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Articles from 2021 In April


Livestock feed demand is upending global trade flows

Jevtic/iStock/Getty Images Landrace pig eating from plastic hog feeder on plastic flooring

By Isis Almeida, Michael Hirtzer and Kim Chipman

Feeding the world’s chickens, pigs and cows has gotten so expensive it’s upending global trade flows.

As grain prices surge, American chicken giant Perdue Farms Inc. took the rare step of buying soybeans, an American staple, from rival Brazil. BRF SA, Brazil’s top poultry producer, turned to neighboring Argentina for corn, while feed makers in China and the U.S. are buying wheat more commonly used for bread.

These tactics and others by the world’s top food companies highlight how tight the global market has become. A gauge of grain prices is at an eight-year high, boosting the cost of feeding animals and signaling higher meat prices could be coming for consumers. Still, keeping up with rising meat demand as the world recovers from the pandemic has industry executives saying the rally is far from over.

“The meat and chicken industries still have good margins, so higher prices are yet to curb their appetite,” said Brian Williams, a senior vice president at Macquarie Group Ltd. in New York. “However, corn prices have risen enough that in some parts of the U.S. wheat is being dialed in.”

It may all seems simple, but changing the diet of animals comes with some risk: wheat shouldn’t be fed to younger cattle and cows can get bloated if they eat too much of it. Researchers at North Dakota State University recommend that wheat make up no more than 15% of an animal’s diet when it’s being introduced. The color of a bird’s skin can also vary depending on what it eats, with corn-fed chicken looking yellowish, a trait shunned in some countries.

“You can’t switch a cattle’s diet, or any animal’s diet really very abruptly,” said Tyler Beaver, a founder of brokerage Beaf Cattle Co. in Arkansas. “They stagnate on their growth when you change anything very much.”

Perdue is importing 31,450 metric tons of Brazilian soybeans as U.S. supplies dwindle, with vessel Four Turandot set to sail from the northern port of Barcarena next month. Concerns about a smaller corn crop in Brazil known as safrinha has sent prices surging in the South American nation, opening up the opportunity for BRF to purchase two cargoes from Argentina.

“When prices get high and supplies are tight you tend to get out of the ordinary moves,” said Stephen Nicholson, a senior grain and oilseed analyst at Rabobank. “Importing soybean into the U.S. is a psychological blow to the market and sometime backs price down.”

China is buying wheat from several countries as corn prices rise, and Brazil is also picking up some, said Juan Luciano, chief executive officer of Archer-Daniels-Midland Co., one of the world’s biggest agricultural commodities traders. American corn arriving in China will soon be more expensive than wheat, he said in an earnings call this week.

High prices are starting to cut into margins for poultry and pig producers in Brazil, but prices aren’t yet high enough to curb demand, said Paulo Sousa, chief executive officer of Cargill Inc. in Brazil. Any feed switching in the South American nation will be limited as Brazil is already a wheat importer.

“Corn and soybean meal are the big components of animal feed, so there aren’t a lot of options,” he said.

In the U.S., some feed makers in the southern Plains bought up wheat in March and April, when prices were close to that of corn, said Joe Nussmeier, a broker at Frontier Futures in Minneapolis.

Feed makers and meat packers could soon get some relief. While U.S. acreage estimates disappointed the markets earlier this year, prices have surged since the survey was carried out. That will likely spur more plantings

Supplies may be bigger than expected if farmers held back on providing their full planting intentions to prevent prices from falling. Also, growers renewing agreements with the agency to keep land aside for environmental purposes are now bringing these areas back into production due to higher prices, agri-tech startup Farmers Business Network said in March.

“We see the possibility of new acres to be found” as farmers respond to price gains, said Fabio Sandri, chief executive officer of second-biggest U.S. chicken producer Pilgrim’s Pride Corp. Higher feed prices compressed the company’s profit margins even as demand for chicken was rising.

