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Monday, August 22,2005

USDA food safety appointment

by WLJ
Agriculture Secretary Mike Johanns today announced he has appointed Dr. Curt J. Mann to serve as Deputy Under Secretary for Food Safety. “Curt Mann brings a wealth of experience, knowledge and dedication to food security, food safety and bio-defense that will assist our efforts to protect the public health from contamination of meat, poultry and egg products,” said Johanns. “We are glad to welcome him back to USDA to serve in this important role and continue our commitment to safeguarding the public health.” Dr. Mann will begin his new duties at USDA August 22nd. Previously he served with the Biological and Chemical Defense Policy Directorate of the White House Homeland Security Council as the Director of Food, Agriculture, and Water Security. In this role, he was responsible for planning, developing, formulating, evaluating, and advising Presidential led programs related to bio-defense of agriculture, food and water systems. Dr. Mann was instrumental in the development and drafting of Homeland Security Presidential Directive-9 “Defense of United States Agriculture and Food” signed by the President in January of 2004. Prior to his White House service, Mann was a special assistant to the Secretary of Agriculture where he focused on coordinating the Department’s role in Homeland Security following the events of September 11th. Dr. Mann has also practiced as a clinical veterinarian, served as a professional staff member to the U.S. House of Representatives Committee on Agriculture and as executive director of the Association of American Veterinary Medical Colleges. “Dr. Mann’s experience and expertise will nicely compliment our strong food safety leadership team,” said Dr. Richard Raymond, Under Secretary for Food Safety. Dr. Mann studied microbiology at Montana State University and the University of Wyoming. He received his veterinarian degree from Kansas State University and has practiced as a large and small animal clinical veterinarian. He has one daughter and lives in McLean, Virginia.—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, August 15,2005

Beef Bits

by WLJ
Idaho plant closes permanently Swift & Company permanently shuttered its Nampa, ID, cow processing facility Aug. 5, citing poor market conditions and an inability to procure enough older cattle to sustain operations. The plant was closed the two weeks prior for those same reasons, and the company informed workers from that facility of the decision Aug. 5. Supplies of older Northwest cattle have been hurt by the previous five years of drought which forced a lot of those cattle to either be culled earlier or moved into the Midwest, far away from the processing facility. The plant had 408 employees as of the shut down, compared to 560 back in May of 2003. Tyson to be added to S&P 500 Tyson Foods will be added to the S&P 500 upon completion of the Unocal acquisition by Chevron. The S&P 500 is an index of 500 stocks chosen by Standard & Poor’s for their market size, liquidity and industry group representation. It is considered a benchmark of performance of the overall market. The specific time line for the finalization of the Unocal/Chevron merger was not known last week. Philippines lifts U.S. beef ban Under an agreement announced Aug. 4, the U.S. will now be able to export boneless beef from cattle 30 months and younger to the Philippines. The estimated value of the Philippines market reopening to U.S. boneless beef is $2.5 million. In 2003, the U.S. exported $4.9 million worth of beef and beef products to the Philippines. The Philippines adopted measures to restrict imports of U.S. beef after bovine spongiform encephalopathy (BSE) was confirmed in Washington state back in December 2003. The country started allowing imports of U.S. boneless beef from cattle not older than 30 months in January 2004. But, In June 2005, the Philippines imposed a temporary ban following confirmation that a second U.S. cow had tested positive for BSE. New Virginia plant proposed Cattle producers in Virginia are trying to organize a partnership to build a beef processing operation in the central region of the state. Members of the Central Virginia Cattlemen’s Association say a new plant will provide them with more choices for selling their cattle. A site study funded by USDA has already been conducted, and creation of a business plan has commenced. It is estimated the plant would cost about $1.5 million. No land for the plant has been bought, but planners hope to locate it beside U.S. Highway 15 in either Buckingham, Madison, Orange, or Louisa counties. Presently, the nearest beef processing plant to the ranchers is in Harrisonburg, VA, and it only can take a few cattle at a time. The potential capacity of the proposed plant has not been announced. Facility donated to university A cattle research facility in southeast Colorado was recently donated by Five Rivers Ranch Cattle Feeding LLC, to Colorado State University’s College of Agriculture and the Department of Animal Sciences. The gift, valued at $2.5 million, includes five-year funding for a professorship within the department to be located at the center. The university took possession of the center on June 1. The Southeastern Colorado Research Center comprises nearly 15 acres and will hold about 1,500 head of cattle. Five Rivers Ranch Cattle Feeding will provide cattle for research purposes for a minimum of five years and will supply feed and supplements to meet their nutritional needs. Barbecue chain plans expansion Conway’s BBQ, founded nine years ago with a single outlet on Conway Road in south Orlando, is heading north. The company, with three outlets operating in Orlando and a fourth under construction, recently signed its first franchise deal to launch the brand in another state—Pennsylvania. The company’s goal is to see 100 restaurants in operation in various states by 2010. Unlike most barbecue restaurants, Conway’s serves all its meat sauceless, and diners can select from the various types pumped from dispensers shaped like cow udders. The distinctive dispenser will be featured in franchise outlets as well. Which states will house Conway’s restaurants were not yet known by the company. New beef at Aldi stores With development assistance from the checkoff-funded R&D Ranch, Quantum Foods has created a line of frozen, pre-portioned, marinated flat iron steaks. These steaks are now available in over 800 Aldi stores under their Granger brand. This is the first introduction of a frozen marinated Beef Value Cut in the retail channel. Beef Value Cuts are a result of the checkoff- funded Muscle Profiling Study, which highlighted individual muscles in the chuck and round to see how these muscles performed on their own rather than in traditional roast cuts. © 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, August 15,2005

