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Friday, January 14,2005

More Canadian BSE

by WLJ
The Canadian Food Inspection Agency (CFIA) confirmed another case of bovine spongiform encephalopathy in that nation’s cowherd last Tuesday. The latest cow was not a herd mate to a BSE-positive animal discovered only nine days prior and was a purebred Charolais under seven years of age. CFIA said that while testing the cow they kept control of the carcass, and no part of the animal’s remains entered the human food or animal feed production chains. The agency also said that because the animal is purebred it will help facilitate traceback and discovery of any related animals that may have been exposed to the disease. Marc Richard, spokesman with CFIA, said the rancher noticed the cow was lagging behind when he was bringing her in from pasture. A veterinarian took a sample of the suspect cow at the ranch and sent the sample for the preliminary rapid testing at the Alberta Provincial Lab on Jan. 7. That lab is one of several facilities approved by Canada as part of a network of transmissible spongiform encephalopathy (TSE) laboratories. When the rapid test revealed a positive result, the cow’s sample was sent to the federal Winnipeg lab to undergo testing under the international gold standard immunohistochemistry (IHC) test. The results were confirmed on Jan. 11 and the BSE announcement was made. The cow was born in March 1998, meaning Canada’s ruminant-to-ruminant feed ban was in place prior to the animal being born. The U.S. and Canada both established laws to prohibit the feeding of these products believed to spread BSE by an animal ingesting meat or bone meal made from the rendered parts of a contaminated animal. Canada implemented a ban in August 1997. Cindy McCreath, communications manager for the Canadian Cattlemen’s Association (CCA), said the most recent infection could be tracked back to the animal eating feed that was grandfathered in by the feed ban. “It’s important to note that while the feed ban began in August 1997, there was no recall issued at that time on feed ingredients already in the system.” She said it was likely the cow was exposed to feed that was produced prior to the feed ban and was stored on a farm an extra long time. She added that does not indicate a lack of feed ban compliance at this stage of the investigation. The other three BSE-positive cow’s originating from Canada were all born prior to the feed ban and investigations into their infection indicated that they had come in contact with BSE- contaminated feed. McCreath said, “We have confidence in our regulators to ensure the effectiveness of the ban. The low incidence of BSE in Canada, as shown by the surveillance program, is evidence that the ban is working. The CCA fully supports a review and validation of the implementation of Canada’s feed ban.” Jan Lyons, Kansas producer and president of the National Cattlemen’s Beef Association, said, “America’s cattlemen insist that the feed ban be strictly enforced, and we must be assured Canada is in full compliance. We demand that USDA and the U.S. Food and Drug Administration (FDA) investigate Canada’s feed ban compliance. Based on this information, USDA and FDA should determine how to proceed with regard to the implementation of the Canadian rule.” Dr. Ron DeHaven, administrator of USDA’s Animal and Plant Health Inspection Service (APHIS), said, “Since this animal is born shortly after the implementation of Canada’s feed ban and to determine is there are any potential links among the positive animals, we will expedite sending a technical team to Canada to evaluate the circumstances surrounding these recent finds. We appreciate Canada’s willingness to cooperate and assist us in these efforts. We will continue our ongoing work with Canadian officials in their epidemiological investigations to determine the facts of these cases.” A team of investigators was sent to Canada last Wednesday to initiate the investigation into Canada’s implementation of its feed ban and the overall effectiveness of its rule. An FDA investigative team will be sent into Canada to research the feed ban sometime before Jan. 21. According to Richard, CFIA is looking to invite a separate international review panel to evaluate the same issues as USDA and FDA. On the other side of the issue, R-CALF USA does not believe the feed ban is enough to prevent the spread of BSE. R-CALF CEO Bill