For now, the world is still facing a shortage of feed grains, while wheat supplies are expected to be more ample. If corn prices continue to rally, it won’t take much to keep more wheat moving into animals’ diets. Corn futures climbed to $6.84 a bushel this month, the highest since 2013.

“A summer weather scare rally or problem would likely induce more wheat into the feed conversions like we saw in 2012,” Williams said. “Consistent price levels in corn above $7.00 would allow for that.”

--With assistance from Fabiana Batista.
© 2021 Bloomberg L.P.

Listen up Congress: Be proactive in preventing fires with land management

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A 2020 Bear Fire survivor and California cattle producer told a U.S. House subcommittee on public lands, national parks and forests, land management is a necessity.

Dr. Dave Daley, whose family has been running cattle on the land for five generations, addressed the combination of wildfires and climate change. He also shared ways to make western forests, grasslands and rangelands more resilient. Daley serves as chair of the National Cattlemen’s Beef Association Federal Lands Committee and chair of the Public Lands Council Ecosystem and Environment Committee.

Daley spoke on controlling the risk of wildfire through active land management practices like reseeding and prescribed burns.

“As a rancher, and an expert in animal science, I can tell you that the nimblest tool to address dense grasses in the most protective way is to graze these landscapes,” Daley says.

In the Bear Fire last year, Daley lost approximately 80 percent of his cattle herd. Most animals were killed in the fire, others had to be euthanized due to their injuries, and tens of thousands of acres of rich, healthy soil and plant life was incinerated.

“Forests, rangelands, and grasslands that are at high risk of catastrophic wildfire are not resilient.The cycle of fuel loading, catastrophic wildfire, and loss of biodiversity decreases carbon storage potential in the soil and plant community. In addition to the loss of storage potential, fires release immense volumes of carbon. The California Air Resources Board estimated that the state’s fire in 2020 emitted approximately 112 million metric tons of carbon dioxide, roughly equivalent to more than 24 million cars,” says Daley.

He also warned about the dangers of a one-size-fits-all regulatory approach at the state or federal level and stressed the importance of empowering local ranchers, loggers, and land management experts on the ground who understand each unique ecosystem

“The world is changing. The climate is changing,” added Daley. “We live in a time where communities are expanding further into forested areas, while the residents themselves are further removed than ever before from the direct knowledge of the farm or the wilderness. The hearing came as severe drought conditions across much of the West threaten to make the 2021 wildfire season one of the most destructive in recent memory.

“Dave Daley’s heartbreaking testimony of all that was taken from him by the Bear Fire reveals the dangerous risk that wildfires can post to entire ways of life in the West,” says Rep. Doug LaMalfa (R-CA-1).I am glad to be able to introduce Dave to the subcommittee, and I hope that his personal story will underscore to lawmakers from across the country the importance of coming together to take bipartisan action to better manage our Western forestlands.”

Source: National Cattlemen's Beef Association which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

USDA improves livestock insurance policies

Getty Images Focusing on Wellness to Improve Productivity, Safety for Waste Workers

USDA’s Risk Management Agency is updating livestock insurance policies. The RMA updates to the Dairy Revenue Protection (DRP) and Livestock Gross Margin (LGM) policies will be effective for the 2022 and succeeding crop years.

“We are always looking for ways to improve the insurance program and coverage for our producers,” said RMA Acting Administrator Richard Flournoy. “We strongly feel that these updates will benefit producers and their dairy and livestock operations in the years to come.”

Updates to DRP

DRP has been RMA’s most successful livestock product. In just its second year, it covered about 30% of milk production. It provided critical protection against unexpected decreases in prices, due to COVID and other causes, paying around $478 million to dairy producers.

The changes for the 2022 crop year include:

  • Ensuring the Class Pricing Option remains available for purchase even when either the Class III or Class IV milk price is not published.
  • Relaxing records requirements by allowing monthly total pounds of milk and milk components (butterfat and protein) to be acceptable records instead of daily.
  • Modifying weekend sales period to end on Sunday at 9 a.m. Central Time.

