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Monday, June 13,2005

Fed trade steady

by WLJ
— Yearlings slump on fed losses. — Calves up on rain. Fed cattle gained $1 in the northern Plains dressed markets and were mostly steady on the live trade in southern feeding states last week. Most live trade was at $85, while dressed sales were at $135 on moderate trade. Just over 108,000 head traded through Thursday afternoon. The fundamentals of the market would normally signal packers to speed up their processing lines, particularly with the Packer Margin Index at a positive $12.30 per head. However, processors are keeping slaughter rates at cautious levels. Packers cleared their beef inventory two weeks ago and forced the Choice cutout down to $144, but were unable to raise the cutout last week with reduced beef production. Through Thursday, 484,000 head passed through packing plants, 27,000 head lower than the same week a year ago. Slaughter levels for the Memorial Day week were 568,000 head, 10,000 lower than the same week last year. Year-to-date beef production is 2.6 percent below a year ago, and the number of cattle slaughtered is down 4.3 percent from last year. Carcass weights are starting to play a larger role in total beef production and southern Plains live steer weights are at 1,197 pounds; a year earlier they were 1,177 pounds. There is no denying that cattle are being held over. Average steer carcass weights were 793 pounds last week, compared to 780 pounds for the same week last year. Cow slaughter is also down significantly. Ron Plain, extension livestock economist at the University of Missouri, pointed out that cow slaughter continues to run below a year earlier. For the year, through the week ending May 21, total cow slaughter was down 5.5 percent from last year. Dairy cow slaughter was down five percent, and beef cow slaughter was down 6.4 percent. This reduction in cow slaughter is on top of an 11 percent decrease for the same period in 2004, compared to 2003. This reduced slaughter of cows along with replacement cow prices is very strong evidence that cow-calf producers are rebuilding the breeding herd. The cow beef markets have been mixed over the past few weeks. The cow beef cutout is now down to $118.68, but was at $126 two weeks ago. The 90 percent lean was up a couple of dollars to $146.10 and the price of 50 percent trim is $82.11, still a strong market for this class of grinding product. Cow beef carcass values are at $83. Yearlings down Feedlot-ready cattle were bringing mostly $1-2 under prices paid the previous week, as cattle feeders continue to struggle to make profits on cattle being marketed right now. In addition, delays in getting beef trade resolutions with Japan and South Korea don’t have market analysts very optimistic about the late summer, early fall fed market. Southern cattle market sources reported breakevens at mostly $87-88, compared to prices of $85 or less actually received during the previous few weeks. That figures out to a $20-30 per head loss on cattle being marketed right now. Northern state breakevens are closer to $85. However, that still means it’s a “fifty-fifty” proposition when it comes to making a profit, according to analysts. In addition, Jim Robb, chief analyst at the Livestock Marketing Information Center (LMIC), said that breakevens on placeement-ready cattle bought throughout May and early June are already projected at $90, while fed cattle prospects aren’t forecast to be that bullish when those cattle are ready to market. “They (breakevens) could even go a few dollars higher,” Robb said. The Chicago Mercantile Exchange (CME) feeder cattle index, jumped over $3 on June 3, up to $114.37. However, that was in part due to CME changing its formula for that data to include a wider range of cattle, from 600 to 850 pounds. Previously, the weight range was 700-850 pounds. CME statisticians last week told WLJ that the old CME formula, for last Wednesday, was around $108.50, compared to $110.77 the previous week. Calves rebound Lighter weight calves were still showing a lot of strength, as a majority of northern tier auction barns were reporting $2-5 gains, while southern facilities were reporting prices steady to $2 higher. Abnormally heavy moisture continues to inundate northern and central Plains states and a large portion of the West. That has resulted in continued improvement in pasture and range conditions. In fact, USDA reported nine of the 17 most western states having 70 percent of their pasture and range in good or excellent condition, and another four having at least half of available grazing lands in those categories. Ironically, a couple states with the poorest range conditions in that area were Texas and Oklahoma, where producers are starting to report severe drying of pasture and rangeland soils due to high winds accompanying hot temperatures. In those areas, price gains for stocker cattle and calves were harder to find than in more northern areas of the country. Extension livestock specialists from the Dakotas, Nebraska, northern Kansas, Colorado, Wyoming, Utah, Nevada and Idaho all indicated that stocking rates this spring and summer are 150-200 percent compared to the previous three-year average. That is leading to more demand for stocker cattle and calves. In addition, northern state feedlots are more current than southern state lots, and they are in need of more cattle than their southern counterparts, officials said. Demand was also helped because few cattle were available during the previous week due to the Memorial Day holiday, and all the prospective buyers from that week were joining other potential suitors for cattle last week. — 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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Monday, June 6,2005

