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Monday, February 21,2005

EU urges U.S. ag reform

by WLJ
The U.S. needs to match European Union efforts to reform agriculture trade policy, EU Trade Commissioner Peter Mandelson said Feb. 11. The EU is working to update its Common Agricultural Policy. This has the potential to cut “distorting trade subsidies” by two-thirds, eliminate export subsidies and offer improved market access for many products, he said. “We look to others to match this, including the United States. In particular we need to see how the U.S. plans to reduce and discipline agricultural domestic support and export credit.” Mandelson said in prepared text for a speech to the U. S. Chamber of Commerce. Mandelson said international trade officials need to move faster on the issue of anti-dumping rules. Many countries are adopting trade defense regimes that could turn into protectionism. “Unless we reach rapid agreement on how to handle this issue, the opportunity for reform will be lost and countries across the world will lock in unsatisfactory and restrictive regimes damaging world economic growth,” Mandelson said. Mandelson said he hopes the U. S. and Europe are heading into a new era of cooperation. Both sides of the Atlantic need to set aside past differences and work to create stability in Iraq and progress toward peace in the Middle East, he said. U.S. President George W. Bush’s upcoming visit to Europe will be an important step renewing this relationship, Mandelson said. He said Bush should renew U.S. support for European integration, as well as broader transatlantic themes. “This is the strongest signal he could send of support for what we are doing to reunite our continent in democracy and economic development, and to build a Europe more capable of assuming its global role,” Mandelson said.

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Monday, February 21,2005

Fast food offered to U.S. military

by WLJ
U.S. soldiers in Iraq spend hours—sometimes days—on patrol hunting insurgents and dodging roadside bombs. But when they get back to base, they can pick up a case of Dr. Pepper, buy the latest DVD and get a Pizza Hut meal back to the room to relax after a hard day at war. A soldiers life isn’t what it used to be. Commanders say providing a good quality of life is essential to keeping volunteer troops in the military. Having a chance to skip the mess hail and go to Pizza Hut, Burger King or Subway—Popeye’s Fried Chicken and Taco Bell will be added this month—makes a big difference, soldiers say. I think it’s great. The dining facility gets old after a while, said Spc. William Oates. 25, a 1st Cavalry Division soldier from Asheboro, NC, after finishing a Whopper at Camp Liberty, just outside Baghdad. The Army & Air Force Exchange Service operates 23 fast food franchises at 16 U.S. bases in Iraq, with 25 more approved and under construction. They also have Seattle’s Best and Green Beans coffee shops. Terry McCoy, the food program manager for Iraq, opened the first Burger King at Baghdads airport in May 2003, before the military even set up its first mess hall. “This generation of soldiers has grown up with name—brand fast food.” McCoy said. “It’s the taste from home that they’re missing. It not only gives them that little moment of comfort, I like to think it...takes them back home for just the 15 minutes they are enjoying a Whopper.” The staff is a mix of American AAFES employees who volunteer for combat duty and workers from third countries hired through a labor company in Kuwait. Part of the base is set aside for their living quarters. Armed convoys deliver the fast-food ingredients to the bases along with regular military supplies, McCoy said. Making sure the stores have enough stock for those times when the supply convoys don’t run for security reasons is the biggest challenge, he added. While the fast food is extremely popular, AAFES’ main mission is to operate 3,150 retail stores for troops on bases in 35 countries. Their motto is “We go where you go,” and stores range from medium-size tents on remote fire bases to large department stores at the main camps. At Camp Liberty’s post exchange, or PX, soldiers can buy anything from a 50-cent granola bar to a $3,499 42—inch, plasma—screen television. AAFES sells everything at prices comparable to those in the United States, with profits going toward troop morale programs. Through its Web site, www.aafes.com, AAFES lets people donate phone cards and gift certificates to wounded troops overseas. The Camp Liberty PX is on track to sell $80 million worth of goods this year, said Rick Mora, the general manager for Baghdad. The store is second in sales only to a larger facility at Kadena Air Base in Japan, he added. AAFES also operates a phone service with AT&T so soldiers can call home cheaply. Troops can buy new cars and motorcycles that can be picked up when they get home. Iraqi vendors are rented space so they can sell souvenirs, art and other things to the troops. Spc. Rakesh Pal, 23, from Modesto, Calif., said he likes to walk through the PX when he has free time, even if doesn’t intend to buy anything. “It reminds me of being back home at the mall,” he said. “It doesn’t feel like I’m in Iraq when I’m in the PX.” — WLJ