Updates to LGM

LGM is available for cattle, dairy, and swine producers and provides protection against loss of gross margin (market value of livestock minus feed costs). The LGM programs have also seen an increase in participation over the last year. The total insured livestock and livestock products increased approximately 103% from 2019 to 2020.

The changes for the 2022 crop year include allowing producers to purchase coverage on a weekly basis instead of monthly, which will allow producers to be more effective at managing the risks to their operations.

Additional Opportunities

In addition to DRP and LGM, another insurance option for livestock producers is Livestock Risk Protection (LRP), which is available for feeder cattle, fed cattle, and swine. It provides protection against declining market prices. Recent changes, which include increased head limits and additional subsidy increases, have resulted in a 1,000%-plus increase in program participation compared to the 2020 crop year.

Source: USDA, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

How long should you keep a cow?

vectorbomb-ThinkstockPhotos artwork of cowboy riding market
Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazine.

This week there were female specials all over the country, so this week’s post will be a female special as well. I am going to use some material I got from friend, mentor and marketing school instructor, Wally Olson.

Wally has a great slide where he has a real-world comparison of a conventional cow calf operation against one he labeled a high turnover operation. 

The conventional operation is one that keeps a few of their open heifers back to replace the cull cows they shipped off. These operations have so many cows of each age from heifers, on up to 10 plus. They are the people that think they got one crack at the market to get that one paycheck a year, since they only have one calf crop to sell.

They also have the mentality that a cow has her whole life, or ten years, to pay for herself.  In my own words they are in the business of trying to make old cows. I say trying because if we are honest not many cows will make it to ten years. They get culled for injury, disposition, coming up open, or losing a calf. If we use the theory of having ten years to pay for herself, many cows will never accomplish their goal

In the high turnover herd they got rid of all cows over the age of five, and kept twice as many replacement heifers. This program sells off the momma cows at age five, heifers that didn’t get bred, and the steer calves. They also rebreed, and then sell cows that come up open.

The high turnover herd’s inventory valuation (cattle only) increased 6%over the traditional way.  That doesn’t sound like much but by keeping the open heifers back they are keeping the undervalued females and adding value to them and that shows up when we compare gross sales.

The high turnover herd improved their gross sales by 44% over the traditional way. This is accomplished by adding value to the open heifers by breeding them, and by marketing over valued mature cows (selling them at five years of age). A good five-year-old cow is worth a heck of a lot more in the market than an old weigh cow or feeder heifer. By marketing this way they accomplish two things.  One is they sell the overvalued animal and get a much bigger paycheck; and two they are deflecting the depreciation expense of making old cows.

Wally called the second program high turnover because they are selling the cows sooner, or at a younger age. The high turnover program actually sells fewer animals than the conventional program, which really makes that 44% gross increase stand out even more. One way to increase your profit is to increase your gross margin. This marketing concept accomplishes that.

Another thing to note is that by reducing the number of larger mature cows and keeping the smaller younger replacement heifers they increased the number of animals they could run on that ranch. This is managing the inventory triangle of feed, money, and animals well. Since the younger smaller animals eat less than the bigger mature ones they stretched their feed budget. They also do a better job of capturing the value of their grass by having animals appreciating in value consume the feed rather than mature animals that are depreciation in value.

Defining depreciation

I am sometimes asked what depreciation looks like. My knee-jerk reaction is to say “rust.” Depreciation is easy to spot on a pickup. Rust, dents, miles on the odometer and that kind of thing. Sometimes it’s easy to spot on cows too, some simply look old and are in poor condition. Some have a bad udder, or toes. But what about the one that looks good? She’s in good flesh and doesn’t appear to be very old. A veterinarian at the sale barn can shear a bunch of value off her by noting she has lost a couple teeth. With a pickup in mint condition it's easier, the body style gives away the age.