Cattle imports still slow

by WLJ
— Transportation shortage could linger. Daily volumes of cattle entering the U.S. from Canada have increased slightly during the first half of August, compared to mid-July data. However, market analysts said the impact to the U.S. cattle markets has still been minimal, at most, and could remain that way through the rest of the year. According to USDA’s Animal and Plant Health Inspection Service (APHIS), 30,669 head of fed and feeder cattle entered the U.S. from Canada between July 18 and Aug. 10. However, that figure doesn’t include weekend movement of cattle, just weekday volumes. Over that period of time, 15,954 head of fed cattle, for immediate slaughter, were reported moving to U.S. packing plants, the other 14,715 head being feeder cattle going to certified U.S. feedlots. The largest single daily volume, through last Wednesday, occurred August 8, when 1,763 of slaughter cattle and 2,610 head of feeder cattle crossed the border. “We are talking about less than two percent of daily slaughter in the U.S. coming from Canadian cattle,” said Jim Robb, chief market analyst at the Livestock Market Information Center. “In most cases, the figure from Canada is less than one percent of daily (U.S.) slaughter.” Two primary reasons have been cited for the slow pace of cattle coming in from Canada—fewer-than-expected fed cattle in Canada and the lack of available trucking. Mark Gustafson, vice president for Swift International, told WLJ last week that the number of backlogged fed cattle in Canada isn’t nearly as large as many people thought. “We’ve had a lot of problem finding enough cattle to justify loading a truck and getting them down here,” Gustafson said. In addition, he said finding trucks to deliver cattle has been an even harder task than finding cattle ready for slaughter. “Not only is it expensive to get trucks to deliver cattle but they are very hard to find, because they have either gone out of business entirely or have shifted into hauling other commodities or products,” Gustafson said. “We are seeing this on the refrigerated side also.” Dennis Laycraft, executive vice president for the Canadian Cattlemen’s Association, said that two of the five largest livestock haulers in Canada have both gotten out of the business and shifted their emphasis to another industry. “After two years and two months of little or no cattle activity, they got out of livestock and started hauling from the oil patches,” said Laycraft. “That has turned out to be a very lucrative decision for them, and it appears unlikely they will get back into the cattle business.” In addition, the number of qualified livestock truck drivers is down and that is keeping any available trucks for that purpose parked, according to Laycraft. “When hauling cattle, there is more to it than just driving them to a destination,” he said. “Animal handling skills are required, and a lot of prospective drivers aren’t adequately trained or prepared for that part of the job.” U.S. truck companies are also a little apprehensive of doing too much hauling of cattle from Canada because of the extra licensing that is required. “U.S. haulers don’t have to have any more licensing than Canadian truckers, however, it does cost some to get that licensing done,” Laycraft said. From a cost standpoint, cattle hauling expenses are on the verge of eclipsing $2.50 per loaded mile. Additional jumps in fuel cost could force that charge even higher, according to transportation companies. — 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, August 15,2005

