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Monday, July 11,2005

Feeders hold out for fed rally

by WLJ
Reports of very good Fourth of July beef demand and some early week strength in both the futures and boxed beef markets gave fed cattle producers some optimism for a stronger market last week. However, as of Thursday, market activity was still almost nonexistent as packers were waiting for asking prices to get in line with the previous week’s market. The only trade reported as of press time was 5-8,000 head in Nebraska at $130 dressed, which was $1-2 stronger than two weeks ago. Thursday morning packer bids were down to $128-129 in northern feeding states. In the southern Plains, cattle feeders were asking mostly $84-85, but, packers were still bidding mostly $80. “We’re looking at a Friday trade, maybe even a Friday afternoon market,” said one Denver-based market analyst. Packers were reluctant to get into the market even at steady money, compared to the previous week, because they are seeing negative margins, again. Most analysts said that packer breakevens were between $81.50-82, and that steady to stronger prices could move them to the minus side of the ledger. Retail beef movement over the three-day Fourth of July weekend was called very good by several retail and market sources, which produced some strength in the boxed beef market last Tuesday and Wednesday. Almost 400 loads were sold Tuesday, while a 500-plus load day happened Wednesday, which was a $1 jump in Choice beef and a 40-cent gain in Select, compared to the previous Friday. However, Thursday saw the boxed beef cutout fall $1.50 on Choice and $1.10 on Select. Analysts said that heavier-than-expected slaughter volumes during the previous few weeks were starting to weigh on packer storage and that beef needed to be “firesaled.” It looked like Thursday was going to be another 500-plus load day for boxed beef movement. While the Fourth of July weekend was considered the best three-day period for beef demand in almost a year, it was on middle meats and other items associated with grilling. Chucks and rounds weren’t in big demand and the supply was building. A lot of the inventory reduction was on those primal cuts, sources said. One central Plains retail buyer told WLJ, “Even with the new ‘steak’ cuts that are coming out of the chucks and rounds, there is just not enough demand in the summer to swallow up that part of the beef supply. We are also talking about fed cattle that are 20-30 pounds heavier, compared to previous years, meaning there’s another 13-18 more pounds of beef produced, and at least 50 percent of that is additional chuck and round.” For the week ending July 2, USDA reported that the fed steer average live weight was 1,286 pounds, compared to 1,257 the same week a year ago. That figure was also five pounds heavier than the previous week. Analysts also said that recent slaughter volumes continue to eclipse current beef demand levels. For the week ending July 2, USDA reported 652,000 head of cattle processed, compared to 643,00 head the week prior and 646,000 for the same week a year ago. Most analysts concurred that 620-625,000 head of cattle was more than enough to supply current beef demand levels, both domestic and export. Northern feeders, stockers stronger The national calf and feeder cattle market was several dollars stronger last week, however, most of that was due to the extreme rally seen in markets in the central and northern Plains and Intermountain West regions. Reports that drought is on the verge of ending or already ended in most western states has strengthened demand for cattle to put on pasture, specifically heifers, sources said. With more heifers going to cow/calf producers, there are more steers available but fewer overall cattle for feedlots, which means there is more demand for a dwindling supply of feeder cattle. Southern auction barns reported very limited offerings and even weaker demand. Most of the weakness was contributed to the extremely hot weather and the holiday “hangover.” “Typically, feeder cattle this time of year hits a peak in the northern areas of the country, and with weather conditions helping out pasture, and hay production, there is even greater demand for grass cattle.” said Derrell Peel, extension livestock economist at Oklahoma State University. “We are dry here, but that’s a normal trend down here.” While the Fourth of July kept a lot of auction barns closed for the first half of last week, Superior Livestock Auction had a very large video auction that was broadcast from Steamboat Springs, CO, last Tuesday through Saturday, and prices were considerably higher. Attendees at that sale reported heavy seven and eight weight cattle bringing well over $115 per cwt, and 650- to 700-pound cattle back up over the $130 range. Peel and several colleagues still said the fed cattle prospects for the rest of the year don’t appear to justify the current prices being paid for fed cattle. Most analysts indicated, however, that feedlot operators still contend they are better off feeding cattle even if they lose money, rather than have empty pen space. “I can see (cattle feeding) losses the rest of the year, but it is still more beneficial for them to feed them rather than have no cattle at all,” Peel said. The CME feeder cattle index last Wednesday got over $116 per cwt, almost $4 higher than the previous Wednesday. — 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 27,2005