Bullard criticized Canadian officials’ comments during a news conference about the feed ban. Bullard quoted the officials as saying the feed ban was enough of a safeguard to prevent the spread of BSE into the Canadian cattle herd and into the human food supply. “However,” Bullard said, “during Europe’s BSE crisis, Europe also implemented a feed ban, yet, cases of BSE were discovered 12 years after the feed ban was put into place.” He also emphasized that, given the new finding, USDA should immediately withdraw its final rule allowing Canadian cattle and beef from cattle over 30 months of age into the U.S. The National Farmers Union (NFU) joined in the sentiment that USDA should revoke the final cattle import rule. Dave Frederickson, NFU president, said, “The National Farmers Union reiterates its call for Congress to reject, or the U.S. Department of Agriculture to immediately abandon, efforts to reopen the Canadian border to live cattle. In addition, we urge USDA to rescind its rule allowing Canadian boxed beef to enter the United States. It would be negligent to jeopardize consumer confidence and our domestic cattle market with these rules. “Of the 23 countries with documented cases of BSE, 70 percent have discovered subsequent cases in the months and years that follow. This latest discovery is further evidence that the Canadian cattle herd is infected with BSE, and the safeguards put into place in Canada to prevent the disease are not properly working.” Sen. Tom Harkin, D-IA, the ranking Democrat on the Senate Agriculture, Nutrition and Forestry Committee expressed disappointment in USDA’s failure to reevaluate plans to reopen the Canadian border through last week. However, the Senate Agriculture Committee did commit to holding a hearing. Harkin said, “Critical questions exist about the efficacy of both the Canadian anti-BSE effort and our own anti-BSE policies. Addressing these concerns has to be a top priority of USDA before more broadly opening the border to Canadian beef and cattle.” Sen. Mike Enzi, R-WY, sent a letter to outgoing Secretary of Agriculture Ann Veneman, asking USDA to withdraw the Canadian final rule to allow imports to resume. “Today’s announcement reminds us that we do not know the prevalence of BSE in Canada’s herd until they have completed their testing program,” said Enzi. To date, CFIA says it has tested 24,000 head of cattle for BSE. This is the third positive BSE test in Canada and the fourth case of BSE in an animal of Canadian origin. Enzi indicated that he supported reopening the border after export markets were reestablished. That is a similar position to Rep. Earl Pomeroy, D-ND, who introduced legislation earlier this month delaying Canadian cattle imports until U.S. beef export markets were reopened to pre-BSE levels. “From the producer perspective, it is imperative that we reopen our export markets before we allow our domestic market to be flooded with Canadian cattle ... The border opening must be done in a way that minimizes economic impact to domestic producers,” Enzi said. No health concerns On the other side of the issue, the American Meat Institute (AMI) and NCBA wanted to ensure that consumer confidence here in the U.S. is not damaged by the announcement of this latest case of BSE. AMI emphasized that the meat never entered the food chain. However, they did say that had the meat been sold for human consumption, it would have been safe because the risk materials where the contaminating agent is found is required to be removed. “Those are the only tissues where BSE has ever been found,” said James Hodges, AMI president. Lyons agreed, saying consumers should remember BSE is not found in beef such as steaks, roasts and ground beef. Hodges also said, “There are multiple firewalls in place to detect BSE if it exists in North America and prevent the contamination of the food supply. This animal was identified because it had been detected under the Canadian surveillance system.” On a final note, Hodges said it is important that the U.S. tries to fully understand the significance and the demand that public officials make policy decisions based on sound science. AMI encouraged USDA to move forward with the decision to open the border on March 7. CFIA said the results of a full internal audit of the Canadian feed rule, as well as the traceback and traceout of this animal to find any subsequent contaminated animals should be completed before March 7.

