

by WLJ
20, 2005 — UK test results expected late June. — Testing protocol breach suggested. A sample of brain matter from a “downer” cow collected last November was retested for BSE earlier this month and came back positive for the brain-wasting malady. Officials with USDA’s Animal and Plant Health Inspection Service (APHIS) were awaiting confirmatory testing from a British lab to determine if the animal was indeed infected with the disease. Producer groups last week were very critical of USDA’s announcement concerning the BSE test, saying that surveillance protocol was breached when an announcement was made prior to final test results being received from Great Britain. On June 10, USDA Secretary Mike Johanns and USDA chief veterinarian Dr. John Clifford said the agency’s Office of Inspector General (OIG) requested earlier that week that three beef samples previously determined to be negative for bovine spongiform encephalopathy, but showing “preliminary inconclusive” results after a rapid test, be reassessed using a different type of test. One of those three retested samples came back positive, and efforts were being made last week to get that sample shipped to Britain where the final test would be conducted. Preliminary inconclusive means that the original rapid test came back with a positive result. However, a confirmatory immunohistochemistry test on all three preliminary inconclusive test samples from last year showed the disease did not exist in those animals. OIG came back to USDA early in the week of June 6 and requested that APHIS scientists retest the three preliminary inconclusive samples with a different test, called the “Western blot.” USDA officials said that past assessment of both the IHC and Western blot tests have shown them to be equal in their accuracy and effectiveness in determining presence of BSE. Why OIG made the request was not disclosed by USDA or APHIS officials. “OIG, which has been partnering with APHIS, the Food Safety and Inspection Service, and the Agricultural Research Service by impartially reviewing BSE-related activities and making recommendations for improvement, recommended that all three of these samples be subjected to a second internationally recognized confirmatory test....Of the three samples, two were negative, but the third came back reactive,” said Dr. John Clifford, chief veterinarian for USDA. He added that the animal in question was a 10-12 year old “downer” cow, that did not meet criteria for being processed into human food or animal feed. The animal also was born prior to the 1997 feed ban restricting use of ruminant meat-and-bone-meal (MBM), which means the animal could have received feed contaminated with the agent responsible for BSE. “Regardless of the outcome (of the confirmatory test in Great Britain), it is critical to note that USDA has in place a sound system of interlocking safeguards to protect human and animal health from BSE, including a ban on specified risk materials from the human food supply,” Clifford said. “In the case of this animal, it was a non-ambulatory animal and as such was banned from the food supply. It was processed at a facility that handles only animals unsuitable for human consumption, and the carcass was incinerated.” Criticism launched at USDA Futures and cash cattle markets last week were both directly impacted by USDA’s decision to announce the Western blot test results, and producer organizations were upset because USDA went against normal protocol to wait to announce any results until final tests are completed. In a letter to U.S. Agriculture Secretary Mike Johanns, Jim McAdams, president of the National Cattlemen’s Beef Association (NCBA), said, “We expect a full explanation of the circumstances that caused OIG to recommend additional testing of previously identified BSE negative animals. While NCBA has supported the surveillance program and its intent, these most recent actions by USDA and the OIG do not increase the safety of U.S. beef, nor do they improve the health of the U.S. cowherd, but instead put the industry at greater economic risk. “We call upon USDA to clearly communicate the scientific basis for the protocol that they will follow, and the time frame that the industry can expect to bring this current issue to resolution. It is important not to communicate the results of this situation until they are definitive. To prevent further economic uncertainty in the market, USDA should not release intermediate test results or additional information that is not final and conclusive in nature.” State and regional producer groups had additional concerns about USDA’s recent actions, including the following questions: • Why did USDA not announce the change in surveillance protocol prior to accepting OIG’s recommendation to retest using the Western Blot test? • Is the IHC test still considered the “gold standard,” and why was the extra Western blot test not done last November? • Why was the suspect sample “enhanced” to complete the test? According to the Nebraska Cattlemen Inc. perception is that the sample was concentrated last November to achieve a “weak positive.” • How is USDA preparing for a confirmed positive or a negative test result from the Weybridge, England, laboratory? USDA officials said they would not give any more details on the situation until final test results were received from the British laboratory. Those results are expected to be known right around the end of the month. APHIS scientists said it would take at least two weeks from June 10, before results would be known. — Steven D. Vetter, WLJ Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