BEEF BITS

by WLJ
South Dakota plant delayed Connecticut-based Ridgefield Farms will further delay breaking ground on a South Dakota beef processing facility until next spring. In addition, construction on a cattle slaughter facility has been pushed back another year, company officials said. In April, the company announced a six-month delay for starting construction on the proposed plant in Huron, SD, and five investors resigned from the company's board. The company is expected to spend approximately $20 million on the initial plant, plus another $7 million on technology. Originally the cost was expected to be around $42 million. Until it can build its own slaughterhouse, Ridgefield Farms will contract that function to local processors. Midwest beef processors merge Rosen Meat Group, Fairmont, MN, and American Foods Group Inc., Green Bay, WI, recently announced plans to merge the two companies and keep the name American Foods Group (AFG). AFG is known for producing ground beef products and deli meats, while Rosen is a manufacturer of steaks, ground beef and sausage. No layoffs are expected, and the new company plans to restore full-time work hours that employees from both companies lost after cattle supplies tightened due to a lack of Canadian cattle imports. Jobs are expected to be added once imports resume and additional Asian markets reopen to U.S. beef. The deal is expected to close sometime in late August. Collective sales between the two companies totaled more than $1.5 billion last year. Tyson plant votes union out The National Labor Relations Board has certified the February vote that decided to remove the Teamsters Union from Tyson Foods, Inc.= s beef processing facility in Pasco, WA, after 28 years. The union has objected to the vote, but withdrew their objections earlier this month and the vote was certified. Tyson said in a statement it is finalizing plans for a pay increase and other benefit enhancements for the 1,500 hourly production and maintenance workers. Those changes are expected to go into effect July 3. Tyson said about 70 percent of its 300 production plants are now non-union. Cattle neglected at college farm Ten cattle at a University of Wisconsin research farm died after apparently suffering from neglect over the winter, according to school officials. The cattle were fed a diet of poor-quality hay and corn silage in December and January that left them malnourished, Ben Miller, assistant dean at the College of Agriculture and Life Sciences, said last week. The animals were housed at the university-operated Franbrook Farm where they were involved in predicting whether cattle give birth to twins. Six cattle died in February and March of complications during calving, while the others died of malnutrition. Communication problems between the researcher and the worker charged with caring for the animals were cited. The worker has since resigned. Uruguay beef exports hit record Uruguayan beef exports reached record levels during May, with export volume increasing 39 percent over last year, at 26,100 metric tons. The value of beef exports for May rose 48 percent, to U.S. $68 million. Over the first five months of 2005, Uruguayan beef exports totaled 119,000 metric tons worth $303 million, increases of 22 and 27 percent, respectively. The U.S. remained the primary destination for Uruguayan beef, accounting for 76 percent of the country= s May exports. The majority of that product was frozen, at 19,800 metric tons. During the first five months of 2005, exports to the U.S accounted for 74 percent of Uruguay= s exports, totaling 88,500 metric tons. Spanish-language web site unveiled The California Beef Council (CBC) expanded its Hispanic-based promotion efforts recently by launching a Spanish-language web site, www.MeGustalaCarnedeRes.com. Translated the web site name means A I like beef.@ The new web site includes beef recipes, nutrition facts and beef safety information. In addition, this year's CBC Hispanic marketing campaign also includes radio advertising and in-store retail promotions with more than one hundred Hispanic stores. USDA certifies Greater Omaha Greater Omaha Packing Co. received Quality System Assessment approval from USDA, which qualifies the company to export to customers in Japan when that market is reopened to U.S. beef products. The QSA signifies that a processor has ties with ranchers and feeders who maintain careful feed, age and genetic records of cattle and gives such companies an advantage when the border reopens. Harris Ranch Beef Co., Brawley Beef Co. and Packerland Co. have received similar designations. Winn-Dixie closing 300-plus stores Winn-Dixie Stores Inc. will sell or close 326 of its 918 stores, close three of its 10 distribution centers, sell off manufacturing plants and lay off approximately 22,000 workers. The closing distribution centers are in Atlanta, Charlotte, N.C., and Greenville, S.C. The retailer is attempting to emerge from bankruptcy protection and is expected to will see its gross sales dip from $10 billion last year, to $7.5 billion. The 22,000 layoffs account for about 28 percent of the company's employee base. Giant Eagle opens super store A prototype supermarket for Giant Eagle's new grocery concept opened last week in Pittsburgh, PA. The 24-hour, 86,000-square-foot store includes a prepared-foods department, an in-store cafe, a natural and organic section, a full-service dry cleaner and a child-care center. According to Kevin Srigley, Giant Eagle's vice president of marketing, convenience is the primary feature of the new supermarket, which houses a fully staffed meat department selling USDA Prime Beef, Certified Angus Beef, and natural beef. The store also offers 100 varieties of deli meats, salads, and antipasto items.