Beef Bits

by WLJ
Morton’s founder dies at 83 Restaurateur Arnie Morton, founder of the Morton’s of Chicago steakhouse chain, died May 28 at the age of 83. Morton had suffered from Alzheimer's disease and cancer and had been living at a nursing home in Deerfield, IL. A native of Chicago, Morton opened his first restaurant, the Walton Walk, in the 1950s. In 1960, he joined Hugh Hefner and Victor Lownes to found the first Playboy Club. In 1978, he opened the first Morton's, featuring prime aged steaks. The restaurant struggled until Frank Sinatra came in after a concert one evening and the press ran the story. Morton sold the operation in the late 1980s. The chain currently consists of 65 restaurants in the U.S. and abroad. Morton is survived by his wife, seven children, a brother and 13 grandchildren. Japan BSE cases at 19 Japanese officials last week announced they have suspected the 19th case of BSE in the country. Preliminary tests came back positive on a bovine animal at a slaughterhouse in Hokkaido prefecture, and authorities sent samples to two laboratories in the prefecture for confirmatory testing. No other specifics on the animal were available. Japan has found 18 animals infected with the illness since the first case was detected in 2001. As a result, Tokyo has checked every slaughtered beef animal before it enters the food supply since 2001. In February, Japan confirmed its first human case of BSE following the death of a man with symptoms of the illness. Japanese health authorities have said it was likely the man contracted the disease while living for a month in Britain in 1989. New product facility unveiled Swift & Co., Greeley, CO, recently opened the doors to its new product research and development facility, which company officials said cost $6.6 million to build and is now dubbed “The Summit.” The new facility opened with a company-wide celebration, including politicians and other meat industry leader. The Summit is where Swift’s customers will be introduced to new Swift products. The Summit is a 17,000 square-foot facility where meat product innovation and processing tests will be conducted. A team of meat scientists will operate the center's $1.5 million worth of equipment including slicers, dicers, tenderizers, breaders, smokers, shrink wrappers, and roasters. CKE sales mixed CKE Restaurants, Inc. recently announced that same-store sales for period four of fiscal year 2006 were up for Carl’s Jr. but down for Hardees’, compared to a year ago. First quarter results also showed an increase in sales at Carl’s Jr., but a decline at Hardees. For the four weeks ending May 23, Carl’s Jr. showed a 1.5 percent increase in sales, while Hardees’ sales were down one percent. For the first quarter of FY 2006, Carl’s Jr. sales were up 2.4 percent, while Hardee’s sales were down one-tenth-of-one-percent. The jump in Carl’s Jr. sales was attributed to continued advertising the new Spicy BBQ Six Dollar Burger and its unique breakfast offering, the Breakfast Burger(TM). As of the end of its fiscal fourth quarter on Jan. 31, 2005, CKE Restaurants, Inc., had 1,014 Carl's Jr. restaurants and 2,034 Hardee's restaurants. Friday's meat snacks to hit retail Poore Brothers Inc., Goodyear, AZ, recently announced it will retail a new line of T.G.I. Friday's brand meat snacks pursuant to its licensing agreement with Carlson Restaurants Worldwide. The snacks are said be more tender than traditional jerky items. Flavors include Original Steak, BBQ Flavored Chicken and Mesquite Smoked Steak, all available in resealable packaging. The snacks will be sold in convenience stores, grocery stores, club stores and mass merchandise outlets in the very near future. Curling rink to become packing plant Peace Country Tender Beef Cooperative plans to convert a curling rink in Berwyn, Alberta, into a beef processing plant. Neil Peacock, chairman of the cooperative, said the plant, built in conjunction with a Dawson Creek, British Columbia, facility, would open as a value-added beef-processing plant. The Dawson Creek plant will take some time getting through the regulatory processes. In the meantime, Peacock said the Berwyn plant will fill a gap. The Berwyn processing plant will be built in two stages. For the first stage the facility will be a provincially-licensed plant to process meat from animals slaughtered elsewhere in Alberta. The second stage will coincide with the opening of the Dawson Creek slaughterhouse and meat-packing facility, when it will start producing various deli meats destined for both Canadian and export markets. The Berwyn plant is expected to begin first phase operations this fall. Japanese packer sentenced Mitsuru Asada, former chairman of Hannan Corp., Japan’s largest distributor of meat products, was sentenced to seven years in prison for is role in a scheme to defraud the government of $46 million. Asada and other executives substituted imported beef for domestic product when the government instituted a buyback program for domestic beef in the wake of the 2001 discovery of BSE in Japan. Asada admitted he had conspired with about 25 other company executives and other to mislabel the beef and collect the subsidies. Twelve others have pleaded guilty and received suspended sentences. Asada has paid back about $9 million of the fraudulent funds he received. Flies kill cattle, other livestock Swarming flies were responsible for killing 324 farm animals in Latvia late last month, with most of the victimized livestock being cattle. The flies bit the animals to death, Latvia animal health officials reported. Warm temperatures after an unusually cold, damp spring created ideal conditions for the massive swarms of flies to attack grazing animals in Latgale, one of the European Union’s poorest regions. Damages from the fly attack could amount to tens of thousands of euros. Published reports said at least 90 percent of the animals killed were cattle.