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Monday, February 21,2005

Letters

by WLJ
Re: Cattle Identification Attention: Sarah Swenson: Why do not cattlemen insert “microchip IDs” in the cattle as they do in dogs now? They would not be very easily removed at all—and would surely simplify the procedure as well as decreasing costs! Just was thinking about this after reading the article in WLJ. I am retired now and have sold all our cattle since my husband (Clyde) passed away in 1994. Just always loved the cattle business! Audrey Carner Carner Hat C Ranch (no longer in business) Chino Valley Long-term solutions required Since BSE was discovered in Canada, a tangled web of media hype, international politics, scientific investigation and economic theory have intertwined to create strong opinions and ample miscommunication in the cattle and beef industry. After the events of the past months, one common theme has emerged—Montana ranchers do not want the border reopened in a way that jeopardizes their livelihood. Our livestock organizations are in agreement on this. Our differences, however, come from two different rationales. Montana Stockgrowers Association (MSGA) is concerned about economic impact, while others promote fear in the safety of beef. Other countries have closed their borders to U.S. beef exports because we had a case of BSE. They do not make the distinction that it was not a native born cow. Based on this, it is important to establish rules for dealing with a minimal risk country. We must develop rules and protocol that instill confidence in our consumers and trading partners. MSGA has demanded that five very stringent requirements are met-based on sound science, economics and fair trade. We realize that eventually, trade will resume. And instead of demanding a complete and indefinite closure, we are asking that reasonable, realistic conditions be met. To promote Canadian beef as unsafe because they have had BSE in their country is to set ourselves up for disaster if we ever have a native case in the U.S. The December 23 case, although of Canadian origin, was a shot across our bow. Industry experts agree it is quite possible that we will discover an indigenous case, and we must be prepared. It is imperative to maintain consumer confidence in our beef. With the current food safety protocols in place, both in the U.S. and Canada, no infectious BSE agent ever reaches the food supply. Beef is safe. To attempt to protect our markets by using hysteria and scare tactics will result in the shot going through our bow not over it. Bill Donald MSGA President Melville, MT Concern about opening Canadian border Dear Sirs: The neighbors and I back in the hinterlands of Idahos’ Owyhees are a bit confused and need enlightenment. We don’t savvy how opening the border to Canadian live cattle in the face of confirmed BSE cases and speculation over tainted livestock feed will encourage Japan to import our beef. We refer to BSE, mad-cow disease, as wild cow disease because it’s perceived as a wild card that’s being played at our industry and the consumers expense. As the little boy admonished Shoeless Joe Jackson, “Tell us it ain’t so Joe?” Yours truly, Michael L. Hanley IV Jordan Valley, OR One Nation Under God I was raised on a small ranch near Wild Horse, CO, and went to a country school the first eight years. One room with eight grades, 21 children, and one teacher. Looking back, I realize how wise my teacher was, teaching all grades reading, writing, arithmetic, and English. Teachers are not that versatile today. Each morning we would pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, with liberty and justice for ALL. I grew up understanding what patriotism really was, having great respect for the President of the USA, and reverence and faith in God. I was taught to honor my parents and respect my fellow man. Many things have changed in the last 40 to 50 years. Ten commandments cannot be displayed in a public building. God and prayer has literally been kicked out of our schools. Atheists are petitioning to remove God from the Pledge of Allegiance and from our currency (in God we trust). I’d like to remind these unbelievers that there are still places on earth where they could go and not have to associate with God fearing believers. I have been traveling around the country extensively lately. My awareness has increased to the people around me and how they react to different situations. I was at the R-CALF Convention and we always ask God’s blessing before meals and the same at the NCBA Convention. At one NCBA meeting, we all stood to pledge allegiance to the flag (we did not leave God out, he was right there). For the most part, these two organizations are comprised of producers with a reverence for God and a love for the land upon which they make their livelihood. While in San Antonio, me being an Irishman, I decided to stop at Dirty Nelly’s Irish Pub. It was a full house, people having a good time. Steve Palmer was playing the piano and singing some Irish songs. Time was taken to ask God’s blessing and protection on our soldiers at war. There was a Viet Nam Veteran there who had been wounded and burned in service to our country. He sang a song, then Steve asked all to stand and sing the Star Spangle Banner. Let me say, these are my kind of people. This is what America should be like. The BEEFMAN Tom Connelley Belle Fourche, SD