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Monday, June 27,2005

Live cattle BSE test awaits U.S. validation

by WLJ
Company expects fall introduction. Confirmatory A quick-test@ also unveiled. Canadian-based Vacci-Test Corporation recently announced it has developed a diagnostic blood test that shows the presence of brain diseases, including BSE, in live animals. Company officials said USDA researchers will conduct validation studies on their research starting next month, and that the test could be available for use in the U.S. sometime this fall. Vacci-Test BD is a quick test that determines the presence of a protein marker that is indicative of a variety of brain diseases in cattle, including BSE. AA single drop of blood will identify the presence of Protein 14-3-3, the marker for brain infections, including BSE,@ said Bill Hogan, president and CEO of Vacci-Test. AThis will facilitate affordable mass testing of live cattle in the field with results readable in less than 30 minutes.@ According to Hogan, if an animal tests positive for a brain disease using the Vacci-Test kit, further post-mortem tests should be conducted to confirm whether the disease is BSE or not. AThe test itself can detect a wide variety of diseases. If the test is negative, then animals are free of brain infections, including BSE. If the test is positive, further testing is needed to rule out or confirm BSE,@ said Hogan. A This is a good precursory test for producers to use.@ Hogan added that the test uses a hand-held, non-laboratory process that makes it easy and quick to use. ABecause it is a hand-held kit that doesn= t require a laboratory setting the cost is five to six times less expensive than the other lab-based tests,@ Hogan said. The test reportedly costs around $20. Vacci-Test conducted two-years worth of testing on 2,000 blood samples that were given by the Veterinarian Laboratories Agency (VLA) in Weybridge, England, which is considered the foremost authority on BSE testing, internationally. AWe conducted blind vial testing on samples that were collected on animals that were alive but then slaughtered and tested for the BSE in Great Britain. We used our test on samples from animals that were both positive and negative for the disease, and had a 100 percent success rate,@ he said. That test data has already been filed with food and livestock agencies in France and Canada as well as with the European Food Commission in Brussels. Hogan added last Wednesday that his company is also in the process of filing its data with both the World Animal Health Organization (OIE) and the U.S.= National Veterinary Services Laboratory in Ames, IA, for validation. AWe are two weeks out from submitting our data to the U.S. and OIE, and the analysis of that data is expected to take another few weeks,@ he said. AIf their (NVSL) review is positive we will then be allowed to market the test in the U.S.@ USDA officials told WLJ last week that in the case of diagnostic tests or kits there isn= t a full-fledged certification or approval process needed, and that a positive review from federal scientists is enough to allow those products to be marketed in the U.S. C WLJ