Congress debates immigration reform

by WLJ
Two competing immigration reform bills have been introduced in Congress in past weeks and the debate over the best approach toward overhauling a broken system is raging. One proposal sponsored by Sens. John Kyl, R-AZ, and John Cornyn, R-TX, would mandate extensive reforms in border security including increases in border patrol agents and technology. The Kyl-Cornyn bill also provides funding to increase the size and number of detention facilities for holding illegal immigrants. Perhaps the most contentious portion of the Kyl-Cornyn measure is the requirement that immigrants in the U.S. illegally report for health screening and background checks before being issued a temporary work permit. The permit would allow the individual to work and travel freely throughout the U.S. Following the issuance of a temporary permit, illegal immigrants would have five years before being required to return to their country of origin. Once back in their home country, individuals would be required to apply for a “guest-worker” permit before returning to the U.S. Critics of the Kyl-Cornyn proposal are quick to point out that many immigrants, even those in the country illegally, have an established and important presence in this country including families, homes and jobs which are not easily abandoned. An alternative to the reform offered in the Kyl-Cornyn bill has been offered in the form of bipartisan legislation introduced by Sens. John McCain, R-AZ, and Edward Kennedy, D-MA. The McCain-Kennedy bill also features an increase in border security and funding to prevent illegal immigration to tighten the porous border. However, rather than a voluntary deportation program, the legislation creates a large “guest-worker” program that requires immigrant registration and the payment of punitive penalties and back-taxes before an illegal immigrant could start toward the path of citizenship. Signers on both plans have been quick to step forward in favor of their chosen bill and are quick to criticize the opposition. Sen. McCain said in reference to the Kyl-Cornyn bill, “report-to-deport is not a reality, and it isn’t workable. Systematically rounding up every person living here illegally and sending them home isn’t a viable option either. It’s neither practically possible or economically feasible.” Kyl, arguing in support of his own legislation stated, “Those who seek permanent residence and eventual citizenship will have to return home and apply from their own countries, but that’s the time-honored and legal method of doing so today.” Under the Kyl-Cornyn proposal, illegal immigrants who do not comply with the proposal would be automatically deported to their home country and denied entry to the U.S. for a period of ten years. Many close to the issue believe that White House support will be critical to getting any meaningful reform bill passed. Although President George Bush made immigration reforms a top priority following the events of Sept. 11, 2001, White House reaction to the recent flurry of activity has been muted. At hearings scheduled for both bills currently before Congress, representatives for the White House have been conspicuously absent. Agriculture sector interest groups are closely monitoring the legislative activity. At present, immigrant workers compose a significant portion of the agriculture, manufacturing and service sector workforce. A year 2000 census estimate showed that nearly 30 percent of the immigrant workforce is employed in various agriculture industries and an additional 20 percent of immigrants are employed in manufacturing and processing pursuits. In total, it is believed that as many as 11 million workers in these industries may be in the country illegally. Analysts are quick to point out that any immigration reform must take into account the importance these workers play in the economy. Studies show that without immigrants from other countries, and particularly Mexico, the U.S. labor market would have experienced a shortfall of more than 500,000 employees, a contraction of more than 13 percent in some industries. The agriculture pursuits would have been especially hard-hit, due to the large number of recent immigrants employed in the industry. Estimates show an agriculture sector shortage of more than 132,000 workers annually without immigrant workers. Regardless of the reform enacted, the bill will likely have a substantial impact on agricultural producers who rely heavily on the immigrant labor pool to meet their labor needs. Already, interest groups for producers are lining up to provide input on both measures on behalf of farmers and ranchers across the county. — John Robinson, WLJ Associate 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, August 15,2005