The conventional cow calf operation misses how depreciation expense is hurting them because they have the paradigm that the cow has her whole life to pay for herself. Therefore they never bother to shine any light on it and depreciation does its thing from the shadows.

Here’s an example. A five year old bred-cow is the most over-valued female (currently this changes by area, this is only an example). Let’s say she is worth $1,500. This operation culls their cows at age ten, and cull cows are worth $900. That’s a difference of $600. Divide that by five years and we get $120 per year. That $120 depreciation expense is charged to each calf she produces after the age of five, since that is when the depreciation begins to take place. This is what depreciation looks like. It’s hard to see because we don’t write a check for it. It's easy to ignore.

Cow bell curve

Wally has come up with a simple way to spot over valued females. He calls it the “cow bell curve.” On the left-hand side of a piece of paper he begins with an open heifer of 550 pounds,  and let’s say she’s worth $800. From our example above the 5-year old cow was the most over-valued at $1,500. On that piece of paper put her in the middle of the page and a couple inches higher than the 550-pound heifer. Then on the right-hand side he places the cull cows, which from the example above was $900. So he places her even across the page with the feeder heifer. 

If we draw a line from the feeder heifer up to the five year old cow, then down to the cull we have just drawn a bell curve. When the line is going up the page the female is appreciating. And the opposite is true when the line is going down. With the line going up we are capturing/adding value. Line going down we are losing value.

A simple cow bell curve from the example above looks like this:

cow-bell-curve.jpg

Here is a link to Wally Olson’s website if you would like to contact him and learn more: olsonranchllc.com/

Nothing simple about female markets

When I decided to do this female special I thought it would be simple. Just spot the trend and point it out. The market didn’t make it that simple. I was watching sales around the country and there were two trends. The trends are a mirrored image of the drought monitor map.

In the dry areas I noticed that eight-weight feeder heifers were worth more than young breeding females. Then the 5-year old females rise above that threshold. My thought was these females are proven and can handle the drier conditions. I called Wally since he lives closer to the dry area than I do and he informed me there is more supply of females than there is demand. The people who want to buy these young females can have all they want.

In these areas the market tells me we would be devaluing heifers by breeding them. More bad news is that there is not much appreciation value to be captured right now. The good news is there is little depreciation across the board. The bell curve in these areas is fairly flat.

Make your own decisions

This is not a recommendation to avoid breeding females. That is a decision you must make for yourself.  What I am pointing out is that dry conditions are affecting the market. It always amazes me how one good rain can send the market soaring, even though conditions don’t improve immediately. As of this writing I do not know what hay is selling for in these areas. I can assume its high, and to me the cows look cheap. So it would be a waste of money to devalue high cost feed, by feeding it to cheap animals that are not appreciating in value now.

In areas that are not currently in a drought stage females were much higher priced. And the farther into these areas you go the higher the price. The top of the bell curve was the first calf heifer pair. There was appreciation value to be captured by turning an open heifer into a pair.

Having big calves at side added $500 over bred cows. Stage of pregnancy didn’t seem to affect the price of bred females. To most people if she hasn’t calved by now, she is late. Body condition of the cow had more to do with her value than how far along she was. Fat is a pretty color on cows.

There was a steady depreciation of $100 per year of age all the way through the spectrum.

JBS cattle blockchain platform begins operation

JBS Purchases Canadas XL Foods

JBS S.A. announced this week that it has begun registering suppliers on the Transparent Livestock Farming Platform, an essential phase of a project that will advance monitoring the cattle production supply chain in the Amazon Biome. The tool, equipped with blockchain technology to ensure the security and confidentiality of the data, will make it possible to extend to the suppliers of the suppliers of cattle the socio-environmental monitoring that the company already applies to its direct suppliers.

By signing up voluntarily to the Platform, producers who negotiate animals directly with JBS, will inform the list of their suppliers of animals on the platform, which has been developed by the specialized company Ecotrace. This information is then sent electronically for validation to Agri Trace Rastreabilidade Animal, a system of the Brazilian Confederation of Agriculture and Livestock Farming (CNA), which checks whether the list of suppliers is complete.