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Monday, June 27,2005

Outrage over BSE retest lingers

by WLJ
Final results likely early this week. Testing disclosure scrutinized. Cattle industry and U.S. agriculture officials last week were both eagerly awaiting final results of confirmatory BSE testing being conducted by a world-renowned lab in Weybridge, England. However, as of press time last Thursday, those results were not known, and USDA officials were indicating that results would be known probably the first half of this week (starting June 27). In the meantime, USDA was still facing intense criticism due to the decision to retest and the fact that they breached normal BSE surveillance protocol by announcing A preliminary@ test results and not waiting for final confirmatory tests to be completed. During a June 17 teleconference, Jim McAdams, president of the National Cattlemen= s Beef Association (NCBA) said that his group had a face-to-face meeting early that morning with U.S. Agriculture Secretary Mike Johanns concerning how the current BSE situation has been handled. A We took this opportunity to let Secretary Johanns knowCin no uncertain termsCthat these actions have created great anxiety within our industry, and have resulted in significant losses for producers forced to market during these uncertain conditions,@ McAdams said. A We believe that the market uncertainty stemming from last week's report has already resulted in a serious drop in value for the U.S. cattle inventory. No matter how quickly or fully the market rebounds, many producers have suffered very real losses that will never be recovered. This situation will continue to bring volatility and economic harm to our industry as long as uncertainty hangs over the marketplace.@ According to Johanns, his agency had no choice but to order the Animal and Plant Health Inspection Service (APHIS) to conduct retests on three A preliminary inconclusive@ samples that were collected last year. USDA's Office of Inspector General (OIG) asked for the retest using the Western blot test, and Johanns said that is a branch of the agency that he has no say over or against. Samples from three cows showed A preliminary positive@ results using BioRad= s rapid BSE testing kit, however, confirmatory testing at the National Veterinary Services Laboratory (NVSL), Ames, IA, showed there to be no infection in those animals. According to OIG, there was some reason to believe that the confirmatory testing process was flawed or conducted incorrectly and that a retest using the Western blot test was in order. That retest came back positive in one of the three retested samples. That sample was then sent over to the Weybridge lab for additional testing. USDA officials indicated that the English laboratory received the sample last Monday, June 20, about a week later than originally projected. The delay was the result of USDA needing to make sure they kept enough of the suspect animal= s brain sample so they could continue to do their own batteries of testing as well. There was some industry and scientific concern with OIG= s decision to use the Western blot test, because it is a broader test that can determine the presence of other prion diseases besides BSE. AThe positive result from the Western blot could have been something else besides BSE, while the IHC test, which USDA uses as its confirmatory test, exclusively looks for BSE,@ said Gary Weber, executive director for regulatory affairs with NCBA. AThe IHC is the > gold standard= BSE test and recognized internationally.@ According to NCBA and other industry organizations, USDA needs to stick to original protocol regarding announcements of BSE tests and their results. A few months after implementing their stepped-up BSE surveillance program on June 1, 2004, USDA announced that they would not publicly report test results unless they were positive following confirmatory testing. In this case, producer groups said USDA violated that protocol by announcing the positive Western blot test results before the English laboratory had a chance to conduct it= s testing to confirm or deny the presence of the disease. AOnce again, USDA= s actions surrounding this same animal have unnecessarily caused extreme volatility in the marketplace, and conditions can only be described as miserable,@ said Leo McDonnell, president of R-CALF United Stockgrowers of America. AMarkets are reeling as a result of USDA= s indecisiveness, which is causing irreparable harm to our industry, and someone needs to take the reins and steer us back on a proper course.@ There was also concern that USDA is withholding information on the specifics of the animal in question and that rumor and speculation is causing even more harm to the industry, specifically cattle markets. It has been indicated by some USDA reports that the cow is between 10-12 years old, meaning it was born prior to a 1997 ban on ruminant meat-and-bone-meal in ruminant feed. In addition, reports have indicated the cow was from the Southwest U.S., more than likely Texas. APHIS spokespeople have denied those reports, and that specific information on the animal will only be released if the England lab comes back with a positive BSE result. Jim Rogers, spokesman for APHIS, did say that preliminary reports about the suspect animal= s remains not entering the human or animal food chain were correct and that any chance of the disease spreading beyond this animal was nonexistent. C Steven D. Vetter, WLJ Editor

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Monday, June 27,2005

Utah joins states with stomatitis infections

by WLJ
This year's early-season outbreak of vesicular stomatitis (VS) continues to expand, with Utah becoming the most recent state infected with the pesky disease. On June 17, 2005, the National Veterinary Services Laboratories (NVSL), Ames, IA, confirmed the disease in one horse each from Garfield and Davis counties in Utah, the first confirmed cases in that state this year 2005. According to the Utah Department of Agriculture, the two horses were part of a pleasure ride on May 22 along the Escalante River in southeast Utah. The owners did tell officials that they remember an abundance of biting flies and insects along the trail, and that the horses started showing signs of the disease May 31. Flies and other flying insects are thought to be the primary vectors by which the disease is transmitted. With Utah, there are now four states that have reported confirmed cases of the disease, which was first confirmed rearing its ugly head in late April. The other three states that have already reported infections of the disease are Arizona, Texas and New Mexico, with Arizona being the hardest hit so far. As of June 17, 18 premises in five counties are under quarantine because of VS; eight of those premises were on the 21-day countdown for release from quarantine. In both Texas and New Mexico, two horses from the same premise in one county are currently infected with the disease. In both those instances, the infected premise is on a 21-day countdown from quarantine. The counties with confirmed cases are Graham, Maricopa, Navajo, Pinal and Yavapai in Arizona; Luna County in New Mexico; and Travis County in Texas. Over the past two-plus decades outbreaks have generally followed a 10- to 15-year cycle. In l982-83, the U.S. suffered its worst recorded VS outbreak, when infection was confirmed on 617 premises in nine statesC Arizona, New Mexico, Colorado, Utah, Wyoming, Idaho, Montana, Nebraska and South Dakota. Subsequent outbreaks occurred in l995, l997 and l998 but were limited to Arizona, New Mexico, Colorado and Texas. Last year, Texas had 15 cases, New Mexico 80, and Colorado 199. Utah did not have any confirmed cases of the disease in 2004. Colorado and other neighboring states have not yet been hit by the disease. However, state animal health officials have said the lingering wet weather conditions this spring have left the possibility for an even greater outbreak of the disease very likely. Livestock owners and private veterinary practitioners are urged to report suspected cases of VS to their respective state livestock health regulatory agency because of the similar symptoms the disease has compared to hoof-and-mouth disease. Prospective buyers of cattle from states not infected with the disease but looking to buy animals from infected states are asked to talk with their respective state livestock health officials to see what additional testing requirements, if any, are needed prior to bringing cattle across state borders. — Steven D. Vetter, WLJ Editor