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Monday, February 21,2005

Korea noncommital on lifting beef bans

by WLJ
Korea has yet to even hint if, or when, it will lift its bans in place on both U.S. and Canadian beef. While Japan has moved closer to lifting its ban, sources with USDA said it appears Korean officials are waiting for a full resolution between Japan and Canada and the U.S. before they start the resolution process. Korea did send a technical team to the U.S. last May to review and validate the findings of the International Review Commission concerning the U.S. protocols to prevent bovine spongiform encephalopathy (BSE) from infecting beef in the future. However, a high-level USDA official that has made several trips to Korea during the past few months, told WLJ last week, that the Koreans are content to wait for Japan’s final decision on the issue of beef imports of U.S. and Canada before moving forward. “Japan is considered (by Korea) to be the culture and society that is most thorough when it comes to ensuring the utmost in human health and economic sustainability,” the USDA spokesman said. “Once Japan decides on a resolution there will be several other countries follow, and Korea will probably be the first one, and will probably have a policy-making process started within two weeks of Japan’s final decision.” There are a couple of factors that could slow Korea’s desire to reopen its borders to U.S. and/or Canadian beef. The Korean government’s introduction of a traceability system in some of its retail outlets and consumers increased confidence of domestically-produced Hanwoo beef is expected to increase beef consumption in 2005. If the increased inventory allows for retail prices to drop, it would further boost the beef consumption when coupled with the economy that is slowly beginning to recover. Higher production and lower retail prices of Hanwoo beef cattle in 2005 will also help boost beef consumption in 2005. The focus of the Korean government’s policies has been less on stimulating Hanwoo production and, more on enhancing food safety. The focus includes development of a traceability program and environment friendly livestock policies. However, despite significant reduction in cattle prices and a sluggish economy, USDA officials said Hanwoo beef wholesale prices remain six times higher than imported beef and U.S. beef would fill a void of “reasonably priced” higher quality beef. Australia is the leading exporter of beef to Korea, however, it is mostly grass fed product that isn’t as high in quality and isn’t being highly demand by Korean restaurants or higher-end retailers. Hanwoo products target the high-income consumer market. However, the majority of Korean beef consumers who focused formerly on reasonably priced but high-quality imported beef have now shifted to other substitute products, such as pork and fish. — WLJ

