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Articles from 2014 In January


NCBA Opposes Farm Bill

“We are calling on Congress to fix the mistakes they have made, mistakes that are costing cattlemen and women money every day. Mistakes like mandatory Country of Origin Labeling (MCOOL), which has already resulted in steep discounts to our producers and caused prejudice against our largest trading partners,” said Scott George, president of the National Cattlemen’s Beef Association (NCBA) in a letter to Congress earlier this week.

“This farm bill is foundationally flawed and the livestock sector is standing shoulder-to-shoulder in opposition of a farm bill that will only serve to cause greater harm to rural America,” George explained.

The Agricultural Act of 2014 — the farm bill that came out of a bilateral conference committee, passed in the House last week and goes to the Senate for a likely vote next week— retains anti-competition provisions that NCBA and other groups were against. MCOOL is one such point of contention, as the World Trade Organization (WTO) has already ruled that the law puts the U.S. out of compliance with its WTO obligations.

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National Beef Will Shutter Brawley Plant In April

National Beef Will Shutter Brawley Plant In April

Citing the declining supply of fed cattle, National Beef Company (National Beef) announced Friday that it will shutter its Brawley, CA, beef processing facility.

The last day of production is expected to be April 4, 2014.

“This was a very difficult decision for us to make because of the impact on our employees and suppliers,” said Tim Klein, National Beef’s CEO. “We are optimistic about the long-term prospects for U.S. beef demand and we will continue to focus on expanding our position as the industry leader in value-added beef products.”

National Beef has not determined the future status of the facility. National Beef acquired the Brawley facility in 2006. Approximately 1,300 employees will be impacted by the closure.

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Beef Cows Down 1% — Replacements Up 2%

cattle inventory report summary

The national beef cowherd (29.0 million head) is 1% smaller than last year, according to the January 1 Cattle Inventory report issued by the National Agricultural Statistics Service (NASS) Friday.

Although unsurprising, the report adds specifics to the long-held notion that last year’s late-spring and summer dry spell stoppered expansion plans for another year. There was no midyear inventory report last year due to federal budget cuts.

The number of beef replacement heifers (5.5 million head) is 2% more than last year. Keep in mind, producers increased the number of beef replacement heifers last year, too, before dry weather unraveled plans.

Overall, NASS pegs the total inventory of all cattle and calves in the U.S. at 87.7 million head, down 2% from the previous year. That’s the lowest total since 1951.

All cows and heifers that calved (38.5 million head) is 1% less than the previous year and the least since 1941.

 

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Beef Prices Retreat

market and beef demand

“Many market watchers feel that prices are top-heavy (perhaps an understatement) but demand remains good for all classes, with buyers very concerned about the size of available offerings over the next several months,” said analysts with the Agricultural marketing Service (AMS) Friday.

Compared to the previous week, feeder cattle and calves sold unevenly steady to $3/cwt. lower, with the full decline in the Northern Plains where prices have been the highest, according to AMS.

Feeder Cattle futures closed mixed on the week from an average of 29¢ higher to an average of 25¢ lower week-to-week.

Plus, calf and feeder markets felt some fallout from fed cattle and beef prices seeking a return to post-spike normalcy.

Fed cattle prices surged to new record highs in recent weeks, spurred by steadily rising wholesale beef prices, which give beef processors more incentive to pay up for slaughter-ready animals. But consecutive days of lower wholesale beef prices since Wednesday last week and light wholesale sales volume fuel expectations for demand to weaken for beef from domestic retailers in the weeks to come,” explained Penton market analyst John Otte Friday.

Choice boxed beef cutout value reached a record $240.05/cwt. on Jan. 22 — it ballooned $40 in less than a month. On Friday, it was $223.39, but still about $23 higher than when the new year began.

“It appears retailers are not going to continue chasing beef prices at this time,” says Andrew P. Griffith, University of Tennessee agricultural economist, in his weekly market comments. “The industry knew a price escalation was inevitable. However, the magnitude of a price change was less certain, and it appears buyers may have been a little overzealous as beef prices have moderated this week. It would appear beef prices will continue to moderate over the next several weeks as the next big push for beef is not likely to occur until late April and May when consumers start firing up the grill.”

Choice boxed beef cutout value declined $13.77/cwt. week-to-week on Friday. Select was $11.40 lower. On Friday, Select was bringing a $1.36 premium to Choice.

Reluctance was also seen by packer buyers this week.

“Fed cattle trading never developed this past week with the last established market at more than an $8 premium to February CME Live Cattle futures,” AMS analysts explained. 