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Monday, June 20,2005

Softer beef adds pressure to feds

by WLJ
— Market declines $2-3; feeder cattle follow. Last week’s developments surrounding a possible second case of BSE in the U.S. and the continued softness in the boxed beef market combined to result in a $2-3 softer fed cattle market last week. That decline trickled down to the calf and feeder cattle markets, also to the tune of about $2-3. The only fed cattle trade reported through Thursday was in northern feeding areas at mostly $83 live, $132-133 dressed. Analysts said volumes were “moderate at best,” with Nebraska probably moving 75,000 head, and Iowa moving under 20,000 head. Colorado trade was minimal at mostly $82 live, $131-133 dressed, sources said. Kansas and Texas cattle feeders were still trying to hold out for as much money as possible Thursday, with asking prices still at $87. Packers were seen bidding mostly $83. “Friday trade is pretty much expected,” said Brent Snyder, analyst with the Texas Cattle Feeders Association. “Softer trade will probably happen, but the question is how much softer.” Cattle futures were down significantly three of the first four days last week, with the only glimmer of hope being a Tuesday turnaround. However, that hope didn’t last too long, as most contracts lost over $1.50 between Wednesday and Thursday. At close of business Thursday, June live cattle were at $81.20, down 70 points from Wednesday; August settled down 77 points, at $79.42; and October closed at $82.05, a 70-point decline. Packer margins were barely hovering around breakevens last week, as boxed beef prices continued to slide, particularly Choice product. As of midday Thursday, Choice boxed beef was reported at $138.74, down over $4 from the close of business the previous Friday. Select was at $133.82, down about $2.50 from the end of the previous week. Thursday’s Choice/Select spread of $4.92 was about $2 narrower than most of the prior week. “We are really starting to see a large influx of cattle that are coming in too heavy with too much condition on them,” said Reed Marquotte, analyst with M&Z Livestock Analytics. “Compared to the past few years, the narrowing of the Choice/Select spread is several weeks premature and does nothing but add more concern about the market come late July and August.” Finishing weights continue to be a concern, also. Through Thursday, average fed steer finishing weights were still over 1,300 pounds, more than 30 pounds heavier than a year ago. The weights were slightly below the previous week, however, analysts said the fact that weights are still over 1,300 pounds is very threatening to fed cattle prices over the next few weeks. In addition, slaughter volumes continue to run ahead of most analysts’ projections for meeting consumer beef demand. For the week ending June 11, 659,000 head of cattle were processed. Projections for last week’s slaughter volume were at least 660,000 head; between last Monday and Thursday, 486,000 head were processed, 5,000 head more than the same period a week earlier. Most analysts still said that processing approximately 610,000 head of cattle would meet, possibly exceed, current beef demand, both domestic and exports. Boxed beef volumes were mostly moderate last week, after the previous week showed several 500- plus load days. There was some hope that retail beef demand would be strong for the Father’s Day weekend, however, analysts said previous holiday weekends have been lackluster for beef movement and consumption. Decline trickles down Very few, if any, cattle feeders were said to be making money on last week’s market. Most market analysts indicated that breakevens for cattle sold in northern feeding areas were around $85, while Kansas and Texas cattle feeders were probably figuring $87-88, at least. As a result, a significant decline was seen in the calf and feeder cattle markets last week. The biggest slide was shown in the heaviest weight ranges of yearling and other feedlot-ready cattle. In some instances those cattle lost $4-5, compared to two weeks ago. Most other classes of cattle were down around $3 per cwt. In some cases, cattle sold last week may be losing upwards of $75-100 per head. Heavier feeder cattle right now are more likely to be ready for market when there is an overly large supply of cattle already looming, said Marquotte. “Front-end supplies are already pressuring the market, and the way things look, things aren’t going to change anytime soon,” he said. The CME feeder cattle index, for 600-850 pound steers, was $111.83 last Wednesday, compared to $114.42 the previous week. Calf prices were a “trickle-down” victim of price declines in the other cattle markets. Most analysts said that unseasonably good grazing conditions and small offerings were very conducive to keeping prices at least steady under “normal” conditions. “But, we are far from normal conditions,” Marquotte said. “We start seeing losses in the fed market likewe are right now, and it affects all others in the industry.” — 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 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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© 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.