New federal grazing rules given OK

by WLJ
20, 2005 — Legal protections to be in place next month. The Bureau of Land Management (BLM) last week announced the public release of a final environmental impact study (EIS) that confirms upcoming grazing rule changes will produce long-term benefits for public rangelands and not be a detriment to wildlife habitat or recreation in the future. “This environmental-impact analysis underscores grazing’s role as a vital use of public lands in the rural West,” said Rebecca Watson, assistant secretary for Land and Minerals for BLM. “The new rules will improve BLM’s management of public-lands ranching, an activity that not only supports rural economies but also preserves open space and wildlife habitat in the rapidly growing West.” BLM Director Kathleen Clarke said the EIS, published in the June 17 Federal Register, shows that grazing if managed appropriately provides long-term benefits to federally-managed rangelands. “These benefits include increased vegetation along stream banks, which will reduce soil erosion and provide more habitats for wildlife,” Clarke said. “Under the new regulations, the BLM’s grazing-management decisions will be based on better information about rangeland conditions and utilize information from those that are most closely linked to the land.” The new grazing regulations, to be published in the Federal Register next month, aim to improving BLM’s working relationships with ranchers on federally-managed lands, according to Clarke. “The revisions reflect the agency’s commitment to managing the public lands for multiple uses, including grazing, while ensuring the health and productivity of these lands,” she said. The revisions include continuing the role of BLM’s Resource Advisory Councils (RACs), which are composed of citizens across the West who advise and make recommendations to the agency on federal land issues. The revised regulations will also leave intact the rangeland-health standards and guidelines developed by the RACs. The new rules also work to improve the agency’s working relationships with those holding BLM grazing permits and leases; advance the bureau’s efforts in assessing and protecting rangelands; and addressing legal issues while “enhancing administrative efficiency.” Of particular focus, are changes in protocol concerning legal challenges of grazing on federal lands. Under the new rules, people or organizations challenging a specific grazing situation will need to bring factual proof of damage being done to the land in question, and not just allege that damage is being done or that there is “a threat of damage” looming, BLM officials said. “In the past, the court’s have accepted grazing permit challenges on the basis that someone or a group of people think damage could happen if the practice of grazing livestock is allowed to continue,” a BLM spokesperson told WLJ. “Under the new rules, that isn’t enough to gain standing. Those with the allegations have to come forward with facts and not just opinion or conjecture.” In addition, the new regulations will continue to require that the bureau consult with the interested public and users of public lands on key matters, such as developing or changing grazing-activity plans; planning rangeland-improvement programs; and developing reports that are used as the basis for BLM decisions affecting grazing permits or leases. The final EIS is posted on BLM’s Web site at www.blm.gov/grazing. BLM officials said that when the final grazing rules are published next month, they will be implemented immediately. They did not say for sure that a comment period would be reopened over the first 30-45 days of the new rules being in place, however, that is a possibility. — Steven D. Vetter, WLJ Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