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Monday, February 21,2005

Obits

by WLJ
Edwin J. “Ed” Carter Edwin J. “Ed” Carter, 72, died Feb. 6. He was born in Torrington, WY, Nov. 1, 1932, the son of Bill and Phyllis (Platx) Carter. He grew up in Torrington and graduated from Torrington High School. Following high school he went to work as a ranch hand for various ranchers in the area and lived in Fresno, CA, Sheridan and Lovell, WY. Carter spent four years working for Senator Malcolm Wallop on his ranch near Sheridan. He then began his own business trimming cattle hooves and preparing livestock for stock shows and traveled to Wyoming, Colorado, South Dakota and Nebraska. Carter was active in the Goshen County 4-H program, and was the ringman for the cattle show at the Goshen county fair for nearly 40 years. He enjoyed his work and taking time to help prepare young people for the stock shows. He is survived by his brother James Carter, St. George, UT, two nephews and a niece. Willie E. “Bill” Carter Willie E. “Bill” Carter, 97, died June 5, 2004. Born on May 14, 1907 in Esbon, KS, the son of Wilbur and Myrtle (Nichols) Carter. He grew up in Esbon and attended Cottner College in Omaha, NE, where he met Phyllis Ann Platz. The couple married in September of 1930, and moved to Torrington, WY, where Carter helped build the Holly Sugar factory and was employed until his retirement in 1972. He enjoyed raising cattle and working on his home. He is survived by his son, James Carter and wife Gail of St. George, UT; three grandchildren and three great-grand children. A joint memorial service for father and son was held Feb. 15, at the Colyer Funeral Home in Torrington, WY. Those who wish to make a memorial contributions may do so in Ed’s name to the Ed Carter Memorial fund, established for creating a handicap facility on the Goshen County Fair Grounds, %Pinnacle Bank, 2000 Main St., Torrington, WY 82240.

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Monday, February 21,2005

Plant processes first cattle

by WLJ
The first new packing house to open in Alberta since BSE was discovered in Canada recently processed their first cattle. After pondering the idea of turning a shuttered chicken processing plant into a beef facility over seven years ago, producers Reita and Stan Sparks, Wanham, Alberta, revisited that plan and moved forward with it after BSE was discovered back in 2003. "It gave us a jolt to try something else," said Stan Sparks, who plans to kill 70 animals a week at Hart Valley Processors near Wanham in the Peace River region of the country. Seven cattle were processed on Feb. 8, the first day of operation, but the Sparks expect to kill 35 head a day twice a week by late February. "If we get enough enthusiasm or enough work we could probably double what we're planning on," Sparks said. While as many as 40 new packing plants have been talked about across the Prairies, this is the first to open in Alberta since BSE was discovered two years ago on a farm about five miles east of the plant’s location. Unlike other groups trying to raise money by selling shares to other producers, the couple financed the venture themselves. They sold half a section of farmland and mortgaged the rest to renovate the 8,300 square-foot plant. Sparks said there was little desire shown from bankers to back the project. The project is financed through three lenders. "Bankers don't want to get involved. The Alberta government doesn't want to get involved. They're making noise but they're not really handing out any money," he said. "Part of it is the financing. Nobody's getting any help. We just went in and did it. There's a lot of talk about building slaughter houses, but no one is really doing anything but talk.” He said time will tell if jumping into a packing plant business with little experience is the right way or just the quickest way. The former chicken facility is now a beef "kill and chill" operation. The meat that leaves the plant is cut into large sections and vacuum packed. Producers can then either find a butcher to finish cutting the meat or sell it directly to restaurants. "It's up to the farmer to make his own sale and we'll process the meat," Sparks said. "We're not into the marketing end of the meat." There are plenty of butcher shops able to cut and wrap the meat, but most federal or provincial plants have a three or four month waiting list for slaughtering. The Peace River region has one provincial slaughter plant in Grande Prairie, Alberta, and a federal slaughter plant in Dawson Creek, British Columbia. — WLJ