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Friday, January 14,2005

Retail food down in 4th quarter

by WLJ
Retail prices for food at the supermarket dropped about four percent in the fourth quarter of 2004, retracting most of the increase recorded in the third quarter, according to the latest American Farm Bureau Federation market basket survey. The informal survey on the total cost of 16 basic grocery items showed a decrease of $1.51 from the 2004 third quarter survey. The third quarter average price for the market basket items was $1.53 higher than the second quarter. The $38.87 average paid by volunteer shoppers for the 16 items is $1.44 higher than the 2003 fourth quarter survey average of $37.43. While the survey average has increased from a year ago, food remains affordable overall. Americans spend just 10 percent of their disposable income on food annually, the lowest average of any country in the world. Of the 16 items surveyed, 11 increased and five decreased in average price compared to the 2004 third quarter survey. Reversing an upward trend in price that began during the first quarter, bacon showed the largest decrease, down 41 cents per pound to $3.11, followed by Russet potatoes, which dropped 31 cents per 5-pound bag to $1.75. The price for a gallon of whole milk dropped for the second consecutive quarter, ending at $2.98, a 25-cent drop from the third quarter. Cheddar cheese dropped 18 cents per pound, showing the lowest average price in a year at $3.76. The price for a dozen eggs and a pound of apples also dropped 18 cents, to $.99 and $1.04 respectively. Other items that decreased in price: • Flour, down 16 cents per 5-pound bag, to $1.46; • Pork chops, down 14 cents per pound, to $3.29; • Whole fryers, down 14 cents per pound, to $1.14; • Sirloin tip roast, down four cents per pound, to $3.70; and • Vegetable oil, down four cents per 32-oz. jar, to $2.52. “The decline in meat and milk prices is due to a couple of different factors working concurrently. First, there has been an increase in the supply of beef––production rose two percent from a year earlier in the fourth quarter. At the same time, reduced demand for meat products became a factor, due to a weakening of the high-protein diet craze which has gripped the country over the last year or so,” said AFBF Senior Economist Terry Francl. After dropping 12 cents in the third quarter, the price for a 20-oz. loaf of bread increased 15 cents to $1.44. Corn oil increased in price, rising 11 cents to $2.78 per 32-oz. jar. Toasted oat cereal increased 11 cents, rising to $3.07 for a 10-oz. box. Ground chuck averaged $2.57 per pound, a 9-cent increase from the third quarter and the first rise in price in a year. Mayonnaise increased to $3.27 per 32-oz. jar, a 4-cent rise. Despite steady increases in grocery store average prices over time, the share of the average food dollar received by America's farm and ranch families has actually dropped. “This reflects a long-standing trend,” said Francl. “Thirty years ago farmers received about one-third of consumer retail food expenditures.” According to the most recent Agriculture Department statistics, America's farmers and ranchers receive just 19 cents out of every dollar spent for food. Using that across-the-board percentage, the farmer's share of this quarter's market basket average total would be about $7.39. Francl noted that increases in off-farm costs, which account for 81 cents of the retail food dollar, reflect the higher cost of energy as well as health and retirement benefits. “These are more likely correlated with the overall inflation rate in the general economy,” Francl said. — WLJ