Pac Rim trade fragile

by WLJ
20, 2005 The tenuous nature of U.S. beef trade with Pacific Rim export partners became even more so last week following the announcement that a cow tested last November for BSE could have been infected with the disease. Officials in Taiwan, the most recent major export market to reopen to U.S. beef, said last week that they will immediately reinstate the ban on all U.S. beef if confirmatory tests in Great Britain show the suspect cow was infected with the disease. Beef trade talks with South Korea were suspended, at least temporarily, with both countries citing the uncertainty about the health of the United States’ cattle herd. “We are waiting until we get the test results back from England, before resuming our talks with the Koreans,” a USDA trade source told WLJ last week. Japanese officials last Tuesday indicated that they were moving ahead with the regulatory process that would change import rules to allow U.S. beef from cattle under 20 months of age without BSE testing back into Japan. The fact that Japan has confirmed 20 cases of the disease in its domestic herd, with no infections in animals under 20 months of age, was said to temper the amount of distrust in U.S. beef. In Taiwan, Chen Lu-hung, director of Taiwan’s Department of Health (DOH) Bureau of Food Safety, formally announced last Monday that if the suspect cow is confirmed to have BSE Taiwan will suspend imports of U.S. beef immediately. A group of opposition parliamentarians said they suspected politics had been involved in the issue and vowed to push for the ban. Taiwanese Health Minister Hou Sheng-mao, said the government will not cave to increasing public pressure from Taiwanese consumer organizations to ban U.S. beef before results of a confirmatory test from England are known. He said the decision to retain imports of some U.S. beef products was made on “professional considerations,” and he asked for time to allow the health authorities to carry out investigations into the latest U.S. BSE case. USDA sources said that beef trade resumption talks with South Korea were at a standstill last week, while the final BSE test result is awaited. A negative BSE test will probably lead to South Korea deciding late this month whether to resume the import of U.S. beef. Government representatives, consumer groups and beef producers will gather in late June to review the United States’ quarantine efforts, Korea’s Ministry of Agriculture and Forestry (MOAF) said last week. The ministry said no decision has been made concerning the resumption of the import, but rumors suggest the meeting will pave the way for American beef into the South Korean market. South Korean government officials, consumer group representatives and animal and human health specialists toured the U.S. June 6-10 on a technical BSE mission. USDA sources said that a tentative agreement resuming U.S. beef imports had been discussed extensively, however, the Korean ministry refused to confirm the claim. Instead, those officials said further meetings in Korea needed to be conducted to determine if the BSE surveillance and mitigation protocols in the U.S. were sufficient. U.S. government and beef industry officials said they had the impression that BSE protocols were more than adequate to ensure South Koreans’ confidence in the health and safety of U.S. beef. “I would say they (the Koreans) were more than satisfied with the practices in place,” said Mark Gustafson, president of Swift International, a branch of Swift & Company. The reinstatement of trade with Japan was still moving forward last week, with the country’s Food Safety Commission (FSC) continuing to work on new regulations that would allow U.S. beef from cattle under 20 months of age, with specified risk materials removed, that were untested for BSE. According to Mamoru Ishihara, Japan’s vice minister of agriculture, forestry and fisheries, the federal government in that country was originally moving ahead with new import rules under the assumption that new cases of BSE would probably be confirmed in the U.S. “We wouldn’t be surprised if another case (of BSE) is confirmed,” he said. The final proposal regarding resumption of beef trade with the U.S. was expected to be announced late last month, however, several delays within FSC has resulted in projections for a new regulation being pushed back till at least the end of June or the first half of July, sources said. — Steven D. Vetter, WLJ Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