Companies on the platform, such as Agrotools, will process the analysis of socio-environmental compliance standards based on the same criteria currently used by JBS, in an agreement signed with the Federal Prosecutors Office (MPF), to verify the existence of:

  • deforestation, respecting the Brazilian Forest Code,
  • invasion of indigenous lands or environmental conservation units,
  • work analogous to slavery and
  • use of areas embargoed by Ibama.

The result of these analyses will be sent directly to JBS´ supplier, who for the first time will have a view of the socio-environmental compliance of their suppliers. With this, they will be able to develop plans to mitigate risks and implement actions to help producers when necessary.

At no time will JBS have access to sensitive information, having access only to the result of the socio-environmental analysis. Thanks to blockchain technology, it will be possible to maintain the commitment to the confidentiality of third-party information.

As a fundamental part of the project, an engagement strategy with the supply chain is being developed to accelerate the registration of producers who comply with socio-environmental standards. All JBS cattle suppliers are expected to join the platform by the end of 2025. This is also the deadline, according to the Net Zero commitment for 2040 announced by JBS, for the company's cattle supply chain, including suppliers of suppliers to be free of illegal deforestation in the Amazon Biome. The same shall occur in other biomes in Brazil until 2030. JBS has committed to achieve net zero greenhouse gas emissions across its entire value chain, reducing the intensity of direct and indirect emissions and offsetting all residual emissions.

JBS´ Net Zero goal includes the company's global operations, covering producers and other suppliers, as well as clients, in its efforts to reach net zero emissions by 2040. The monitoring of its entire production chain in the Amazon is a fundamental part of the company´s strategy towards Net Zero.

The company expects that the ranchers who handle a total of one million animals will be registered on the Transparent Livestock Farming Platform by the end of this year,

As part of the project, JBS is also launching the Green Offices, which will help ranchers in the environmental regulation of their properties. Altogether 13 Green Offices will be opened in processing units across the country.

Farm Progress America, April 30, 2021

Max Armstrong reports on a new product made from soybeans – a soy-based dust suppressant. It's available for roads and farms and provides a sustainable choice for rural and urban areas to improve air quality. BioBlend Renewable Resources has the new dust suppressant called Epic L. The product was developed with research funding from the United Soybean Board and the North Dakota Soybean Council.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: North Dakota Soybean Council

7 ag stories you might have missed this week - April 30, 2021

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Need a quick catch-up on the news of the week? Here are seven agricultural stories you might have missed.

1. The Supreme Court on Tuesday heard the case of Hollyfrontier Cheyenne Refining v. Renewable Fuels Association. Read the transcript of proceedings and hear the oral argument at the Supreme Court website. The justices questioned contentions by two refining companies that Congress intended to create a long-term safety valve for refiners otherwise required to blend plant-based fuels into their products. – Bloomberg

2. President Biden's American Families Plan calls for changing the way the tax code handles capital gains and eliminates the stepped-up basis. However, the plan offers protections for family-owned businesses and farms who pass on the entity to heirs. The White House says the plan is a once-in-a-generation investment in education, health care and child care. – Farm Futures

3. Agriculture Secretary Tom Vilsack says the Biden administration is not out to limit your beef intake. “There is no effort designed to limit people’s intake of beef coming out of President Biden’s White House or USDA,” Vilsack said. The falsehood comes from conservative lawmakers and pundits. – The Hill

4. The Ever Given remains impounded almost a month after it was rescued from the Suez Canal where it snarled traffic for six days. Most of the crew members have remained on board as the ship floats in the Great Bitter Lake, an artificial body of water along the canal. The captain can't leave the ship because he's the ship's legal guardian. – Business Insider

5. Chinese officials plan to split the country into five regions beginning in May, and live hogs will not be allowed to cross the boundaries as the nation aims to control the spread of African swine fever. The move is expected to push down pork prices in the main pork producing areas of the north and raise prices in demand centers in the south. – National Hog Farmer