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Monday, May 30,2005

Beef Bits

by WLJ
Swift names new CEO Swift & Company announced it has named Sam Rovit as its chief executive officer and a member of its board of directors. Rovit has been with leading strategy consultants Bain & Company since 1988, and was named to that firm’s partnership group in 1995. Rovit is co-author of Mastering the Merger, published this winter by Harvard Business School Press, as well as numerous articles in Harvard Business Review, The Wall Street Journal, Strategy & Leadership, Acquisitions Monthly and The European Business Journal. Rovit replaces John Simons, who left Swift & Company in early April. Feedlot venture completed ContiGroup Companies Inc. and Smithfield Foods on announced the completion of an arrangement that would combine the two companies’ 10 feedlots into one joint venture. The new venture is called Five Rivers Ranch Cattle Feeding LLC, and will consist of feedlots from Colorado, Idaho, Kansas, Oklahoma and Texas with a total one-time feeding capacity of just over 810,000 head. The joint venture combines the six original ContiBeef feedlots with four feedlots owned by MF Cattle Feeding, Inc., an offshoot company of Smithfield. Aussies report Q1 export record Australia's beef exports jumped in the first quarter of 2005 to record levels for the first three months of the year. The value of beef exports rose to $758 million (A$1.03 billion), a first-quarter record, up 19 percent over a year ago and 12 percent above the record set in 2001. More than half of all exports went to Japan, which imported about A$570 million worth of Australian beef, up 20 percent on a year ago. The value of Australian beef exports to the U.S. rose 11 percent to A$223 million, reflecting high domestic beef prices in the U.S. due to tight cattle supplies. Shorthorn branded-beef program The American Shorthorn Association recently unveiled the first-ever, breed-association-sponsored, natural, source-verified, direct-marketing, branded-beef effort, called Durham Natural Gold Beef. Specifications require that calves entering the program be 50 percent Shorthorn genetics and 25 percent Continental genetics. Additionally, they must never be administered or fed any hormonal supplements or antibiotics, and be less than 20 months of age at time of slaughter. For more information visit www.shorthorn.org. Philippines opens to Canadian beef The Philippine government lifted its ban on imports of beef meat from Canada based on measures taken by the Canadian government to contain BSE. Under new rules government imports from Canada, only deboned and deglanded meat from cattle under 30 months of age will be allowed to enter the Philippines. The meat cannot contain nerves and other BSE specified risk materials and must be derived solely from “healthy ambulatory and not downer cattle." The age of the cattle will be certified by the Canadian Food Inspection Agency or a third party certification company accredited by the Philippine Department of Agriculture. Buckhead acquires Royalty Foods SYSCO subsidiary Buckhead Beef, Atlanta, GA, last week signed a preliminary agreement to acquire Orlando-based Royalty Foods, a Southeast distributor and supplier to restaurants of Certified Angus Beef. Royalty had 2004 sales of approximately $75 million. Robert G. Meeks, who co-founded Royalty in 1983, will remain as president and CEO. SYSCO officials said Royalty’s business fits well with Buckhead’s existing Certified Angus Beef business. Cargill to expand in Brazil Cargill Inc. may double investment at its Brazilian meat processing unit in the next two years to expand capacity of existing plants to meet rising demand in Brazil and abroad. Cargill's Seara Alimentos SA, Brazil's third biggest meat processor, plans to invest between $50 million and $100 million in the next two years to expand meat and poultry processing capacity, said Sergio Rial, president of the unit. The company forecasts revenue will rise 10 percent this year to $800 million, of which 70 percent will be exports. © 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 30,2005

Obituary

by WLJ
Vernon Leonard Thornton Vernon Leonard Thornton, 76, died at home in Moores Valley, OR, of a brain tumor May 13. The son of Robert Baird and Marjorie Bell Thornton, he was born Feb. 25, 1929, in Payette, ID. The family moved to Moores Valley, west of Yamhill in 1932. Thornton graduated from Yamhill High School in 1947. April 12, 1958, he married Nancy Withers. Except for his service in the army (1953-55), Vern lived and ranched in Moores Valley all of his life. He was a member of several agricultural and forestry organizations. Thornton’s hobbies were what he did every day—growing trees, raising cattle and managing pastures. He tried to make things a little better than they were the day before. He is survived by his wife, Nancy; his son, Dale and fiancÚ, Jenni of Yamhill; his daughter Janet Haddock, and husband, Steve, Pilot Rock; and grandchildren: Dannica Thornton and Kodria, Ben and Joe Haddock. He was preceded in death by his parents and a brother Charles. © 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 23,2005