Farm Bill forum, comment period announced by USDA

by WLJ
20, 2005 Agriculture Secretary Mike Johanns last Thursday announced the first Farm Bill Forum and the topics on which USDA will be seeking input from America's farmers, ranchers and rural residents regarding the development of the 2007 Farm Bill. "The next farm bill will affect America's entire agricultural community," said Johanns. "That's why I want to ask America's farmers and ranchers how our farm policy is working and how we can make it better. I believe very strongly that they deserve a voice in this process.” The first Farm Bill Forum will be held in Nashville, TN, on July 7 from 6:00 to 10:00 p.m. CDT at RFD-TV Northstar Studios. The public is invited to attend and participate in the forum, which will be broadcast live on RFD-TV. In addition to accommodating approximately 300 in the audience, the forum also will accept calls from across the nation. Johanns made the announcement in remarks to the state convention of the Illinois FFA in Springfield, IL. The 2002 Farm Bill, which authorizes many of the programs operated by USDA, expires with the 2007 crop year. Johanns noted that he was approaching the Farm Bill Forums with an open mind. "I do not begin this process with preconceived notions about the direction future farm policy should take," said Johanns. "We will use the feedback we receive to help us determine the best course for a new Farm Bill." Throughout 2005, Johanns and other senior USDA officials will participate in the Farm Bill Forums that will be held across the country. The dates, locations and times of the forums will be announced as they are scheduled and be available on the USDA web site at www.usda.gov/farmbill. The public is invited to attend the forums and present oral comments. Six topics have been identified to provide a framework for the forums. The primary topics addressed at the forums will reflect various concerns affecting rural America such as commodity, conservation, and rural economic development issues. In addition, some forums will be dedicated to other important programs authorized by the farm bill such as food assistance, research and education programs. USDA will seek public discussion on farm policy considerations regarding the competitiveness of U.S. agriculture in global and domestic markets; challenges facing new farmers and ranchers as they enter agriculture; appropriateness and effectiveness of the distribution of farm program benefits; achievement of conservation and environmental goals; and enhancement of rural economic growth and opportunities to expand agricultural products, markets and research. The public will be invited to provide comments on six specific questions based on these policy considerations: • How should farm policy be designed to maximize U.S. competitiveness and our country's ability to effectively compete in global markets? • How should farm policy address any unintended consequences and ensure that such consequences do not discourage new farmers and the next generation of farmers from entering production agriculture? • How should farm policy be designed to effectively and fairly distribute assistance to producers? • How can farm policy best achieve conservation and environmental goals? • How can federal rural and farm programs provide effective assistance in rural areas? • How should agricultural product development, marketing and research-related issues be addressed in the next farm bill? Notice of these questions was published in the June 17 Federal Register. Comments will be accepted at public forums and may also be submitted electronically via the Internet. USDA will review public comments received by December 30, including any analyses, reports, studies and other material submitted with the comments, that address the six questions. — WLJ © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