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Friday, January 14,2005

Packer profits rally feds

by WLJ
— Short supplies, weather tighten sellers’ grip. For the first time in several months, beef packers last week showed positive profit margins and that resulted in them coming to the table and paying more for their immediate slaughter needs. While trade volumes were pretty light, fed cattle sellers were able to capitalize off of tight supplies and winter weather that was threatening several major feeding areas. Last week’s trade happened at mostly $92-93 live in southern cattle feeding areas, primarily Kansas and Texas. Northern trade was at mostly $145 dressed, $90-91 live. Prices were $2-5 higher than the previous week. Packers started out the week bidding $85 or lower. By Wednesday, however, packers had jumped bids to at least $92, and the majority of trade happened that afternoon. For the week, 40-45,000 head of cattle traded hands in each of the three major cattle feeding states. Most analysts called trade volume “moderate, at best,” and said recent slowdowns in production chains led to slower-than-normal trade activity. In addition, finishing weights of cattle are a little larger than the same time last year, with live weights being 20 lbs. heavier and average carcass weights being 12 lbs. larger. Slaughter volume for the week ending Jan. 8 was 574,000 head, and most market onlookers said it is likely weekly processing volumes could be steady or below those levels the remainder of the month. However, while light slaughter volumes were considered bearish for packer demand on cattle, it did help boost wholesale beef prices last week, which allowed packers to report profits for the first time in over three months. The Choice composite cutout last Thursday was at $155 per cwt, compared to $143 at the end of the previous week. The Select cutout was above $147, compared to being below $136 the previous Friday. Packer profits were called $10-12 per head at the close of business last Wednesday and were expected to be almost $20 per head by the end of the week. Last week’s boxed beef prices were being compared to previous week procurement prices of $88-90 live. Boxed beef volumes last week were called “surprisingly strong,” with the first three days of the week all showing around 300 loads or more being moved between packers and retailers. Severe winter weather hit Nebraska, Colorado and Kansas last week and that allowed cattle feeders to tighten up slaughter-ready supplies because of concerns that cattle were stressing or losing weight. Western Nebraska, eastern Colorado and western Kansas feedyards reported anywhere between 3-6 inches of snow last Tuesday and Wednesday with temperatures below freezing. The panhandle of Texas was spared a lot of severe weather. Brent Snyder, analyst with the Texas Cattle Feeders Association (TCFA) said, however, feedlots in that area are still trying to recuperate cattle from winter weather that hit at the end of December. “We’re in good shape weather wise. Right now, however, some cattle are still needing some feed after severe winter weather last month,” Snyder said. “Showlists are extremely tight right now, and that is showing itself in the market.” Dillon Feuz, extension livestock economist with the University of Nebraska, told WLJ that the previous week’s cash trade volume—245,000 head—was better than projected and that it created enough clearance in showlist numbers that prospective sellers had few cattle to sell. In addition, he said packers were buying cattle on a very tight “hand-to-mouth” basis and that they needed cattle for immediate slaughter needs, perhaps even for last Friday. “They only bought 105,000 head the week of Christmas, and that kept them in a very short supply situation, and forced them to buy more cattle last week and this week,” Feuz said. Live cattle futures rallied through Wednesday, before starting to slide 50-60 cents last Thursday. Early week sentiments on the Chicago Mercantile Exchange (CME) trading floor were USDA would delay final implementation of its live cattle and beef import rules and that rallied the market some. February live cattle, in fact, got up to $92.75 last week, before showing just over $90 Thursday midday. April also got over the $90 mark, since it was the first listed contract following USDA’s expected import implementation date of March 7. Calves stronger While feedlot demand was considered anemic for lighter, more immature calves, stocker demand was more than enough to rally the market $2-5 across the nation. According to Feuz, winter moisture has been plentiful across most major stocker cattle areas and that has resulted in stocker operators trying to get their hands on cattle already for spring grazing. “In this area (Sandhills of Nebraska) spring grazing could be the best in 4-5 years, and I’ve heard nothing but positives about grazing prospects across the country,” he said. “Looks like stocker operators are already buying those cattle and putting them on cheap feed the next few months, before turning them out on pasture in April.” It was a busy first two weeks from a video auction standpoint, with the three biggest video auctions in the country all conducting beginning of the year sales. Superior Livestock Video, Western Video Market, Northern Plains Video Auction all reported very strong sales on lightweight calves and called trade activity very active. There were several instances with 350-450 lb. calves getting back above the $140 level, with some 500-600 lb. calves seeing $125-130 again. Land-based auction facilities reported similar scenarios, with larger-than-normal buyer attendance noted. Texas, Missouri and Nebraska auction managers reported buyer attendance last week that was 25-40 percent larger than the same time the previous few years. “While weather was considered a deterrent for packers buying fed cattle, it was a windfall for cow/calf producers selling their calves,” said Feuz. “A lot of stocker operators can get these calves and put them in a facility where weather isn’t a big factor on their health or nutritional needs. Most drylots can provide a dry spot to lay, and in most cases, a good windbreak.” Yearlings steady Heavier, more placement ready cattle weren’t seeing the same price gains last week, however, they weren’t seeing any major price declines either. Most auction sources reported yearling cattle bringing mostly steady money, compared to the previous week. Winter weather was keeping some northern Plains feedlot operators out of the market. Southern feedlots, however, weren’t seeing a lot of problems, except for some slightly muddy conditions due to light rain. According to Snyder and Feuz, feedlots are still bringing in placements but aren’t doing so at any great increase in procurement prices. While fed prices were up last week, a $92-93 market still means cattle feeders are losing $35-55 a head, if not a little more on cattle that have been held back an extra two or three weeks. The possibility that USDA would delay the reentry of Canadian feeder cattle beyond the original March 7 deadline was keeping the market mostly steady, according to Feuz. The CME feeder index last Wednesday was at $104.65, almost even with the previous Wednesday. — WLJ