Effort to expand livestock feed restrictions continues

by WLJ
—Draft plan under review The U.S. Food and Drug Administration (FDA) announced last week that it has made significant progress toward a change in policy for eliminating all bovine materials in livestock feed. FDA initially banned the feeding of bovine materials to cattle in 1997, but the rule did not cover certain feeding practices and left potential loopholes in the feed ban. The most serious concerns lie in the potential for cross contamination of feed during the milling process and the possibility of cattle being fed a ration containing banned materials accidentally. In January 2004, former FDA Commissioner, Mark McClellan announced the agency planned to take action to clarify uncertainties in the feed ban which did not address the feeding of cattle with materials such as plate scrapings and chicken litter. McClellan also addressed the possibility of eliminating the use of bovine specified risk material (SRM) from all livestock feed. By strengthening current feed ban measures, FDA hoped to prevent all potential transmission methods of bovine spongiform encephalopathy (BSE) from entering the bovine food supply. On July 14, 2004, the FDA unveiled the advanced notice of proposed rulemaking (ANPR) which announced the agency intended to ban from livestock feed all products it determined to be a risk for spreading BSE. The prohibited products included items such as the brain, skull and spinal cord from cattle 30 months and older; also included were the intestinal tract and tonsils from cattle of all ages. The agency also included the possibility of removing downer cattle from the animal food chain in the ANPR announcement. A ban of rendered SRMs and downer cattle from animal feed could have an enormous impact on the entire livestock industry. In an August 2004 letter to FDA, the American Meat Institute (AMI) estimated financial impact at more than $125 million annually. Both rendering plants and feed mills would experience the bulk of the impact. However, producers will also experience an increase in render fees when the value of a rendered animal is eliminated by the ban. In addition to the monetary damage, the ban would send an estimated 1.4 billion tons of bovine rendering waste to landfills each year. In the course of their comments to FDA, AMI urged the agency to weigh the industry impacts and base any future rules on scientifically valid observations. AMI’s comments concluded that current scientific studies do not necessarily validate the measures being weighed by the agency. FDA has considered public comments from interested parties and made changes to the original proposed rule. The revisions, which have not been released, are being circulated among FDA officials as the agency considers whether to publish the regulation. Once published, the rule will go through an additional public comment period prior to being implemented. — John Robinson, WLJ Associate 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, August 15,2005

Pasture values continue to escalate

by WLJ
— Rental rates climb, also. — Calf pressure from corn costs, not pasture. Pasture values across the major cattle grazing regions of the U.S. continue to rise and along with that, another uptick has been seen in average pasture rent, according to USDA’s National Agriculture Statistics Service (NASS). While land values bode well for those looking to sell all or a portion of their land, it could become a hindrance to cattle producers looking to expand their operation or buy more “seasonal” grazing acres. Market analysts said they don’t expect calf prices this fall to decline directly because of increased rental rates, however, profits could decline because of the extra cost to graze cattle. Most market onlookers said the possible price increase of other feed resources—in particular corn—could wreak more havoc on calf and yearling prices this fall. According to the agency’s 2005 Agricultural Land Value Report, the southern Plains region of Oklahoma and Texas has an average pasture land value of $695 per acre, up $71 from last year. In the Northern Plains states of Kansas, Nebraska and the Dakotas, per acre value is $325, compared to $279 the previous year. The average pasture price in the Mountain region—Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming—was $346, compared to $302 last year. In the Pacific region—California, Oregon and Washington—the average pasture value is $1,120 per acre, up $100 from 2004. According to NASS, the 17 states in those four regions account for over 85 percent of the total privately-owned pasture acres in the U.S. The western state with the highest valued pasture land is California, valued at around $1,750 per acre. Along with the bump in land values this year, USDA also indicated that pasture rent has increased as well. The average rent for pasture in the northern Plains is $12 per acre per month, compared to $11.80 last