6. R-CALF says cattlemen have the right to use traditional, low-cost methods for animal identification and traceability and the group is fighting USDA for that right. USDA's Animal Plant Health Inspection Service wants cattlemen to soon use radio frequency identification ear tags to track animals. R-CALF has taken the issue to court and is represented by legal nonprofit New Civil Liberties Alliance in U.S. District Court for Wyoming. – Food Safety News

7. USDA's Animal and Plant Health Inspection Service is extending deregulation to J.R. Simplot Company's Snowden Z6 potato, which was developed using genetic engineering. The potato variety is engineered for late blight protection and reduced blackspot bruising among others. APHIS previously deregulated these traits in another Simplot potato variety. – Fresh Fruit Portal

And your bonus.

A killer robot, called Dick, targets individual weeds in crops and is destroying broadleaf weeds identified using pattern recognition. A scout robot, called Tom, scanned the field in detail and passed the data to an AI engine called Wilma to plot the targets before Dick entered the field. The robots are the work of the Small Robot Company. – The Guardian

Hundreds of U.S. exporters urge ocean transport intervention

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Nearly 300 U.S. agriculture and forest products companies and associations, including the Agriculture Transportation Coalition, National Pork Producers Council, National Chicken Council, U.S. Dairy Export Council and the U.S. Meat Export Federation, have delivered a letter to Department of Transportation Secretary Pete Buttigieg, urging immediate attention to challenges currently being imposed by vessel-operating common carriers (VOCCs) who are declining to ship U.S. agricultural commodity exports from U.S. ports. The stakeholders warn that the actions are imposing hundreds of millions of dollars in punitive charges that have already been deemed unreasonable by the Federal Maritime Commission.

“The burden on hardworking exporters, manufacturers, farmers, ranchers and our rural communities is overwhelming,” the signees noted in the letter. “We urge the Department of Transportation to utilize all existing authorities to remedy the challenges experienced by U.S. agricultural exporters.”

According to the letter, consolidation in the ocean shipping industry over the past decade has led to a complete reliance on less than a dozen foreign carriers to deliver U.S. agricultural products overseas. The booming ecommerce business right now has resulted in VOCCs delivering massive volumes of imported shipments to U.S. ports but then electing to leave without refilling empty containers with American goods and products in order to have a quicker turnaround. Congestions at U.S. ports has only exacerbated the situation.

The letter further reported that carriers are failing to provide accurate notice to U.S. exporters of arrival/departure and cargo loading times, but then are imposing penalties on the exporters for “missing” those loading windows.

Action needed now

With more than 20% of agriculture products being transported abroad, the financial estimate of the situation is nearly $1.5 billion in lost agriculture exports, the letter explained.

“These losses come on the heels of trade conflict and pandemic that have wiped away markets globally.”

While stakeholders have supported the Federal Maritime Commission’s investigation as well as its Rule setting forth guidelines for Detention and Demurrage, the stakeholders said action, not additional studies, is needed now.

“We ask the Department of Transportation to assist the Commission in expediting its enforcement options,” they noted. “Additionally, we urge the Department of Transportation to consider its existing authorities to determine how it can assist with the transportation needs of the U.S. exporters and the farmers and ranchers they serve, in overcoming the current challenges in shipping goods and products.”

 

 

Finishing beef calves on-farm

Starting calves
When starting calves, particularly those of the high-risk variety, the long-standing wisdom has been to begin with a high-roughage ration and work up to a high-energy ration. But research and in-the-bunk experience show that starting calves on a limit-fed, high-energy diet with more fermentable fiber is a viable option.

Rural landowners are often interested in raising livestock to slaughter for personal consumption, local marketing or for normal commodity markets. There are several options producers can use to finish cattle, ranging from finishing completely on forages to conventional drylot programs using high concentrate diets. Hybrid systems have been studied as an alternative to high-concentrate total mixed rations fed in confinement. These systems utilize the roughage supplied by pasture along with additional energy from supplemental concentrates. They may not meet the requirements to meet ‘grass-fed beef’ claims by the USDA, but do provide free-choice access to pasture.