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Monday, February 21,2005

Probe of BSE case complete

by WLJ
The Canadian Food Inspection Agency (CFIA) has concluded its investigation into the latest case of bovine spongiform encephalopathy (BSE) confirmed on Jan. 11. All animals tested through the investigation were found negative for BSE. The agency's investigation determined that 349 animals comprised the birth cohort, which includes cattle born on the farm of origin within 12 months before and 12 months after the infected animal. Of this group, 41 animals were found alive and were euthanized. They tested negative for BSE. Most of the other animals from the birth cohort had previously died or been slaughtered. The investigation also identified the infected animal's two most recently born offspring. One calf born in 2003 had been slaughtered; the other born in 2004 was too young to be tested for BSE and was euthanized. Canada's ruminant feed ban was introduced in 1997 as a proactive precaution. At that time, it is likely that the feed ban was not immediately adopted uniformly across the feed industry, according to the agency. Prohibited materials would have been purged from the ruminant feed system as Canadian renderers, feed manufacturers, retailers, distributors and producers developed, implemented and refined new operating processes. Similar experiences have been observed in all countries with BSE that have implemented feed controls. Based on this understanding, the agency said, the detection of an infected animal born after the feed ban was not unexpected. The feed component of the investigation determined that BSE may have been transmitted to the infected animal through feed produced shortly after the feed ban was introduced. However, exact production dates for the feeds under investigation are unavailable. Surveillance findings, inspection reports, international risk assessments and previous investigations indicate that the ban has successfully limited the spread of BSE over time, CFIA said. Nonetheless, the agency is committed to continuously improving Canada's BSE safeguards. Canadian officials are conducting a review to gain a detailed, current snapshot of how the feed ban is working. Concurrently, proposed enhancements to the feed ban are moving through the regulatory process, the comment period for which closes on Feb. 24. These changes require the removal of specified risk material (SRM) from all animal feeds. This action will minimize the risks associated with any potential cross contamination or on-farm misuse, CFIA said. — WLJ

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Monday, February 21,2005

Poor demand stalls fed cattle

by WLJ
— Cow market remains strong. — Calves stronger on weather, feeders struggling. Fed cattle markets were slow to develop last week as little trade was reported through Thursday. A small number of cattle traded between $87-88 live, $138-140 dressed. A pick up in trade was expected Friday. Early trade was $2-4 softer than the majority of market activity the previous week. Slaughter volumes continue to be a problem with just 573,00 head passing through packing plants two weeks ago, 10,000 head lower than the prior week. Packers processed 471,000 head through Thursday of last week, which was the first week that weekly slaughter exceeded weekly volume from a year ago. Feeders are also looking at Presidents Day taking a day out of their normal weekly slaughter this week. So, they won’t need as many cattle. The latest packer margin index shows packers losing around $44 per head. Boxed beef markets were slightly softer with the Choice cutout falling $2-3 to $142.70; Select was down to $139.98, making the Choice/Select spread just $2.72. Trade volume was moderate. Beef production year to date is 4.2 percent below a year ago. The Feb. 1 Cattle on Feed Report due out last Friday was expected to show strong placements into U.S. feedlots. The average analyst’s guess was 110.5 percent of a year ago, out of a range of 100-118 percent compared to last year. The number of cattle on feed is expected to be up 2.5 percent, and marketings down two percent from a year ago. The probability of a smaller marketing total made analysts more nervous than the potentially-large increase in placements. Some of the marketing decline, versus last year, can be explained as one less business day, however, the January total is set to be the smallest early year out movement since USDA started keeping on-feed data. Anyone looking at current carcass weights and impressive country leverage in the fed market would certainly not conclude that a marketing backup problem exists, however, the longer term balance sheet clearly points to potential price danger somewhere down the road. Andy Gottschalk, HedgersEdge.com, pointed out that the number of cattle that have been on feed more than 120 days will be up seven percent over last year and up 11 percent over the five-year average. His group expects to see the market retest a $93 fed market, on a storm related situation. But, he also expects to see growing inventory start to conflict with demand. He said the industry will have a summer demand base that will support a weekly slaughter of 605,000 head and that available slaughter supplies will be much larger than that. Slaughter cow markets have been seasonally stronger with top quality cows in the mid-$50s. The 90 percent lean markets are also stronger, suggesting there could be more room for slaughter cows. Ninety-percent lean was trading at $154 mid week, and the 50 percent trim market was at $54. The cow beef cutout was $115.87 last Thursday, was down $2.25 from the day before. West Coast cow beef was trading between $89-91. Calves stronger, feeders softer Last week’s calf market was called $1-3 stronger across the country as spring grazing gets closer and moisture continues to inundate most major spring grazing regions of the country. Feeder cattle prices weren’t as fortunate as a continued lack of fed cattle profits and muddy pen conditions force prices down mostly $1. Stocker operators and even some backgrounding operations were heavily demanding lighter-weight calves last week, according to auction barn managers across the country. Stocker operators, particularly in the western half of the U.S. are very bullish when it comes to spring grazing prospects. In most major spring grazing areas, moisture is 15-30 percent ahead of the previous five-year averages, and that is spurring on thoughts that stocking rates could be 10-15 percent higher than the past few years. In addition, the longevity of the grazing season could be extended by as much as a month to six weeks longer than normal, particularly in the southern Plains and Southwest, rangeland specialists indicated. Backgrounder demand was said to be spurred by the continuation of cheap corn prices along with hay prices that are $10-15 per ton cheaper than the past couple of years. On the corn side, March futures were still below $2, with several instances of $1.95 cited last week. According to commodity market analysts, old corn crop is still behind the near-term futures contract 20-25 cents, meaning that some producers can purchase cash corn between $1.65-1.70 per bushel, or $2.90-3.05 per cwt. Not only is hay cheaper across the board, but the quality of hay needed to feed backgrounded cattle doesn’t have to be very good, especially if corn or another feed grain is being fed alongside. In some instances, poor quality, stemmy hay is selling for $25-35, according to USDA hay reporters from Midwest and Plains states. Heavier weaned calves and yearlings were struggling to bring steady money last week, as most cattle feeders continue to show $25-40 losses on finished fed cattle. In some instances, calf feds have a breakeven around $90. Analysts said, however, the percentage of calf feds in the slaughter mix right now is barely in double digits. Also, demand from feedlots was deteriorating due to muddy conditions and extremely cold temperatures resurfacing in a majority of the major cattle feeding areas. Wet pen conditions and severe cold can lead to extra health problems and a slow down in getting cattle transitioned to full feedlot rations. Futures also were struggling last week, and that trickled down to the cash market. As of the close of business last Thursday, the March contract was at $100.62 per cwt, after getting up past $102 earlier in the week. Other Thursday closes showed April at $99.95, and May at $98.85. The CME cash feeder cattle index, for 700-850 pound steers was $103.89 last Wednesday, compared to $104.31 the previous Thursday. — WLJ