Beef Bits

by WLJ
Jack’s Q2 earnings up Jack in the Box Inc. reported higher quarterly earnings in the second quarter, as improved sales of its chicken ciabatta sandwich and other new products offset higher beef and produce prices, sparking a 7.5 percent jump in its shares. Net income for the fiscal second quarter ended April 17 rose to $20.7 million, compared with $18.7 million the same quarter a year ago. Analysts credit revitalized sales to the addition of higher-priced products such as Caesar Salad and deli-style sandwiches, both of which have struck a chord with its adult customers. Beef plant proposed in Edmonton A Beaver County grant has produced a business plan for a specialist beef processing plant to be built outside Edmonton, Alberta, reports meatingplace.com. The C$21 million plant will process 500 cattle a day, specializing in hormone- and antibiotic-free beef for export to the European Union. The plant, to be located just outside the village of Ryley, will employ about 80 workers and will be called the Prairie Prime Processing Cooperative. Iowa feedlots expanding Half of Iowa's feedlot owners say they are feeding more cattle today than they were five years ago, while one third have remained the same size, according to the results of a winter survey done by the Iowa Beef Center (IBC) at Iowa State University (ISU) and the Iowa Cattlemen's Association (ICA). The average feedlot operation in the state includes, 241 acres of hay and pasture, 1,752 fed cattle marketed and 163 cows in a cow/calf herd. Feedlots identified environmental protection as the highest policy priority, and cattle health and financial and marketing were the highest research and education priorities. Beef plant looking for owner Taxpayers will bear the total cost of the failed Mississippi Beef Processors that was built with millions of dollars in state-guaranteed loans and grants. State officials ended their efforts to sel1 the Oakland, MI, plant and now must figure out how to pay the $55 million bill. Officials had hoped to find someone to buy the plant and put it back into operation. While experts had said any buyer would pay pennies on the dollar, the state had hoped some of the 400 people who lost jobs would be put back to work. The two firms the state was courting, both failed to follow through. Aussie exports another record Meat and Livestock Australia (MLA) cited continuing strong demand as a key reason why Australia exported a record volume of beef in April. Beef exports for April 2005 rose 17 percent compared to last year and 20 percent compared to April 2003. Australia exported 83,450 metric tons of beef during April, the highest volume for April on record. Japan, Korea, and the U.S. accounted for almost 93 percent of Australia’s April 2005 beef exports. A record 37,981 metric tons of beef was exported to Japan in April, up 42 percent from April 2004. April exports to the U.S. was the second highest in over a decade. Overall, 32,640 metric tons were shipped to the U.S. during April, 20 percent above April 2004 levels. Australian beef exports to Korea, however, fell 33 percent this last April, to only 6,802 metric tons. Kansas still TB free Animal health authorities have found no cases of bovine tuberculosis in Kansas after testing more than 75,000 animals and slaughtering 18 cows that initially tested positive. The testing program began in April after animals from infected herds in New Mexico and Arizona were traced to dairies in southwest Kansas. The Kansas cattle herd has been tuberculosis-free since 1995. The USDA bought 18 animals after initial skin tests had shown strong positive results. All those cows cleared two subsequent tests after being butchered. A final culture test on those 18 animals will take another six weeks. Bulgaria gets BSE lab A laboratory for the research of bovine spongiform encephalopathy (BSE) has opened doors in the city of Veliko Tarnovo, in northern Bulgaria. The new center is designed to carry out diagnostics of infected cattle in the area of North East Bulgaria. The laboratory has an equipment worth of EU250,000 and is staffed by two doctors and two nurses. Bulgaria does not have any BSE confirmed so far, but a scandal raged in August last year over an illegally imported BSE disease test. The Netherlands diagnosed its first known case of the human form of BSE earlier in April. © 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 16,2005

Fed trends uncertain

by WLJ
— Boxed beef market cited. — Thursday bids, asks $5-6 apart. Packers and cattle sellers continued to stay $5-6 apart as WLJ went to press last Thursday. What made last week more interesting was the fact that nobody was sure where the market would end up at the end of the week. While some regional marketing sources said they thought steady money was in the cards for last week’s trade, other more national-based analysts were thinking $1 softer was more likely. Some northern trade was reported late last Wednesday, early Thursday at $142-143 dressed, which was $1 softer than the majority of northern trade the previous week. In addition, that price was paid on only 20-25,000 head of cattle. In southern markets packers were still bidding mostly $87 on Thursday, while producers were asking for at least $92, with most still wanting to get $93. There were some diverging opinions about what last week’s very heavy boxed beef movement meant to the cash market. Between last Tuesday and Thursday almost 1,800 loads of boxed beef moved on the spot cash market, which was considered the largest three-day total in several years, analysts said. On one hand, optimists said that packers had to be getting low on product and would need to get more active in the fed cattle market to meet increased production demands through the last half of May. However, more pessimistic analysts said that the heavy volume of boxed beef was the result of retailers holding out of the market the week prior and forcing packers to “fire sale” product because of overly large volumes starting to build. “The decline in boxed beef prices the last week will make up for a large portion of the spike in movement,” said Jim Robb, chief analyst with the Livestock Marketing Information Center. “If we would have seen a spike in the boxed beef composite value on Thursday, I could see some optimism on the fed market. However, no spike probably means that there is still plenty of product in storage and little need for extra beef production.” Choice boxed beef was at $155 per cwt last Thursday, compared to over $163.50 the previous week. Select was down to $139.25, compared to a high the previous week of $145.44. Last week’s slaughter volume was fairly consistent with the two previous weeks’ output and analysts said that could mean a continued buildup in beef supplies, particularly with most beef being produced now for retail sale after the Memorial Day holiday. “Most beef for Memorial Day has been booked,” said Reed Marquotte, M&Z Livestock Analytics. “There is some possibility that Choice steaks and other middle meats are demanded more, but booking other products for the holiday is probably done. Slaughter volumes right now are more than enough to meet current demand.” Through last Thursday 477,000 head of cattle were processed, according to USDA, compared to 481,000 head for the same period in the previous week. For the week ending May 7, 656,000 head of cattle were processed, 50-60,000 head more than the number of animals required to meet current demand, according to Marquotte. Last week’s slaughter volume was expected to be well over 600,000, which is considered mostly “in sync” with current beef demand levels. “I definitely see a buildup in beef until Memorial Day,” Marquotte said. While live cattle futures were still mostly steady for the entire week, compared to two weeks ago, it didn’t result in any major cash trends. May live cattle stayed between mostly $86-86.50 last week, still $5-6 below the previous week’s cash price. Most analysts said the normal seasonal basis, cash-futures, is $2-3. Feeders rally Feeder cattle markets were capitalizing on recent developments concerning Pacific Rim beef trade and the fact that cattle being offered were “greener” than the previous few weeks. In addition, overall volumes of calves and yearlings offered were called 75-80 percent of normal for this time of year. Feedlots were seen paying mostly $1-2 more on all classes of replacement cattle. Feeder cattle futures contracts helped lead to the upward trend in cash cattle prices, as the first few listed contracts all reached contract highs last Tuesday and Wednesday. May hit a contract high of $111.60 on Wednesday, while August got up to $111.50 the same day. The bullishness continued through most of the day Thursday with an extra dime being added to each contract’s high. Last week’s positive developments in the beef trade dispute with Japan and continued word of active consumer purchases of U.S. beef in Taiwan were said to help spur the jump in feeder cattle prices. In addition, USDA and industry lobbyists said that the trade dispute with Korea could be resolved over the next couple of months, adding to overall beef demand this fall. Most sources said it is possible that all three major Pacific Rim export markets could be receiving U.S. beef later this summer, possibly as soon as July. That means overall fall beef demand could be significantly larger than once expected and that more cattle will be needed to fulfill beef needs, particularly over the last quarter of the year. In addition, USDA auction market reporters across the board were calling cattle conditions “moderate” to “very green,” compared to previous weeks’ reports of cattle being in “high moderate” to “fleshy” condition. Heavier conditioned feeder cattle normally means poorer feed efficiencies and average daily gains. In addition, those cattle usually wind up hitting the market with a poorer yield grade, which means they need to be bought a little cheaper than “green” cattle. Cattle feeders were also justifying paying more for replacement cattle because of declining feed prices. Cash corn prices declined another five to seven cents last week, following a trend set by nearby corn futures contracts. As of last Thursday midday, May corn had dropped to $1.93 per bushel. Converted over, cash corn was hovering around $3.50 per cwt. Feedlots in close proximity to major corn producing and storage areas were reporting sub-$3.25 cash corn. The CME feeder cattle index, for 700- to 850-pound steers, was at almost $112 per cwt last Wednesday, compared to $111.15 the previous Wednesday. Calf prices ranged wildly last week, with auctions reporting trends anywhere from steady to $4 higher. The greatest gains last week were reported in Plains and northern tier states where stocker operators got into the market after a couple of weeks of field work occupying their time and dealing with muddy spring weather. Northern stocker interest has been helped by an unseasonable wet April and early May, which has resulted in the best pasture and range conditions since the late 1990s. In several northern Plains auction markets there were reports last week of 600-700 pound steers bringing upward of $125 per cwt; 500 pounders bringing $135-plus; and 350-400 pound cattle brought as much as $150-160. In the southern half of the country, auction reporters indicated that conditions are starting to dry out and stocker operator interest is waning as a result. In addition, an increase in feedlot demand for younger cattle has curtailed demand by backgrounders and calf graziers in those areas. In general, auction market owners said that weather is turning warmer on a more consistent basis and that there are fewer concerns about calves coming into a feedlot situation and creating more expense and labor due to health issues. The current corn market also was cited for allowing more interest in calves to be fed out as calf feds. — 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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Monday, May 16,2005