An Alternative Finishing System

I conducted research with Jason Apple, a meat scientist currently at Texas A&M Kingsville, to compare conventional finishing at a High Plains feedyard to the hybrid ‘grain-on-grass’ system. In the first trial, calves from spring or fall calving herds were either sent to a Texas Panhandle feedyard for finishing as yearlings following a stocker program or kept at the home operation and supplemented with 1% of bodyweight per head per day with a grain/grain byproduct supplement until slaughter. Steers finished conventionally in confinement gained 4.4 lbs/day while steers fed concentrate supplement on pasture gained 2.5 lbs/day. Although the finishing period on pasture was 30 days longer on the average, steers finished in the conventional feedlot were 128 pounds heavier at slaughter and dressing percentage was higher 62.5% vs 60.6% for Conventional and Pasture, respectively). Conventionally finished cattle were 86% Choice while pasture finished were 78% Select quality grade.

Figure 1. Effect of finishing on pasture (Forage) with 1% of bodyweight concentrate supplement daily or conventional finishing (Grain) on bodyweight of steers.

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In the next trial, 60 calves were either finished in conventional Texas Panhandle feedyard or were kept on pasture with a grain/grain byproduct concentrate supplement fed at 1.5% of bodyweight daily. Steers finished on pasture with supplement gained 3.6 lbs per day (vs 4 lbs/day for conventional) and were fed 40 days longer than conventional steers, but were again still 40 pounds lighter at slaughter. But, hot carcass weights (836 for pasture vs 854 for conventional) were not as impacted as in the previous study, fat thickness was similar for the 2 treatments (0.62 inches for pasture vs 0.52 for conventionally finished) and dressing percentage was likewise similar (63% for pasture and 62.5% for conventional). In this experiment the cattle finished on pasture with supplement were 100% Choice with 73% being Premium Choice, while the Conventional steers were 93% Choice with 45% being Premium Choice. This research indicates that acceptable carcass performance can be obtained with limited energy supplementation on pasture.

Figure 2. Effect of finishing on pasture (Forage) with 1.5% of bodyweight concentrate supplement daily or conventional finishing (Grain) on carcass quality grade.

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There are several items that producers should be aware of and be able to communicate to consumers if selling directly.

  • The amount of retail cuts coming from a finished calf depends on the frame, muscling, skeletal structure, fat cover, and gut fill.
  • The conversion of live animal depends on dressing percent (the amount of carcass per pound of shrunk live weight), in grain finished calves this ranges from 58% (usually dairy calves) to 66% (highly finished heavyweight beef steers), but in forage finished calves this can be much lower, usually due to gut fill and lower fat cover.
  • A rule of thumb is on a well finished calf (0.6 inch of backfat at the 12th rib), you can expect red meat yield to be about 50% of the shrunk live weight of the animal (empty of gut fill).
  • A tool to estimate red meat yield from a carcass is the Beef Cutout Calculator (http://beefcutoutcalculator.agsci.colostate.edu/). The user must be aware that this is based on the average grain finished carcasses, and differences in finishing system will affect your results.

In summary, finishing cattle on farm can be an economical enterprise to add value to cattle. Finishing systems are not one size fits all and should be tailored to fit the producer’s production goals, target market, and management expertise. For more information about on-farm finishing programs look at our new Fact Sheet AFS-3303 Finishing Beef Cattle On the Farm

https://extension.okstate.edu/fact-sheets/finishing-beef-cattle-on-the-farm.html

Source: Oklahoma State Universitywhich is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

Feeder cattle futures take a tumble

Feeder cattle futures take a tumble

Fed Cattle

 Fed cattle traded steady to $1 lower compared to last week on a live basis. Prices on a live basis were primarily $120 to $122 while dressed prices were mostly $191 to $193.