year. In the southern Plains, average pasture rent is around $8.40 per acre, 30 cents more than 2004. The average pasture rent for Mountain states is $3.80, up from $3.60 last year. Pacific states have an average rent of $13.50 per acre, steady with last year, according to NASS. However, California reported a 50-cent increase in pasture rent, coming in at $12 per acre. For the 17 most western states, not including Alaska and Hawaii, the average pasture rent this year is approximately $9.42 per acre, two percent higher than the $9.25 average rent last year. According to Chris Bastian, agricultural marketing specialist with the Department of Agriculture and Applied Economics at the University of Wyoming, the jump in pasture value this year was due to historically high feeder and stocker cattle prices and additional competition coming from non-agriculture buyers. “There is a strong correlation between cattle incomes and pasture values. When prices for calves and yearlings are where they were last year, producers will be more active in looking at and purchasing land. High prices also increase their willingness to pay more for that land,” Bastian said. He also said there has been a significant increase in the amount of “urbanites” that are looking at getting out of metro areas and buying smaller tracts of pasture or rangeland with the thought they will regain their privacy. “In a lot of instances, 120 acres of pasture can be broken into several 20-, 30-, or 40-acre parcels, which are in demand by a lot of buyers coming out of the city,” Bastian said. “In most cases, these people have more money to spend on purchasing these tracts, thus bumping up overall pasture values, nationwide.” In analyzing the impact of higher pasture values and rental rates on this fall’s calf market, Bastian and several of his colleagues felt any price decreases would be the result of increased corn prices and some possible pressure from additional Canadian cattle being weaned starting in October. “I don’t think a lot of prospective calf buyers this fall will be in the market for additional pasture, particularly after paying record prices last year and prospects for higher priced corn looming. Cow/calf producers that sold cattle for those prices will be the ones in the market for higher priced pasture,” said Greg Abernathy, consultant with NP Livestock Services, Grand Island, NE. Moving further west, several sources said that renting pasture was still cheaper than buying it and that both stocker operators and cow/calf producers would lease more pasture instead of purchasing it outright. “Even paying $35 per month (per cow), it’s cheaper to run a cow or cow/calf pair on leased land than it is to pay for pasture right now,” said Allen Torell, professor of rangeland sciences with New Mexico State University. According to Torell, stocking rates across much of the Southwest and Intermountain West range anywhere between 8-25 head per section. As a result, the economics of buying pasture for the sole purpose of running cows isn’t very economical. “Appreciation of pasture land alone has out-returned the running of cows by five to eight times over the past six years, or longer,” Torell said. “If producers are relying on cattle to return their investment, it will be a long time before that happens, in most cases 10-15 years. If pasture value continues to increase, it will be even longer.” Market impact Market analysts indicated that stocker and feeder cattle markets could be softer in the fourth quarter of this year and first quarter of 2006, however, most said the extra cost of running cattle on pasture wouldn’t be a primary reason for that happening. Instead, more price pressure is expected to come from a projected increase in corn price because of a fall in corn production this year. Most analysts have indicated that a nationwide average yield of 145 bushels per acre will keep corn prices mostly steady with prices seen most of last year and the first half of this year. However, a lot of analyst projections are that corn yields will fall below 140 bushels and that corn prices could start getting upwards of $2.50 or more. Additionally, yields of 130-or-fewer bushels could force prices over $3. “The fall calf market really depends on where the corn situation goes the rest of this year,” said Bastian. “There is a lot of corn damage in Illinois, but other Corn Belt states are still unknown. We will know more when USDA comes out with its next production report.” As a rule of thumb, most analysts say that for every 10 cents of movement in the corn price, a reverse move of $2-5 per cwt is usually noted in feeder cattle prices. If corn hits $3 later this year, that could mean calf prices could range anywhere between 12-30 cents per cwt below current levels. The next crop production report was scheduled to be released last Friday, Aug. 12, a day after WLJ went to press. — 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, August 15,2005