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Friday, January 14,2005

Texas town pursuing packing plant

by WLJ
A west Texas town is offering an incentive package to lure a $20 million meat-processing plant with its 700 jobs. Odessa Texas is in the running for a $20 million meat-processing plant, according to the Odessa American newspaper. An unnamed company is considering Odessa as well as several other west Texas towns as the site of the plant. Neil McDonald, the Odessa Chamber of Commerce’s economic development director, reported some details of the project “dubbed Project Trim”—during the monthly meeting of the Odessa Development Corp. Shortly before Christmas, the state Office of Tourism and Economic Development contacted McDonald about “Project Trim” seeking information about the city’s infrastructure and workforce. McDonald said the project would entail construction of a processing facility and the creation of 700 to 1,000 jobs. Mike George, president and chief executive of the chamber, stressed that the facility would not involve the killing of live animals. “This is not a slaughterhouse we’re talking about,” George said. McDonald added that the facility would purchase processed, vacuum-packed meat for use in other products. There would be no emissions or animal waste. McDonald said Odessa is not the only city vying for the project, adding that state officials told him that this is a west Texas project. “So I’m sure there are other West Texas communities that are going to be competing for this project, but we don’t know who they are and they didn’t divulge that,” McDonald said. The ODC will offer the company several incentives, including an 85-acre tract in an industrial park with access to utilities, rail, Interstate 20, as well as multiple property tax and Freeport tax exemptions, the newspaper said. The ODC taps the $0.0025 economic-development sales tax to offer incentives for qualifying businesses and industries that create new jobs. McDonald said Odessa has an advantage over other potential cities in west Texas, the newspaper reported. Odessa is one of only two cities in the area that has an industrial wastewater treatment plant that requires no pretreatment by users. “The plant gives the city serious leverage on this project,”McDonald said. He added that he doesn’t know how soon the company will make a final decision. — WLJ

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Friday, January 14,2005

U.S., Japan to meet on BSE, age verification

by WLJ
A U.S. beef trade delegation is scheduled to visit Tokyo later in the week of Jan. 17 in a renewed effort to convince Japan that USDA’s beef grading system can reliably determine the age of cattle without birth records. Age verification approval is needed before Japan is willing to reopen its border to U.S. beef. Japan requires that the U.S. be able to prove that cattle slaughtered for beef export would be 20 months old or younger before it eases a ban imposed after the U.S. announced the finding of a case of bovine spongiform encephalopathy (BSE) in December 2003. USDA sent a previous delegation to Tokyo early last month to show Japanese officials the results of a study that shows the agency's carcass grading program can prove that cattle slaughtered for beef export are 20 months or younger. USDA sources said the upcoming meeting will follow-up those discussions, which were also held in Tokyo at the time. After Japanese and U.S. officials met in Tokyo Dec. 16-17, Japan's government issued a press release predicting another such meeting "as soon as practically possible" so that a "common understanding" could be reached. However, those same officials appeared to be skeptical about the U.S. grading system being reliable in determining age of cattle. U.S. beef industry representatives and USDA officials have both stressed the importance of Japan accepting USDA's research showing that cattle age verification is possible. If they don’t agree to that protocol and want birth records to be part of the renewal of trade, it is thought only 5-18 percent of the last U.S. calf crop may be eligible for processing for beef destined for Japan. Fewer than 25 percent of U.S. cattle born in 2004 have documented birth records. A large portion of those cattle are from registered, purebred cowherds that aren’t destined for commercial beef production. Japan was the largest market for U.S. beef before it implemented the ban in reaction to the discovery of a case of BSE discovered in Washington state. — WLJ  