Seasonal weight jump earlier than normal

by WLJ
20, 2005 — Northern tier cattle 30-40 pounds heavier. — Cool weather could intensify front-end supplies. The normal seasonal summer spike in finishing weights of fed cattle started this year several weeks earlier than normal, and analysts are concerned that unseasonably cool weather could make the issue of front-end supplies even more severe over the next couple of months. For the week ending June 12, the average live finishing weights of steers being processed was 1,260 pounds, 18 pounds heavier than last year. Average steer carcass weights for that same week were 824 pounds, 15 pounds heavier than a year ago. The biggest jump in finishing weights has been seen in the northern tier cattle feeding states. Nebraska fed steers averaged a finishing weight of 1,321 pounds for the week ending June 12. That figure is 40 pounds heavier than the same time a year ago. Carcass weights for the state were 23 pounds heavier at 833 pounds. In Iowa, average steer slaughter weights were 1,323 pounds, 30 pounds heavier than a year ago. Southern cattle feeding states weren’t showing increases as big. Weights, however, were still heavier than a year ago. In Texas, for the week ending June 12, steer weights averaged 1,232 pounds, 22 pounds heavier, while Kansas cattle were averaging six pounds heavier, at 1,251. Analysts were very concerned with this trend because a lot fewer cattle are needed to provide even more beef than what was produced last year. “The U.S. processed almost six percent fewer cattle (between June 6-11) than last year, however, beef production was just under four percent of last year’s levels,” said John Ridenour, market analyst with HPP Livestock, Wichita, KS. “If slaughter rates were similar to last year, the U.S. would be producing at least two percent more beef with average finishing weights where they are at.” Several analysts last week said the heavier weights are already leading to an accumulation of cattle being held over week-to-week, or a situation known as “front-end” supplies. Ridenour said that while an earlier-than-normal front-end supply situation was somewhat expected this year, the severity of it could be worse than forecasted. “It’s not surprising that cattle are a little bit heavier when being slaughtered this year, but for a lot of those cattle to be 30 and 40 pounds heavier is shocking,” he said. One of the primary reasons for that extra weight being put on by cattle is the unseasonably cool weather felt by central Plains and northern tier cattle feeding states during the past month to six weeks. Chad Dolittle, statistician with Iowa City, IA-based MW Commodities, indicated that between May 1 and June 10 there were only five days across Iowa, Nebraska, and eastern Colorado that were the same temperature or hotter than the previous five-year average. “In a lot of areas, daily temperatures were 12-15 degrees cooler, which made feeding conditions for cattle much more comfortable than normal,” Dolittle said. “We’ve figured that 10-15 degree decline in temperatures probably resulted in cattle gaining at least a half to three-quarters of a pound extra per day than usual for this time of year. Over a month that is an extra 15-22 pounds being added to an animal’s weight.” Ridenour said that if cooler-than-normal weather continues through June and early July, that finished cattle supplies could get even more burdensome on the market. As a result, he indicated that cattle feeders probably need to adjust their feeding regimens, particularly on cattle originally slated for market slots in August and September. “We could see a good two week holdover on slaughter-ready cattle the next few weeks, which means the supply pressure in a couple of months could be overly intense,” Ridenour said. “It’s probably smart for some cattle to be fed less, in order for them to be ready for market a little later than originally projected.” Other market sources said that the most recent developments concerning BSE could slow down slaughter volumes even further, due to a decline in both domestic and export confidence in U.S. beef. “If things don’t improve from a demand standpoint, and management continues to move forward with current feeding regimens, we could see cattle 60 pounds-or-more heavier than the previous few years,” said Ridenour. “That would be very hard to get out from under.” — Steven D. Vetter, WLJ Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, June 20,2007