Ranchers lose grazing suit in Idaho

by WLJ
— Justice to determine if appeal needed. — Approximately 800,000 acres impacted. A federal court judge in Idaho recently ruled that livestock grazing on approximately 800,000 acres of federally-managed land in the state must be stopped later this month in order to preserve and improve wildlife habitat. Ranching organizations said the judge’s findings directly contradict a ruling earlier this year that said challenges to federal grazing rights must include factual basis, not just theoretical hypothesis. The decision also was said to violate a congressional order exempting the federal land in question from federally-mandated environmental reviews. U.S. District Court Judge Lynn Winmill said that an increase of livestock grazing in the Jarbridge Resource Area had put native sage grouse populations in danger because tall grass habitat was being grazed and destroyed. In addition, he said the Bureau of Land Management (BLM) had violated federal rules by not conducting an environmental impact statement, required by the National Environmental Policy Act (NEPA), when making the decision to increase grazing in the area. However, officials with the Idaho Cattle Association (ICA) and Stewards of the Range said that Winmill erred in his ruling by using outdated information and using his own “discretion” over BLM’s “professional expertise.” According to Fred Kelly Grant, litigation chairman for Stewards of the Range, Winmill used biological data from 1987 instead of taking into account data that BLM has collected over the past four years concerning forage growth and grouse population. In addition, Grant alleged that Winmill allowed the Western Watershed Project (WWP) to by-pass and evade the administrative process surrounding appeals of BLM management decisions. “Interesting that if a rancher asks for a stay in an administrative appeal and it is denied, the rancher has to go on through the administrative process,” said Grant. “Winmill in this case, however, said that because the Western Watershed Project wasn’t granted a stay by the administrative judge, they had gone as far as they needed before jumping to his court.” In addition, Grant said that Winmill ignored a federal law passed through Congress that exempted emergency grazing rules for the Jarbridge Resource Area from the NEPA process. Those special grazing rules were implemented due to a four-year accumulation of extra forage in the area that was leading to very dangerous fire conditions. “BLM has tried to allow ranchers to use extra grazing of the surplus forage to keep the resource in good shape and to prevent disastrous range fires,” said Grant. “However, anti-grazing organizations have blocked each such attempt. Previously, a challenge to an interim decision by BLM to allow grazing of the surplus grass was assigned to a U.S. magistrate in Idaho. He toured the area and concluded the range was a massive fire waiting to happen and allowed the BLM decision to stand so that the extra grazing would reduce potential fire fuel. The magistrate’s decision was consistent with a congressional rider on an appropriations bill that exempted the decision from NEPA compliance.” Winmill reversed that decision saying that normal regulatory rules regarding NEPA superceded the congressional rider. Lloyd Knight, executive vice president of ICA, added that the Ninth Circuit Court of Appeals a few months ago ruled that any environmental challenges to federal grazing permits can’t be taken to court until the plaintiffs can come up with factual information to back up their claims of harm or damage to the land in question. In this case, according to Knight, there were no concrete statistics brought forward by WWP. In terms of the health of the Jarbridge Resource Area, Kelly said that a BLM range technician four years ago found 80 percent of the area to be in fair to excellent condition, compared to 24 percent back in 1987, which is the baseline year that Winmill used to justify his decision. “He (Winmill) basically substituted his own decision for those that were made by a specialist in the field,” said Grant. “He didn’t give the agency their due deference, and that right there is a violation of law.” Members of WWP, called Winmill’s decision a wise one and said that they were not threatening livestock producers’ businesses with their efforts. “We aren’t putting ma and pa rancher out of business here. It’s in the long-term interest of everybody that the lands in the Jarbridge have healthy sage brush and wildlife on them,” said a spokeswoman for WWP. As of last week, there was no indication that an appeal would be filed on behalf of BLM, but that decision has to be made by the Department of Justice. The deadline for initiating the appeal is the end of August, legal sources said. However, a meeting between BLM, the affected permittees, WWP and Winmill was scheduled for Aug. 17 to see if grazing can remain in place until the decision on an appeal is made. If the meeting doesn’t allow that to happen, livestock will have to be moved off of the 28 allotments by Aug. 19, said Grant. There are a total of 98,000 AUMs on the 800,000 acres in question, with 11 different permittees making up that total grazing utilization. One of the permitted grazers on the Jarbridge is J.R. Simplot Company. There is a possibility the impacted ranchers could initiate their own litigation and try to get the BLM decision in the Jarbridge reinstated, and Grant said his group is entertaining the idea of filing an amicus curiae brief if that happens. — 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, August 15,2005