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Monday, February 21,2005

Product News

by WLJ
Large capacity poly forage applicator In-cab controlled rates of dry forage preservative for hay or silage can be easily managed with the Gandy poly forage applicator with positive displacement metering. The 2.3 cubic foot capacity translucent hopper has an instant shutoff and the application rate can be changed with the touch of a dial. The hopper provides 100-150 lb. capacity to cover more acres per fill, and the in-cab control allows rate adjustment to compensate for changes in flow of hay or silage. The underfed metering system eliminates dribble when not operating and is available in 2, 3 or 4-outlet configurations. The metering system also features easy clean-out ports behind each spout. Other options also available. For more information contact the Gandy Company at www.gandy.net or 800/443-2476. Animal health educational program New education program from Merial designed to communicate the advantages of strategic animal husbandry initiatives within the cattle industry. The Merial Veterinary Professional Services (VPS) Strategic Husbandry and Research Education (SHARE) program is designed to maximize animal health education. With an emphasis on long-term, continuing education initiatives, the SHARE program will consist of producer and veterinary meetings, instructional newsletters, educational tools and other specific programs designed to highlight strategic animal husbandry topics. The SHARE program utilizes the expertise and industry knowledge of the Merial VPS staff, while bolstering Merial’s commitment to encouraging good management practices. One of the first topics to be addressed by the Merial VPS SHARE program will be strategic parasite control. Partnership brings feed products to U.S. Acadian Agritech and BioIngenuity LLC, announced an agreement focused on bringing several new Ascophyllum-based livestock feed products to U.S. livestock producers. Acadian Agritech, manages and harvests Ascophyllum nodosum from the North Atlantic coastline and converts this renewable resource into nutritional products for both human and livestock consumption. Research data shows feeding its products to livestock and poultry can improve conception rates, reduce heat stress and improve meat quality. Biolngenuity LLC will assist Acadian Agritech in the further development of research and marketing programs to expand its U.S. market. For information call 952/474-4187. New cattle and horse clipper The new 3-speed Cattle & Horse Clipper from Andis Co. has 180 watts of power for heavy-duty clipping. Plus it incorporates an ergonomic design that reduces fatigue when clipping and fitting large animals. It is also quiet, doesn't heat up, and has an extra long power cord. Adjustments for blade tension are quick and easy. The 3-speed clipper includes a blade set 31-15, instruction manual, clipper oil, a screwdriver, blade brush and sturdy carrying case. For more information visit www.andis.com or call 800/558-9441.