Closer monitoring of cattle water intake urged

by WLJ
27, 2005 As the official start of summer hit last week, ruminant nutrition specialists reiterated that ranchers need to monitor their animals= water intake and adjust their well output or other water-availability levels accordingly. The minimum requirement of cattle for water is a reflection of that needed for body growth, for fetal growth or lactation, and for replacing fluids lost through excretion in urine, feces, or sweat or by evaporation from the lungs or skin. When temperatures start to hit 65-70, those minimum requirements increase significantly and on a rapid basis. According to past water intake studies, researchers have indicated that nursing cows drink between 17-19 gallons of water between May and early September, when temperatures are normally at their hottest. During the first quarter and last quarter of the year, those same animals historically consumer between 11-13 gallons of water, on average. The increased intake is not only because of fluids being lost associated with evaporation through the skin and lungs, but because of mother cows needing extra water to promote adequate milk production for their calves. ACalves will start drinking water when they are a few months old, however, they still rely mostly on the milk produced by mom,@ said Randy Nieswander, cattle nutrition specialist, Southern High Plains Livestock Consultants, Liberal, KS. A Milk is both the basis of nutrition and hydration for calves. The more water that is taken in by mom, the better off calves will be.@ In addition, research from the University of Nebraska has indicated that mother cows reach their peak milk production period three to four months after parturition, which can happen either at the time a calf is born or a few days prior. As far as bulls are concerned, summer water requirements range between 17-20 gallons, compared to 10-13 gallons the rest of the year. Under normal winter calving situations, bulls are turned out for breeding in June and July, which means they are walking and A working@ a lot more during hot temperatures than they are the rest of the year. As a result they need more water. AWater is a key component to a bull= s recuperative abilities, particularly during a hot weather breeding season,@ said Nieswander. A In addition, the quality and viability of sperm is improved because of increased water intake.@ Breeding stock aren= t the only cattle that need to have increased water intake during the summer. In fact, heavier weights of feedlot cattle are said to have the most need for water during extremely hot temperatures. Cattle weighing 1,000 pounds or more in a feedlot setting are said to require 20 gallons or more of water in the summer, particularly when temperatures get 85 degrees (Fahrenheit) or hotter. In other times of the year, water intake can range widely, usually between 9-14 gallons. In instances where, temperatures get above 95 degrees, water intake can be up to 25 gallons, sources said. According to Nieswander, confinement feeding situations result in cattle feeling like temperatures are 8-12 degrees hotter than the thermometer indicates. ACattle are so closely penned together and shade is usually minimal in feedlots. That means cattle body temperatures get a lot hotter than the temperature actually is, particularly if they are black,@ he said. A That extra heat needs to be combatted, and the only way they can do that is by drinking water and keeping their core temperature down.@ Stocker cattle on grass and lighter weight cattle in feedlots usually drink 13-15 gallons of water during hot summer months, compared to 9-12 gallons the rest of the year. In areas where shade is more prevalent, and temperatures stay mostly A moderate,@ water requirements can remain around 10 gallons per day. Producers with any type of cattle on pasture or grass also need to take into account that water intake will need to be increased if salt or mintrate blocks are freely available to cattle. In situations where salt and supplement intake is more monitored, water intake won= t vary as much. C Steven D. Vetter, WLJ Editor © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Monday, May 28,2007