Waning packer demand weighs on fed market

by WLJ
Heavy carryover of slaughter-ready cattle in the southern Plains over the past two weeks has been weighing on fed market prospects. Additionally, packer demand for fed cattle was waning as they try to keep boxed beef prices elevated in an effort to regain profitable margins. Last week’s market looked like it would end up moving cattle at prices $1-3 softer, compared to the previous week, which saw cattle gain $3-4 live, $5-7 dressed. Through last Thursday noon, there were only a handful of cattle traded on the spot cash market. Those cattle were sold in Nebraska at $80 live, $2-2.50 below prices paid the previous week. Most asking prices last week were at $84 live, $132 dressed, while packer bids ranged between $76-79 live, $126 dressed. Most analysts said southern Plains trade would be a Friday affair, and that $81 would probably get most action started. A lot of pressure was being put on the market because of 20-30,000 head of carryover that was reported in Kansas last week and another 12-15,000 head that were held over in Texas. Most analysts said those cattle needed to be moved two weeks ago, but a slowdown in packer chain speeds kept those cattle from being sold when they needed to be. Slaughter for the week ending Aug. 6 was 616,000 head, 30,000 head fewer than the previous week and 40,000 fewer than two weeks prior. Through Thursday, last week’s slaughter volume was slightly above the week prior, with 485,000 head moving through packer chains, compared to 478,000 two weeks ago. Market sources said that packers are trying to keep boxed beef prices at current levels or higher and that by doing so they will get back towards breakeven levels and slight profits during mid-August. Through last Thursday, boxed beef prices had been on a three-week rally. Choice boxed beef last Thursday was at $134.27, while Select was priced at $127.63. At those prices, packers were still losing around $12 per head last Thursday, but that was better than the $25-plus losses reported two weeks ago. Most analysts said that Choice beef needed to be at $137 for packers to start showing any profit on processing cattle. Boxed beef movement was called moderate, with no day last week having a volume of 500 loads or more. The previous couple weeks, 500-plus load days were more normal than not. However, packers moved a lot of “firesaled” product to retailers who were forward buying product for Labor Day beef featuring, analysts said. Most of that activity has been curtailed in early August, sources said. Finishing weights of processed cattle continue to be heavier than a year ago and the previous five-year average, and that is allowing packers to purchase fewer cattle for immediate processing needs. For the week ending Aug. 6, the average weight for all cattle being processed was 1,258 pounds, four pounds heavier than the week prior and nine pounds more than the same week last year. The all cattle carcass weight average was 774 pounds, two pounds heavier than the week prior and nine pounds heavier than last year. For the limited cash trade through Thursday last week, the average fed steer weight was 1,354 pounds live, 820 pounds dressed. Heifer weights were also said to be pressuring the market, with average live finishing weight being 1,205 pounds and the average carcass weight being 773 pounds. The average heifer weights last year at this same time were 1,160 pounds live, 760 pounds dressed. Feeder picture The market for feeder calves was stronger last week. Many markets reported marked improvements in both volumes and quality of producers’ offerings. As a result, buyer demand for offered lots was noted to be moderate to strong at most auctions. Missouri sale barns reported the best movement both in quantity and price for the week. Sales of 10,000 head in two auctions sold for an average of $1-6 higher, for both steers and heifers. Lightweights under 450 pounds led the way in White Plains, MO, selling as much as $8 above prices paid the previous week. The majority of the southern-tier cattle sold higher except in Oklahoma City, OK, where a price split occurred. The majority of steers and heifers sold $2 lower, with the notable exception of steers under 600 pounds selling for as much as $4 higher and 800-900 pound steers selling $1 higher. Much of the demand in Oklahoma centered on steers that will finish by February. Sales across the northern tier were sluggish for the week, with few offerings from producers. The few auctions that did put together enough calves noted a firm undertone to the market bringing steady money to producers. Cooler temperatures and scattered rain across western and central portions of the nation were cause for price improvements in the markets. Buyers are going to keep an eye on wheat pasture grazing prospects as the crop is planted over the next few weeks. Adequate moisture on wheat fields will offer some support to prices as buyers stock up on cattle for wheat pasture grazing this fall. Feedlot margins are still negative but appear to be improving slightly. However, lower slaughter rates and increased carry-over will drag on calf prices until feedlots are able to reduce their showlists. Unless packers are able to move some fat cattle prior to the upcoming holiday, strain on feeder calves could continue. Current consumer demand is likely to make that move difficult. The corn crop report, due out August 12, will also play a large role in determining feeder market direction in the coming weeks. Poor feedlot margins are already dragging calf prices lower and an increase in corn price is likely to sideline more buyers. If the crop estimate looks positive—140 bushels per acre or higher—buyer demand should increase, leading feeder calf prices higher. — 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, August 8,2005