Beef Bits

by WLJ
McDonald’s posts growth in April McDonald’s Corp. posted a moderate rise in sales at its namesake fast-food restaurants last month, lifted by improved domestic business while European demand lagged. Same-store sales at worldwide McDonald’s locations open at least a year grew 2.8 percent in April, but slowed from an increase of 10.5 percent in the prior-year period. Total system wide sales were 6.7 percent higher. Monthly same-store sales jumped 4.7 percent at U.S. sites and 1.6 percent in Asia, the Middle East and Africa. A year ago, U.S. sales rose 13.5 percent and Asian, Middle Eastern and African sales were up 10.1 percent. Meanwhile, European same-store sales dropped 0.7 percent, compared with growth of 5 percent last year. Oman reopens to U.S. beef USDA announced last Monday that Oman has lifted its ban on all U.S. beef and beef product imports. In 2003, the U.S. exported more than $61,000 worth of beef and beef products to Oman. It is the second country in the Middle East region to reopen its market to U.S. beef. Egypt announced the reopening of its market to U.S. beef in March. Fast-food tax proposed The mayor of Detroit, MI, recently proposed a two percent tax on fast-food sales, which is an additional 10 cents on a $5 meal. The proposal is said to be an effort to curb a possible $300 million budget deficit facing the city. Mayor Kwame Kilpatrick said, “It's a small amount for the individual customer, but it adds up to a meaningful amount to preserve essential city service.” A vote on the budget initiative will take place before July 1, the start of the city's 2006 fiscal year. If approved, Detroit would become the first city in the United States to impose a tax on fast-food. Consumers already are charged an average nationwide restaurant tax of six percent on, according to the National Restaurant Association. Japan may have 18th BSE case A cow in northern Japan has tested positive for bovine spongiform encephalopathy (BSE) in a preliminary test, and its samples are being sent to university laboratories to try to confirm the infection, a state official said. If confirmed, it would be the nations 18th case of the fatal brain-wasting disease, said Toshinobu Tanabe, an official in Hokkaido prefecture in charge of dairy industry. Preliminary tests on the cow turned up positive May 10 at a slaughter house in Hokkaido, an island in Japan’s far north. But the animal’s age and other details weren’t immediately known. Samples taken from the cow were sent to two university laboratories in Hokkaido for more precise testing. Final results from the secondary tests are expected within several days. Buehler files bankruptcy Buehler Foods Inc., Jasper, Indiana, which owns and operates more than 60 grocery stores in five states—Indiana, Illinois, Kentucky, North Carolina, and Virginia—has filed for bankruptcy protection, citing delays in assuming control of 16 Winn-Dixie stores it purchased last year. The grocery chain owes $200 million to $400 million to 572 creditors. Under its Chapter 11 filing, Buehler will continue operating its stores as it tries to reorganize. Aussie slaughter up in March The Australian Bureau of Statistics recently revealed that Australian adult cattle slaughter during March was slightly higher than year ago levels, at 694,000 head. Slaughter rose six percent in Queensland, to 327,000 head, which was the second highest level for March on record. Slaughter levels also rose four percent in New South Wales, to 148,000 head, but fell by 14 percent in Victoria, to 124,000 head. The slight increase in March slaughter levels has taken adult cattle slaughter for the first quarter of 2005 to 1.8 million head, still down two percent compared to last year. Fewer ‘downers’ in 2004 USDA’s National Agricultural Statistics Service recently reported that the number of non-ambulatory cattle and calves totaled 450,000 head during 2004, 15,000 head fewer than the number reported during 2003. The number of non-ambulatory cattle 500 pounds or greater totaled 280,000 head in 2003, and 270,000 head in 2004. The number of calves under 500 pounds reported as non-ambulatory totaled 185,000 head in 2003, and 180,000 head in 2004. The number of operations that reported non-ambulatory cattle and calves was 103,000 in 2003, and 81,000 in 2004. In 2003, there were 66,800 beef cow operations reporting downer animals, compared to 49,700 in 2004. © 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 16,2005