U.S. nearing tipping point in corn-based ethanol production

by WLJ
A new study conducted by the Center for Agricultural and Rural Development at Iowa State University (ISU) conservatively estimates that the increased prices of corn driven by the demand for corn-based ethanol have already increased U.S. food retail prices by $14 billion annually. The study examined the impact of ethanol and other biofuels on the future and what kind of effect it could have on crop markets, the livestock sector, exports and grain-based food retail prices. The study found that if corn were to reach $4.42 per bushel, which is not out of the realm of possibility, as opposed to the historic $2 per bushel prices, and if crude oil prices range from $65 to $70 per barrel, U.S. food retail prices could rise $20 billion annually. “What we have learned from this study is that there are serious consequences associated with an increased ethanol-usage mandate,” said Gregg Doud, chief economist at the National Cattlemen’s Beef Association. “We recognize the importance of the United States diversifying its energy sources to enhance energy security,” said J. Patrick Boyle, president and chief executive officer of the American Meat Institute. “But this study clearly shows that we are reaching a tipping point and over-reliance on corn-based ethanol to meet stringent government mandates would further drive up retail food prices, reduce domestic meat and poultry production, and erode our vital meat and grain export markets.” In one of the scenarios, which includes high crude oil prices, the study predicts that U.S. ethanol production could reach as much as 30 billion gallons by 2012. This scenario predicts that we could be using more than half of the U.S. corn, wheat, and other coarse grain crops to make ethanol, significantly limiting the amount of grain available for livestock production. “The additional feed costs associated with increasing the price of corn from $3.50 to $4.50 per bushel on a 750 pound steer, decreases its value to the rancher by $100/head when the finished product is worth $90/cwt.,” said Doud. The study predicted that if season average corn prices over a 10-year period ending in 2016 increased to $4.42 per bushel, beef retail prices would increase 4 percent while production would decline by 1.6 percent. In the pork industry, production costs would increase 36.8 percent. Production would decline by 9.2 percent and retail prices would increase 8.4 percent while exports would decline by 21 percent. The poultry industry would be severely impacted as well, with broiler exports expected to decline by 15 percent while retail prices would increase by 15 percent. “After policymakers read this study, our question to them is, ‘How do you plan to address the loss in cow/calf producer’s income if we increase the feedgrains-based fuel mandate and we don’t produce a record corn crop?” said Doud. Many people believe that cellulosic ethanol could help alleviate some of the pressures put on the corn industry to raise enough corn. Quite to the contrary however, the ISU study found that the vast growth of ethanol availability will come from corn. The study also determined that neither corn stover nor switchgrass, when used to produce ethanol, makes any economic sense. It was concluded that with all of the considerations such as conversion, handling, and logistics, it would not be economically feasible to produce cellulosic ethanol unless the government subsidized the operations with more than $270 per acre. Additionally, the study looked at what the impact would be if USDA were to allow some of the land in the Conservation Reserve Program (CRP) to be removed to grow corn. It was found that although CRP land could help to alleviate some of the financial stress on livestock producers in the short term, shifting 11 million acres of the 36 million acres in CRP lands would only have a mild effect for a short amount of time. The study showed it would only add about 1 percent to corn supplies and would lower the prices by 7 cents per bushel in the short term. “This could drive many producers right out of the cattle industry,” Doud said. “All we’re asking for is the ability to compete on a level playing field with the ethanol industry for that bushel of corn. Market forces must be given the opportunity to function, and policymakers need to carefully consider the negative implications that can be brought upon cattle producers as a result of continued government interference in the marketplace.” — RaeMarie Gordon, WLJ Editor  