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Monday, January 10,2005

Australia beef gaining more preference from Japanese

by WLJ
An independent survey of consumers in Japan has placed Aussie Beef at the top when it comes to brand recognition and food safety. The AC Nielsen report into the retail beef market in Japan included surveys of Japanese consumers and took into account brand awareness, consumption figures, consumer perceptions, and key purchasing drivers for both domestic and imported beef brands in Japan. Meat and Livestock Australia (MLA) Japan regional manager Samantha Jamieson said the report confirms the solid standing that the Aussie Beef brand currently has in the Japanese market. “The Aussie Beef brand continues to be at the top of mind for consumers in Japan, even up against the local brands,” she said. Ninety-nine percent of the respondents in AC Nielsen’s latest survey were aware of the Aussie Beef brand and 31 percent of theoe respondents thought of Aussie Beef first when asked to name a beef brand. “It was the top brand in this regard,” Jamieson said. Another key finding of the AC Nielsen report was that product safety is highest in the mind of Japanese consumers when they purchase beef. In comparison to the same survey’s results from last year, safety overtook both freshness and price to be the number one criteria that Japanese consumers considered when buying beef. A total of 70 percent of survey respondents named safety as their number one priority this year compared to 76 percent who said freshness was number one last year. Freshness, at 65 percent, dropped to third, while taste, with 66 percent, was second in this year’s survey. “There is no doubt that the safety image of Aussie Beef plays an important part in maintaining the strong reputation of Australian beef in the minds of Japanese consumers,” MLA said. “Traceability is really gaining momentum in Japan and we have to promote our strengths in this area if we are to maintain our strong safe image in Japan,” Jamieson said. “Similarly, we need to strengthen our delicious image to compete with local Japanese beef brands. We are the number one overseas brand when it comes to delicious image, but compared to Japanese brands we still have some catching up to do.” — WLJ

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Monday, January 10,2005

Australia blocks Brazilian beef

by WLJ
Australia has suspended imports of beef from Brazil even after a suspected case of hoof-and-mouth disease (HMD) turned out to be a false alarm. The suspected case had been reported on a property in a state of the country that had been recognized as HMD free. Australia’s Minister for Agriculture Warren Truss said Australia has only ever imported a small sample of Brazilian beef for processing, but all import permits have now been canceled. “We do not import beef from Brazil in any quantities and so there's no likelihood of there being significant quantities coming into Australia," he said. “But any risk is too much risk in these circumstances, and so all import permits have been canceled forthwith.” Truss said a full review of arrangements for importing Brazilian beef will ensure Australia's animal health status is not compromised. “We'll need to look overall at our approach to imports from Brazil,” he said. “Once there's a better understanding of the extent of this outbreak in Brazil we'll have a better idea of whether there are any parts of the country from where imports might be safe. But until we're absolutely certain that there are no risks associated with imports from Brazil there'll be no import licenses issued.” — WLJ

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Monday, January 10,2005

Beef Bits

by WLJ