Letters

by WLJ
Distinguishing between fact and fiction Editor: In today's world, events you can count on seem to happen less and less, I however have found two. The ability and willingness of R-CALF to take facts and twist them around to suit their purpose, and that whatever they say is printed in newspapers, whether it is entirely factual or not. R-CALF's newest claim is that Canada has decreased BSE testing by 28 percent. They take the total number of cattle tested for BSE in Canada during December 2004 (7,088) and compare that to January, February, and March 2005's average test totals (5,285). R-CALF fails to mention that testing totals for BSE in Canada have increased over eight times in each of the first four months of 2005 compared to the same time in 2004. Does R-CALF honestly think Canada would decrease testing now and still expect to obtain their goal as a minimum risk country? The test totals are posted at www.inspection.gc.ca for anyone who would like to gain the real facts for themselves. Those newspapers that choose to print R-CALF's half-truths without presenting all the facts, mislead and provide a real disservice to the public who rely on them for accurate, factual news stories, just as R-CALF does. It seems every time they have a "news release," it is hard to discern what fact is and what fiction is. Kathy Falkenstine Bellevue, Idaho Observations regarding NCBA Dear Mr. Crow: I’ve been reading your editorials since the first BSE case with steam coming out my ears and can keep silent no longer. I’ve decided to get it off my chest and make some observations. Twenty years ago, many big corporations had their upper level personnel take training in people manipulation and conditioning. The process is called The Delphi Technique (also known in schools as peer pressure). Succinctly, it goes like this: Identify (the target), demonize, marginalize and neutralize. This is what you and your cohorts NCBA, USDA and much of the livestock media are employing in an effort to destroy that upstart R-CALF. My question is, at what point did all the ex-NCBA members, now with R-CALF, become so ignorant? I guess it’s when they left. Do they regain their intelligence if they return? It’s clear there’s a full-fledged attack being waged by some well trained facilitators. They say we are a fringe faction, isolationists, protectionists and short sighted: Not looking at the big picture, only short term price gains etc., ad nauseum. I’d say the first order of business is to stay in business and these higher prices are relative. Have you noticed ALL our inputs have gone up? Do you see any corporate packers announcing that in the interests of the big picture they’ll be foregoing some profit right now? You just don’t get it! Yes, NCBA does many good things, but on trade issues it isn’t representing the interests of mainstream independent family cattle producers or agriculture. You, and NCBA et al can’t hide a lock step bias toward corporate packer interests but still think you can! NCBA’s 11 points to reopening the border came after R-CALF sued and frankly, if fewer Montana and upper Midwest members hadn’t shown up at the convention and changed its direction, they’d still be lobbying in Washington while beef kept pouring in [from Canada] by an unpublicized agreement with USDA. NCBA wants unity, but only its way. I have a problem trusting an organization that at its core is dishonestly padding its membership representation. We haven’t been members since the seventies and yet, suddenly we are voting members. How did this happen? We fed cattle in Nebraska five years ago but have no record of dues paid. We’re not terribly important, so I doubt we alone were selected for this honor. How many others got “picked”? We received the ballot they sent out, and it, too, was deceptive. On the COOL issue, NCBA didn’t ask if we want it mandatory or voluntary. Instead they worded it so no matter how members vote, it’s in the context of a voluntary framework NCBA is all for CAFTA. Where is the big picture there? There’s been no benefit to anyone since NAFTA, GATT, WTO or any other trade agreement other than corporate interests and frankly, I’d forego those benefits if it means the rest of agriculture loses. I know! The government is saying it’s good for us and it’s never lied to us about anything and we should trust and believe what they say. Right! Even the Supreme Court knows better, having declared in at least six decisions that “when dealing with government employees, you should assume they are lying.” Our lack of protectionism has cost America jobs, compromised our infrastructure and forced us to purchase shoddy goods from China and Asia. Now our very foundation and security are threatened by trading away our food independence. Only FOOLS aren’t protective of their own countries’ best interests. You and your fellow travelers are the ones out of touch. Sincerely, Karen Meyer Solen, ND Support producers, but not blindly Dear Pete, I have enjoyed your paper for many years. I know Nelson Crow and Forrest Bassford, and I have enjoyed the friendship of Dick and Barbara on their trips. Let me state that I am for free markets. I support world trade. I believe the American Cattleman can compete. However, lax feed policies in Canada caused us to lose much of our Asian trade and we should be careful to not open our borders until this is cleared up. As a supporter of free markets, we must protect our cash markets. It’s OK to retain ownership of cattle and beef as far as you wish. It’s a free country. However, if it becomes an industry practice for most producers to retain ownership, we will lose our cash markets. The feeders, the packers, and the retailers are our friends, but if we allow them to shift all the risk and all the costs of inventory back to the producer, we are being stupid. They are just being good businessmen. No one is quite as interested in getting a fair price for the cow as the owner of the cow. We lost the cash market for juice oranges because of contractual participation plans. This is why we obtained the “Packers & Stockyard Act!” Our big advantage as cattlemen is when we sell an animal we get paid promptly. We want to keep it this way. I have been a member of the ANCA, the NCA, and the NCBA since 1949. I will continue to support any organization that supports the producers, but not blindly. I am optimistic about our industry and look forward to the next calf crop. Sincerely, Alto L. Adams, Jr. Fort Pierce, FL © 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 9,2005