The 5-area weighted average prices thru April 20 were $121.36 live, down $0.57 compared to last week and $192.11 dressed, down $3.52 from a week ago. A year ago, prices were $96.95 live and $154.27 dressed.

Precipitous is the word that comes to mind as it relates to finished cattle markets and live cattle futures contracts, because that is the type of price decline that has taken place this week. Seasonal beef demand is strengthening, which is sending beef prices higher, but cattle feeders are watching fed cattle prices decline as packers have an ample supply of cattle to hang on the rail. This is one challenge that must be navigated with a non-storable product such as cattle. The primary method the beef industry navigates this situation is by keeping cattle on grass longer. However, cattle cannot be kept indefinitely. The supply of market ready cattle will likely have to wane before cattle feeders gain much leverage.

Beef Cutout

At midday April 21, the Choice cutout was $283.32 up $1.01 from Thursday and up $6.38 from a week ago. The Select cutout was $272.41 down $1.28 from April 20 and up $3.28 from last week. The Choice Select spread was $10.91 compared to $7.81 a week ago.

Total beef production year-to-date is about 8 billion pounds, which is nearly a 3.6 percent increase in production year-over-year and a 6.9 percent increase over 2019. Similarly, exports of beef muscle cuts year-to-date are approximately 4.1 percent greater than the same period last year. It has been clear that domestic production of beef has been strong as has been domestic and international demand for U.S. beef throughout the pandemic. The question to answer now is how demand for beef will change as the economy and consumers attempt to transition back to lifestyles prior to the pandemic. Many consumers have not been able to travel, which means a large portion of their disposable income could be shifted to eating experiences. However, as consumers begin to travel more and restaurants open to larger capacities, it is not known how disposable income expenditures will shift. It is likely domestic demand may soften as disposable income shifts, but international demand may pick up the slack as exports remain strong and more strength is evident in China.

Outlook

Based on Tennessee weekly auction market data, steer prices were $3 to $6 lower compared to last week while heifer prices were steady to $3 lower com-pared to a week ago. Slaughter cow prices were $2 to $3 lower while bull prices were $2 to $5 lower compared to the previous week. Whiplash is a serious condition in the cattle markets this week as prices for all classes of cattle were thrown into reverse while the vehicle was still moving forward. There is no doubt that many in the industry thought feeder cattle had been overvalued in the futures market based on expected feed prices and live cattle prices. However, it took corn prices making another run this week for feeder cattle futures to tumble.

Corn prices have increased $1 per bushel in less than three weeks with more than half of that increase occurring this week. The quick rise in corn prices resulted in the April feeder cattle contract price decreasing more than $12 per hundredweight the past two weeks while the August contract has declined similarly. There is no way to know if the market will recover or how much it will recover if it does. Traders tend to overreact in one direction and then the other, which may be the case in today’s market. However, that means nothing to the cattle producer who needs to market cattle in the near term other than it influences the price received. How can a person stress enough the importance of managing price risk? One can hope the market rebounds over the next few days and weeks, but the likelihood of the market moving back to previous highs is slim. For a significant re-bound, feed prices will have to decline considerably while demand for finished cattle and beef will have to increase. The market has shown its ability to be frustrating the past several weeks, but it offered sellers a long window of marketing opportunity. The market is now going to offer buyers an opportunity to secure inventory at a lower price.

The April cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of April 1, 2021 totaled 11.90 million head, up 5.3% compared to a year ago, with the pre-report estimate average expecting an increase of 6.1%. March placements in feedlots totaled 2.00 million head, up 28.3% from a year ago with the pre-report estimate average expecting placements up 33.8%. March marketing’s totaled 2.04 million head up 1.5% from 2020 with pre-report estimates expecting a 1.1% increase in marketings. Placements on feed by weight: under 700 pounds up 37.7%, 700 to 899 pounds up 27.1%, 900 pounds and over up 9.3%.

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