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Monday, February 21,2005

Cattle-Fax: Profits to deteriorate in 2005

by WLJ
An expected ramping up of slaughter volume this year is expected to result in cattle feeders’ struggling to show profits throughout 2005, according to a cattle market analytics firm. In addition, that profit deterioration will probably trickle down to producers supplying them with placement cattle, particularly stocker operators. During the annual Cattle Industry Convention Feb. 1-5 in San Antonio, TX, analysts for Cattle-Fax, Lone Tree, CO, told producers that recent herd rebuilding would result in almost 850,000 more fed steers and heifers being available for processing and that a lot of beef from those cattle would need to be discounted in price to help spur its movement through the production system. Prices for fed cattle could even result in packers having an average margin of a negative $20 per head over the year, analysts indicated. Randy Blach, CEO of Cattle-Fax, said cyclical nationwide beef cowherd liquidation was several years longer than normal and that the herd-rebuilding phase would carry more impact than has been shown in the past. USDA's annual Jan. 1 Cattle Inventory Report, released in late January, showed the nation’s beef cowherd to be a percent larger than the year earlier. Because of that, U.S. cattle producers likely have seen the highest prices of this cattle cycle and could see declines for the rest of the decade, Blach said. However, the longer-than-normal liquidation phase, the lack of access to export markets and last year marking the lowest steer and heifer slaughter since 1993 could lead to a significant decline in prices paid for fed cattle and deterioration of cattle feeding profits, Blach said. “Now that the herd is beginning to grow again, steer and heifer slaughter is expected to increase about 850,000 head in 2005 with most of the increase coming in the second half,” he said. “Consumer demand for beef also could level out after seeing good demand growth over the last few years. Producers can't expect that growth to continue, especially at rates the past few years. Retail grocers already are seeing price resistance by consumers, and they are featuring it less often.” Cattle-Fax indicated that average steer carcass weights could increase almost 10 pounds in 2005 compared with 2004. That could lead to the feeding industry losing currentness of market-ready supplies and eroding bargaining positions. As a rule of thumb, every one pound of increase carcass weight produces the beef equivalent of about 1,000 head of cattle per week, he said. Kevin Good, Cattle-Fax analyst, said producers should expect the low $70s per cwt to provide long-term support, with prices in the mid-$90s could offering strong resistance through probably 2006 or 2007. However, it was stipulated that those predictions are taking into account the reopening of international markets to U.S. beef products. Cattle-Fax projects the average fed cattle price to range between $82-84 during 2005, with a full range being mid-$70s during late summer to the low-$90s this spring. Prices are expected to rebound back into the mid-$80s later in the year. In turn, profits for summer grazers are expected to be closer to levels seen prior to 2003 and 2004. Cattle-Fax analysts estimated that stocker operators would probably average about a $20 per head profit through 2005, significantly lower than profits of the past two years. Stocker operator profits during 2003 and 2004 ranged mostly between $160-170. Good said it is imperative that costs be minimized, but that cattle still be produced to their maximum production potential. He said that more than two-thirds of the profit differences between high-return and low-return producers are simply the result of reducing costs.

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