Feds off $2-4, but profits still noted

by WLJ
A struggling futures market and projections for less-than-stellar post Mother’s Day beef demand left cattle feeders settling for cash cattle prices $2-4 softer than the previous week. However, even with that decline, most cattle were bringing a $50-or-more profit to producers. Trade was mostly complete in the northern tier states last Wednesday afternoon, with cattle being moved for $144-146 dressed, mostly $91 live. Southern producers were still waiting for packers to come to the table with at least $92 per cwt. Packer bids finally got back up to $90 mid-morning Thursday, but trade was still nonexistent in Kansas and Texas. Trade the previous week was at mostly $93-94 live, $149-150 dressed. June took over as the “current” live cattle futures contract and that created some bearishness in the cash market since that contract stayed right around $85 last week; the cash premium using the previous week’s average price was almost $9. Market analysts said that was way too large of a spread for the season, and that narrowing of that spread was expected and it happened in the form of the cash market losing value. According to Jim Robb, chief analyst with the Livestock Marketing Information Center, beef demand for the week to ten days following Mother’s Day is expected to be lackluster and that was pressuring live cattle prices. He did say, however, that another upward spike in the cash market is possible but it won’t be until the next to last week of the month. “Memorial Day is usually a good beef demand holiday, and I expect a solid spike in cash cattle in reaction to filling up supply voids left by beef demand for that holiday,” Robb said. “However, until that product starts to move the last half of the month, cattle slaughter could be slowed down and that means fewer live cattle are needed by packers.” Robb was uncertain as to how high fed cattle prices would go leading into Memorial Day but said that the mid-$90s was a possibility. Southern cattle feeders were holding out a little longer last week given that packers were reporting $30-plus per head profits, and that slaughter volumes had picked up during the first half of the week. Through Thursday, packers had processed 485,000 head of cattle last week, about 15,000 head more than the previous week, but 20,000 head fewer than the same week last year. Analysts’ projections were that 600,000 head, or more, would be processed for all of last week. Additionally, analysts said that weekly slaughter volumes had surpassed weekly beef demand each of the four weeks in April, and that the amount of product in cold storage was adequate enough to get packers through the two weeks following Mother’s Day. Most sources said that 580-590,000 head of cattle would meet weekly beef demand. For the week ending April 29, 620,000 head of cattle were processed, with another 601,000 processed the previous week. For the month of April, average weekly slaughter volumes were 598,000 head. Robb said that Taiwan reopening its border to some U.S. beef would help increase total beef demand. However, he was also cautious about that help being significant due to bone-in product still being disallowed in that country. According to U.S. Meat Export Federation statistics, 35-40 percent of pre-BSE exports to Taiwan were bone-in short ribs, which means 7-8,000 metric tons of the total 20,000 metric tons shipped to Taiwan in 2003 was boneless short ribs. The boxed beef market started out stronger last week, but by Thursday was starting to weaken some. Choice hit a high last week of $163.89, before getting back down to $162.15 on Thursday. Select was at $144.74 Thursday, after rallying up to $147.59 during the previous week. The Choice/Select spread widened beyond $18 last Wednesday, giving some indication that higher quality Choice beef was in greater demand for the Mother’s Day holiday. Volumes of beef moved on the cash market was moderate last week, but only about 80 percent of the previous week’s volume. Feeders tailing off Auction barn reports from across the country indicated that cattle feeders weren’t willing to pay much more than steady money for cattle ready to go on full feed. In fact, a large portion of cattle feeders were buying cattle at prices $1-2 below the previous week. The two-week downtrend in fed cattle prices and projections for lackluster beef demand throughout most of the remainder of the spring had order buyers cautious about buying cattle at even steady money. In addition, northern and central Plains cattle were coming off pasture in fatter-than-normal condition and that hurt their value. Cattle that are in heavier condition when they enter a feedlot usually have decreased feed efficiencies and average daily gains, compared to “green” cattle that have a little more frame on them. Volumes of fed cattle offered in the southwest were called abnormally large for the first week of April due to wheat graze-out cattle having to be removed earlier than normal. “More wheat cattle were on the move this week as graze out wheat has matured early due to dry conditions,” said Robert Miles, USDA auction market reporter, Oklahoma City, OK. Feeder cattle offered for sale in Texas and Oklahoma were 125 percent of normal for the first half of the first week of April, and that softened the prices also. Last Wednesday’s Chicago Mercantile Exchange (CME) feeder cattle index was just over $111, down almost $1 from mid-week the previous week. Calves steady Weaned calves were bringing mostly steady money. However, there were reports that cattle 500 pounds or lighter were bringing $1-3 more than the previous week, particularly heifers. Lighter calves will be ready for market around the time fed prices are expected to strengthen this fall and winter and won’t be subjected to the normal summer lull in the fed market. In addition, it is likely that Korea, Japan or both will be reopened to U.S. beef by the time those cattle are ready for market, and some cattle feeders are buying them with that in mind. In addition, cash corn slid a little bit more in price last week, going back below the $2 per bushel mark, which is $3.50-3.60 per cwt prior to delivery. Analysts also said that the fact that most fed cattle are still making at least $50 per head has helped producers justify paying a little bit more for cattle that will hit the fed market after the summer lull. Most breakevens on northern cattle were called $83-85 per cwt, while southern cattle were probably breaking even at $84-87. Stocker demand was definitely softening in the Southwest as weather has turned dry and is starting to result in a slowdown in grass and forage production in that region. However, stocker demand in the upper two-thirds and western third of the country was starting to pick up as March and April moisture has resulted in better-than-normal pasture and rangeland conditions and production forecasts. Midwest demand for stocker cattle was somewhat depressed as a lot of producers have grain operations and were out in the fields doing their needed spring work. — 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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Monday, May 9,2005