New boxed beef report unveiled USDA on Jan. 3 formally unveiled its new boxed beef report, which is a downsized and much simpler version of what it had been publishing twice daily for the past several years. The new report only lists the composite Choice and Select boxed beef cutouts, along with the Choice/Select spread. Previously the composite cutout was broke down into 600-750 and 750-900 pound weight categories under each quality grade. However, officials with USDA’s Agricultural Marketing Service said the detail was unnecessary and complicating the reporting. U.S. cattle leave for Cuba A shipment of 22 beef cattle left the port of Fort Everglades, FL, on Friday, Dec. 31 bound for Havana, Cuba, and landed on the country’s shore Tuesday, Jan. 4. It marked the first shipment of live cattle to Cuba since the U.S. imposed an embargo on Cuba in 1959 in the wake of the Cuban Revolution. The New Year’s Eve shipment marked the first shipment of several scheduled over the next few months. A total of 300 head of U.S. live cattle, valued at nearly $1 million, will end up in Cuba when all the shipments are made. In 2000, Congress allowed an exception to the embargo in the case of agricultural products sold for cash. Steak added to donut chain menu Dunkin’ Donuts started out 2005 introducing it’s first ever beef offering—a steak, egg and cheese sandwich. The sandwich features seasoned sirloin steak and is served on a warm bagel. The promotion is expected to run through May, but could be extended pending consumer acceptance of the new sandwich. Japan restaurant posts profit Yoshinoya D&C, one of Japan’s largest gyudon, or beef bowl restaurant chains, said it returned to profitability in the latest quarter, which ended Nov. 30. The 1,000-unit chain, which relied heavily on imported American beef for its most popular dishes, said it lost money for two consecutive quarters after American beef supplies dried up at the first of the year when Japan announced its ban on imports. The company has substituted pork bowls and a new spicy beef bowl made with Australian beef, but said it has no substitute for gyudon, which can only be made to Japanese taste with American beef. Yoshinoya saw sharp same-store sales drop over previous years, on average about 33 percent, but managed to eke out a profit through cost-cutting moves. Kuwait lifts ban on U.S. beef Kuwait, on Dec. 26, became the first country among the four Arab Gulf Cooperation Countries to lift a ban on all beef imports originating from the U.S., with the exception of the state of Washington, according to an agricultural attache from USDA’s Foreign Agricultural Service. The decision resulted from ATO Dubai’s ongoing efforts over the past 12 months to convince the host governments’ health authorities to lift the ban on U.S. beef imports. The decision by Kuwait is expected to help hasten similar action by health authorities in the remaining three GCC countries. Yum! offers health-club membership The ownership group of Taco Bell, KFC, A&W, Pizza Hut fast food chains is offering customers free, four-week memberships at Bally Total Fitness clubs during January. Yum! Brands Inc. operates more than 18,000 units in the U.S. The is designed to counter recent negative publicity from obesity-related lawsuits, which blames the obesity epidemic on the fast food industry. The giveaway is valued at $50 per person. New Ontario beef plant planned The Kent Cattlemen's Association is awaiting approval from the Canadian Food Inspection Agency to begin construction of a (US)$15 million beef processing plant that is expected to slaughter 600-800 cattle per week. The exact site of the plant will be in the region of Chatham, Ontario, and an architectural firm has been hired. However, other details are not being released until CFIA grants approval. At that time, the owners will open bids for a general contractor. Brazil cattle negative for HMD Confirmatory test results indicated there was not an outbreak of hoof-and-mouth disease (HMD) in the cattle-rich Brazilian state of Mato Grosso do Sul as was suspected last month, Agriculture Ministry officials said last Tuesday. The news was relief to Brazil's beef industry, which was put on alert after blood tests on 28 cattle from Paranhos, on the border with Paraguay, showed signs of being infected with the disease. The original test may have come up positive because the cows were vaccinated for HMD just four days before. Brazil has had two outbreaks of hoof-and-mouth disease this year.