Beef Bits

by WLJ
Aussies approve checkoff jump Australian beef producers voted in favor of increasing the dues for that country’s version of a beef checkoff program. About 58 percent of the 9,810 ballots returned approved the $5 per head levy. Prior to the vote, the fee was $3.50. The extra $21.3 million annually is expected to go towards marketing development and promotion. The Beef Industry Funding Steering Committee (BIFSC) said earlier this year that the Australian cattle industry faced cut-price competition from Brazil, slowing beef production, and the imminent re-entry of the U.S. into the Japanese and Korean markets. A recent BIFSC report showed Australian beef production was likely to rise by 16 percent or 335,000 metric tons to 2.46 million metric tons by 2009. Australia has about 27 million cattle. Swift sued by Idaho county An Idaho county recently filed a lawsuit against several companies, including beef processor Swift & Co., for allegedly hiring illegal immigrants that it says are a financial burden on the county’s social services. The suit was filed by Canyon County in federal court, and invokes a racketeering law. In the complaint, the county says the action was brought “for damages it has suffered as a direct result of the knowing employment of large numbers of illegal immigrants by the defendants.” It doesn’t specify the amount it seeks as reimbursement. Wendy’s profits hurt by beef costs Citing rising beef costs and slowing sales, Wendy’s International Inc. has cut its profit forecast for 2005 to between $2.20 and $2.26 a share. The restaurant operator reported a profit of $70.8 million in the second quarter ended July 3, a 1.2 percent decrease from $71.6 million last year. Wendy’s reported beef prices up between 12-15 percent over 2004. Those costs ate into its bottom line, even though revenue rose 4.6 percent. Revenue hit $951 million during the quarter, from $908.9 million in the second quarter of 2004. Wendy’s reported falling same-store sales at its core hamburger stores. Same-store sales fell 4.6 percent at company-owned stores in the second quarter, compared with the second quarter of 2004. Same-store sales fell 3.9 percent at franchised restaurants in the second quarter. June grading report released USDA’s Agricultural Marketing Service released the summary report of meats graded for the month of June, 2005. For all quality-graded beef, Choice was 58.0 percent, up from 56.2 percent in May. Select was 39.3 percent, down from 41.2 percent from the previous month. Prime was 2.7 percent, up from 2.5 percent in May. National Beef curbs slaughter National Beef Packing Company LLC recently announced production at both its Liberal and Dodge City, KS facilities will be discontinued indefinitely due to unfavorable market conditions. The change is expected to reduce company slaughter by approximately 10,000 head per week. According to the company’s president and COO Tim Klein, there are too many cattle currently being processed, compared to beef demand. National Beef is the nation’s fourth largest beef processing company, holding a 12 percent market share with sales exceeding $4.0 billion annually. Atkins files Chapter 11 Atkins Nutritionals, the pioneer of the “low-carb” diet craze, has instigated Chapter 11 proceedings to seal a company restructuring that will see it downsize its operations. The filing was not unexpected as the company has been experiencing difficulties since 2004. Upon its exit from Chapter 11, Atkins Nutritionals plans to downsize and focus on nutrition bars and shakes, instead of focusing on its diet craze, which was touted by beef market analysts as a primary catalyst for improved beef demand several years ago. Brazil sees export jump Brazil’s beef exports rose 31 percent, January through June, compared with the same period last year. For the first half of 2005, Brazil’s exports totaled $1.424 billion, compared to $1.088 billion last year. In terms of volume, 1.06 million metric tons were exported, compared with 802,000 tons during the first half of 2004. In June, the average price of beef exported by Brazil was $2,224 per ton, compared to $2,221 over the same time last year. Forecasts last Tuesday continue to indicate that Brazil’s 2005 beef exports will total $3 billion. Brazil officials also said last week that the U.S. will announce a resumption of corned beef purchases from eight Brazilian companies later this month. Albertson’s ‘all natural’ products Albertson’s, Inc. recently introduced Wild HarvestTM all natural ground beef products in its Albertsons, Acme, and Jewel-Osco food stores. The new items, which include Angus Ground Beef Round, Angus Ground Beef Chuck, and Angus Beef burger frozen patties, were made available in stores the first week of August. The new Wild HarvestTM all natural Angus Ground Beef comes from source-verified Angus cattle. The cattle are raised naturally, including an all-vegetarian diet, and never given growth hormones or antibiotics. © 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, August 8,2005

ESA reform vote expected late September

by WLJ
— Producer support critical Congressman Richard Pombo, R-CA, chairman of the House Committee on Resources, is currently working to complete revision and lobby consensus on a draft version of an Endangered Species Act (ESA) reform bill. Speaking to the National Cattlemen’s Beef Association (NCBA) Federal Lands Committee last week, House Resources Committee staff member Erica Tergeson urged NCBA members to contact their representative to show support for the bill. Many agriculture industry activists consider the Pombo ESA reform bill to be crucial to producer interests and are tracking the progress of the bill closely. Many expect that the bill will create an expanded role for state and local governments in the selection of threatened species and more stringent requirements for groups developing recovery plans for threatened populations. In addition, the bill is expected to include monetary reimbursement for property owners who incur financial losses as a result of ESA enforcement actions. According to Tergeson, the bill is expected to go to the House floor for a vote during the last week of September. Resource Committee members will “mark up” the draft version of the bill the week prior to the vote. Currently out of session for the summer recess, members of Congress will be visiting in their home districts for the break. Tergeson, and NCBA leadership urged all members of the livestock community, particularly those represented by Democrats, to contact their Congressional representatives and urge their support for Representative Pombo’s ESA legislation. — 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.