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Wednesday, May 23,2007

Obituary

by WLJ
2005 Eric Loretz Eric Loretz, born August 30, 1923, in Sacramento, CA, passed away May 1, in Elk Grove. He was 81. Loretz lived his entire life around the Sacramento area and in 1936 moved to the home ranch in Franklin where he lived until his death. He served in the U.S. Army until 1946, when he returned home to Franklin to continue his life-long career as a cattle dealer and rancher as well as owner of Cattleman’s Livestock Market, Galt, CA. He is survived by his wife of 55 years, Pat, son Frank, Elk Grove, daughter Patricia Loretz and son-in-law Ken Christman, grandson Phillip, and granddaughter Claire Marie Christman, all of Maryland, brother-in-law Paul Franusich, Franklin, CA, brother-in-law and sister-in-law Don and Laura Monseth, Herald, CA, and many nieces and nephews. In lieu of flowers remembrances may be sent to Sutter Hospice, 2800L St., Suite 400, Sacramento, CA 95816, or to the American Cancer Society. © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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Wednesday, May 23,2007

Post holiday lull expected; fed cattle prices impacted

by WLJ
2005 Fed cattle markets turned softer last week with northern Plains feeders trading cattle $1-2 lower at $141-143.50 dressed, and limited live trade at $88. Southern plains feeders were playing a tougher game and holding for at least $90 as they watched the boxed beef cutout rise for most of the week. At the end of trade Thursday only 127,000 head traded on a cash basis. Formula trade was at $145.32 on cattle priced Wednesday. Slaughter levels remained fairly strong after the prior week’s rally. For the week ending May 14, 649,000 head were slaughtered to fill Memorial Day orders. Last week, by Thursday, packers had processed 482,000 head, up 5,000 from the prior week but down 30,000 head from a year ago. For the week ending May 7, 656,000 head of cattle went through packers’ processing chains. In addition, both live finishing and carcass weights are above last year. That means that even more tonnage is being put on the market, and fewer cattle may be needed once Memorial Day passes. The average live weight of cattle processed for the week ending May 14 was 1,219 pounds, 15 pounds heavier than last year. The average carcass weight was 743 pounds, compared to 734 during the same week last year. Market analysts continued to call slaughter levels well above consumer beef demand. Most sources continued to say that 600,000 or fewer head of processed cattle would meet current beef demand levels. Packers are seeing some positive margins, earning $26 per head on an average buy of $92.21 from two weeks ago. Boxed beef was approximately $3 stronger with Choice trading at $156.88 and select at $140.90 on moderate volume last Wednesday. The Memorial Day retail supply had been bought up and trade volume had slowed significantly compared to the prior week’s “fire sale.” One of the bright spots continued to be the slaughter cow and bull trade, which is seeing some of the best prices ever. On the cow meat side, the cow beef cutout was at $124.36, which is near an all time high. The 90-percent lean market was trading at $159.38 and 50 percent trim was at $85.62. Analysts said that 150 pounds of fat and trim coming off these fed cattle is adding $100 per head to them. The May 1 Cattle-on-Feed report is expected to show feedlot placements up significantly over a year ago, with analysts estimating 99-115.5 percent of a year ago. Most of the additional placements are expected to show up in the 800-pound-and-heavier category. The average analyst guess for total cattle on feed May 1 is 102 percent of a year ago, with the marketing number expected to be 96.5 percent, with one less marketing day. The placement guess is wide open for interpretation. There were a lot of cattle moved off of wheat and winter grass later than normal. Feeders, stockers Heavier feeder cattle brought mostly steady to slightly firmer money, compared to two weeks ago, according to auction reports from across the country. However, lighter weight stocker-type cattle were seen trending $1-5 higher, with heifers showing larger gains than their steer mates. The fact that most cattle being placed into feedlots currently would be market ready after the normal summer lull in the fed market had passed was enough to keep prices mostly steady with the previous week. In addition, there is still a good chance that both Japan and South Korea will be reopened to U.S. beef in the last quarter or third of the year, and that would help fed cattle prices over that period of time. However, a lack of overall feeding industry profitability was said to deter interest in buying heavier weight feedlot-ready cattle for much more than steady money. Most analysts said that northern cattle feeders could show some breakevens in the mid- to high-$80s. However, several sources said that southern state breakevens were in the low-$90s for the most part. In addition corn prices started to spike last week, led by a 10-cent-plus gain in nearby futures contracts, and that hurt cattle feeders’ ability to ante up more money for cattle procurement. July corn futures last Thursday got above $2.11 per cwt, compared to sub-$2 levels most of the previous week. Cash corn trended back above the $2 mark, compared to the $1.95 level during the previous week. Analysts said that under normal cattle market circumstances, current corn prices wouldn’t be much of a concern to cattle feeders, however, those sources said these aren’t normal circumstances. “Historically speaking, the feedlot industry is currently paying at least 12-15, if not 20, percent more for cattle entering feeding facilities, and isn’t showing much of a profit, if any, for those efforts,” said Davis Adair, analyst with Chicago-based, ADG Commodities Inc. “In that situation, any spike in other expenses is more closely scrutinized and adjustments will be made quicker and more dramatically.” The CME feeder cattle index, for 700- to 850-pound steers, was $111.98 last Wednesday, about 15 cents higher than the previous Wednesday. “Grass fever” was the term most used by auction market reporters last week when reporting the significant upturn in demand for stocker cattle, particularly calves. Southwest auction barns reported that the two to three inches of rain that fell over the second week of May improved pasture and range conditions immensely and improved the psyches of graziers in the Southwest. In addition, pasture and range conditions across the northern tier and central Plains portions of the country continue are called over 60 percent good to excellent condition. Steer prices were called mostly $1-3 higher last week, while heifers saw gains as high as $7 more than the previous week. Reports indicated that the quality of heifers was much better than previous weeks, with a lot of “replacement types” noted. Most calves and lighter cattle won’t be ready for market until early next year, and by then the largest U.S. export markets are almost guaranteed to be open, which means the prices paid for them at that time should be much better than the previous few winters, sources said. From the heifer side, U.S. beef cowherd expansion is expected to be in full gear next year and several stocker operators are buying higher quality heifers with that in mind. — WLJ © Crow Publications - Any reprint of WLJ stories, except for personal use,  without permission, written consent and appropriate attribution is prohibited. ©1996-2005 Crow Publications. All rights reserved.

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© Crow Publications - Any reprint of WLJ stories, except for personal use, without permission, written consent and appropriate attribution is prohibited. 2008 Crow Publications. All rights reserved.