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Monday, January 10,2005

Fed market very slow, steady

by WLJ
— Packer losses, slow demand cited. It was a tenuous week in the fed cattle markets last week. Trade volume was light and $88-88.50 live, $140 dressed was all that cattle feeders could muster despite a winter storm that passed through most of the nation’s cattle feeding region. There were several elements at work last week—futures markets were softer with the Canadian trade news and announcements that most of the nation’s major packers were going to temporarily close some plants and reduce production shifts at others. Tyson was going to suspend operations in Denison, IA; Norfolk and West Point, NE; and Boise ID, and discontinue the second shift at their Pasco, WA, plant. National Beef also announced some temporary production cuts due to “unfavorable” market conditions. The last week of the year there were 538,000 head processed with no Saturday slaughter on Jan. 1. For the first week of the year, through Thursday, 449,000 head were processed, 34,000 head fewer than the same period a week earlier. The most recent packer margin index showed packers losing almost $60 per head. Losses have been reported by packers going for nearly six months. The standard practice of reducing beef production to prop up the boxed beef market is in full swing, market analysts said. Andy Gottschalk, HedgersEdge.com, said beef demand is being pressured because of less disposable income resulting from rising energy costs. The Atkins high-protein diet is also losing favor with consumers, according to Gottschalk, and competing meats are more aggressive in pursuing market share for those high-protein dieters. “The beef industry doesn’t have sole ownership of the Atkins diet as it did several years ago,” he said. In addition, Gottschalk said, “We have a serious demand problem at work, and the current dynamics will only compound the problem. With the packing industry announcing shutdowns, we are expecting weekly slaughter for the next several weeks to be only 570,000 head. The industry needs to slaughter 622,000 head to keep feedlots current based on current numbers of cattle on feed. They are expecting the fed cattle market to trade between $85-90 with storm market factors assumed for the next six weeks.” Boxed beef sales volume was moderate last week and the Choice cutout was off several dollars from the previous week, to $139.55. In addition, there is only a $7 spread between Choice and Select, which is at $132.38. The only bright spot in the meat markets is the grinding markets, where ninety percent lean was trading at $144.71, down just slightly from a week earlier. The 50 percent trim market rallied to $72.90, up more than $20 from two weeks prior. Mark Gustafson, spokesperson with Swift & Company, said it has been very difficult to get extra value in the end meats because of the export situation. “We have been forced to put a lot of chucks and rounds, along with other items into the grinding bin when they would have a much higher value in the export markets,” he said. He added that in their Australian operations tongues are selling to Japan for over $5 a pound while U.S. operations can’t get $1 domestically. Yearlings up, calves sliding Yearling and heavier-weight feeder calves gained a little bit of ground last week, as prices ranged from mostly steady to $1 higher than the last week of 2004. Cattle feeders were scrambling to find cattle that would be ready for market during the spring of 2005, auction barn managers said. Supplies of cattle weighing 750 lbs. or more are very tight, and the fact that Canadian feeder cattle aren’t being allowed into the U.S. until March 7 is forcing cattle feeders to pay a little more for them. The fact that winter weather rolled in last week didn’t deter feedlot interest in heavier placements, particularly with the severity of winter weather being much less severe than meteorologists’ projections. Texas panhandle sources reported an inch or less of rain falling, compared to forecasts of 4-6 inches of snow. In addition, western Kansas, eastern Colorado and western Nebraska received 4-6 inches of snow, compared to forecasts of one foot or more. “They (feedlots) need the cattle right now, and heavier, more mature placements can handle what Mother Nature has doled out so far this year,” said Randy Kinnon, cattle broker with K&K Livestock, Garden City, KS. “Fed supplies could be very short the second quarter, and that means that cattle destined for market at that time could be a profit making venture.” The nearby feeder cattle futures contract remained above $104 per cwt for most of the week, and that was said to be supporting cash feeder cattle prices a little bit. Market analysts said that futures above $103 will keep cash feeder cattle at steady to improving prices week-to-week. In addition, Kinnon said that while corn futures were trending upward last week, cash corn could still be bought for well under $2 per bushel, or $3.60 per cwt. “In two weeks it (corn) may be well over $2 a bushel, however, right now, there is still plenty of old crop in outside piles or plastic, and it is being fire-saled. I’ve seen it still at $1.75 or lower (per bushel) in many areas.” Kinnon said. “That is more impetus to take the chance on older placements.” The CME feeder cattle index last Wednesday was at $104.86, about 25 cents higher than the same day the week previous. Calf prices weren’t as lucky last week, as prices paid for them ranged anywhere between $2-6 softer, as extremely cold weather deterred much interest in lightweight feedlot or stocker placements. Kinnon said several of his feedlot and stocker operator clients were adamant they didn’t want to deal with younger, immature calves because of the extra labor and expense it usually takes to keep them healthy during winter storms. He added stocker operators are no longer looking for late season grazing cattle, and cattle feeders were concerned corn prices would start to escalate through the rest of January and make feeding those cattle out a more expensive proposition. “Light calves being placed right now would normally be ready (for market) during the summer, which is a usual lull period for fed cattle,” Kinnon said. “There is still a lot of uncertainty whether or not Japan and other export markets will be open to U.S. beef by then and the fact that Canadian cattle could be entering the country at that time, makes the possible summer fed cattle supply look overly large right now.” Other cattle market analysts said the primary indicator leading to depressed cattle prices is more simple, and that economics is to blame. At $88 fed cattle are losing anywhere between $80-100 per head. Most sources said that breakevens are at a minimum of $95 right now, and that some cattle could be up around $97-98 because of being held due to severe winter weather. — WLJ

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Monday, January 10,2005

Kuwait lifts beef ban

by WLJ
Kuwait became the first country among the four Arab Gulf Cooperation (GCC) countries that banned U.S. beef imports in late 2003, to lift the said ban on all beef imports originating from the U.S., with the exception of Washington state. The Kuwaiti decision on maintaining the import ban on Washington-state results from the country’s Food Safety Committee’s doubts on elimination of the BSE risk in the state. During 2003, Kuwait imported $32.2 millions worth of U.S. beef products, FOB basis. In 2004, between January and October, U.S. exports fell to $5.9 million. All of the 2004 trade was to the U.S. military personnel stationed in Kuwait. A U.S. trade attache to Kuwait said 2005 U.S. beef exports to Kuwait are expected to go beyond 2003 levels. The decision by Kuwait should help hasten action by other GCC countries to address the bans remaining in place, the attache said, in a published report.

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