Beef Bits

by WLJ
Tyson settles federal case Tyson Foods has paid a $1.5 million fine and its former senior chairman, Don Tyson, has paid $700,000 to settle Securities and Exchange Commission charges that the company had failed to disclose certain benefits paid to Tyson over the past several years. Don Tyson also repaid $1.516 million to the company. Tyson and Don Tyson neither admit nor deny wrongdoing. Wendy's sales up, profits decline First quarter sales at Wendy's International increased 7.1 percent to $894 million from $835 million a year ago, but inclement weather in parts of the country cut profits by 2.8 percent, from $52.8 million to $51.3 million. Unfounded claims by a Nevada woman that she found a human finger in her bowl of chili, caused a chain-wide same-store sales impact of about two percent in the last week of the quarter, according to the company. Despite the difficult quarter, Wendy's still beat analysts' expectations by five cents a share. Canadian packer shut down Provincial authorities in Ontario, Canada, have suspended a license of a meat processing plant. Authorities are holding all the meat products from Denview Meat Packers and warning the public not to eat any products they have bought. The warning is because of concerns that animals weren’t correctly inspected prior to slaughter to ensure that they are healthy. The provincial agriculture and health departments together with the Canadian Food Inspection Agency are investigating the problem to see if further action needs to be taken. Coleman unveils all-natural line Coleman Natural Foods announced it is introducing a line of all natural beef. The new Coleman Purely Natural line will be offered in dedicated natural meat sections within conventional grocery stores nationwide. “By offering various all-natural protein options at grocery stores, we are presenting consumers with a truly natural meat option, much like the choices they have in the produce and dairy areas of the store," said Jeff Tripician, Coleman vice president and chief marketing officer. Japan imports jump Beef imports into Japan during March were up 46 percent, compared to March 2004. The increase was largely a reflection of the strengthened Australian supply capacities since the ban on U.S. beef in late 2003. The value of beef imported during March just passed 20 million yen, with Australia holding 91 percent of the market. March is traditionally a strong month for beef imports in Japan, in the lead up to expected increased retail demand during the Golden Week holiday later this month. Simons receives Golden Parachute Swift & Co. has given former chief executive John Simons a severance package worth approximately $7.2 million, including $2.3 million in severance pay, $3.4 million for four million unused stock options and $1.2 million for about 1.2 million shares of Swift stock. He will also be paid approximately $225,000 for an upcoming six-month consulting period. The settlement was almost equal to the $7.25 million the company earned over the first three quarters of fiscal year 2005. Saskatchewan beef plant planned Organizers of Yellowhead Natural Beef are hoping to build a federally inspected facility that would supply Natural Valley's processing plant in Wolseley, Saskatchewan. Kathy Martin of Natural Valley said the relationship would be similar to the plant proposed for Neepawa, Manitoba, which intends to slaughter cattle and send the meat to Wolseley for processing. The organizers found they were looking at 52,000 head per year. Skjerven said the steering group has done feasibility studies, formed an interim board and is preparing to raise equity capital. The plant could be operating as soon as the spring of 2006 or as late as spring 2007. Packer wins workplace award Greater Omaha Packing Co., Omaha, NE, was one of the top award winners in the Omaha's Best Paces to Work competition. The contest, sponsored by the Greater Omaha Chamber of Commerce, honored five small companies and five larger ones, based on the results of over 10,000 completed surveys from area employees. Greater Omaha Packing, with about 750 employees, finished fourth in the large-company division, which was dominated by service companies. The company will also receive a significant workplace safety award later this month. The Omaha chapter of the National Safety Council will award Greater Omaha Packing its Platinum Award of Honor with Distinction for 12 consecutive years of outstanding worker health and safety accomplishment. © 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.