After record-high live cattle prices the previous week at $147-$150/cwt., cattle feeders were content to bide their time. Through late Friday afternoon, the cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions, as was the case all week.

Live Cattle futures closed $1.72 lower in spot Feb week-to-week and then mixed from an average of 48¢ lower to an average of 44¢ higher.

“Tight supplies of feedlot-ready cattle will help support fed prices but a likely pullback in boxed beef values will increase pressure to push fed prices back down some,” said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in his weekly comments.

 

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The fundamentals still point higher, though. And, Friday’s annual Cattle report from the National Agricultural Statistics Service underscored the fact the nation’s cowherd begins the year smaller yet again.

Globally, beef markets are on the upswing, too.

According to a quarterly beef report from Rabobank, the Rabobank Global Cattle Price Index rose 6% between June and December.

“The Rabobank Global Cattle Price Index improved further in the second half of 2013, supported by both continuing strong Chinese import growth and lower-than-expected supply in the main export markets making cattle prices mainly positive,” explained Rabobank analyst Albert Vernooij.

“After such a dramatic run (wholesale and fed cattle prices), a pullback in both wholesale beef and fed cattle prices is more expected than not,” Peel says. “The major question and big unknown is just how much prices might drop back. While a series of very short-run factors have contributed to this unexpectedly large and rapid increase, the underlying longer-term fundamentals are in place to support strong prices. Part of the current market run has been due to short-bought retailers and post-holiday refilling of pipeline supplies, and it is not clear how much is due to demand strength looking forward. Assessing demand will be an ongoing process in the coming weeks. Meantime, supplies will likely stay relatively tight. Winter weather could play an especially important role in the ability to rebuild short-run supplies. The market picture may clarify significantly in the next two to three weeks.”

“Every rocket eventually reaches its optimum elevation and then it either levels out or explodes,” AMS analysts said of the recent market run. “The former is most likely with fundamental indicators fully supportive of the ongoing rally in cattle and beef demand.”

 

 

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Anti-Technology Proponents Actually Cause Millions To Starve

Anti-Technology Proponents Actually Cause Millions To Starve

Every Sunday morning, when I walk down the steps of my downtown church and cross the street to the parking lot, there’s an elderly man on the sidewalk holding a sign that reads “Hungry.” He paces back and forth, rubbing his stomach and looking at us with beseeching eyes.

Since I can’t just smile and walk past, I’ve taken to sticking a granola bar in my pocket and handing it to him. I can tell by his reaction that’s not what he really wants from me. What’s more, I can’t believe he’s really hungry, since he’s only blocks away from several homeless shelters that routinely offer meals.

I see them often, on many intersections, those people holding a cardboard sign. So do you. Right or wrong, I’ve become jaded as to how destitute they really are.

Then my wife comes home from work. She’s the principal at a very large elementary school of nearly 700 kids, many of whom are what the school district politely classifies as “low SES.” Translated, that means low socio-economic status. To you and me, that means they’re living at or below the poverty line.

She tells me of a program called Snak Pak 4Kids, which identifies school children who don’t have anything to eat over the weekend, and sends them home every Friday with a sack full of food. It includes peanut butter and recently, thanks to members of the Texas Cattle Feeders Association, Elanco Animal Health and dairy farmers, a beef stick and carton of shelf-stable milk.

My wife drags me along when she goes to the warehouse to help stuff the bags. She tells me of the remarkable difference it makes in those kids’ ability to focus, learn and succeed.

I try to attend a few school functions when I can. I see those kids, and my heart melts.

In spite of the charlatans, hunger is real. It’s real where I live and it’s real where you live. The cure is both simple and complicated. It’s complicated because the roots of poverty and hunger run deeper in our culture and society than I can dig up and chop apart. If I could cut those roots, chain the stump and rip the problem out of those kids’ lives forever, I would. But I can’t. Not by myself.

But I can do my part. That’s all Jeff Simmons, president of Elanco, is asking. He’s trumpeting an initiative called Enough and he’s asking all of us to step up and do our part.

Simmons wants to change the dialog. First, he wants to change the discussion from hunger to food security. He defines food security as when food is no longer an issue and he says now, when we’re living “between the 7 and the 9,” is perhaps the best time ever to be in the beef business.

Living between the 7 and the 9 means the global population hit 7 billion people a few years back and is projected to hit 9 billion by 2050, where he anticipates it will level out. However, a more significant number, he says, is 3. During that same time frame, 3 billion more people will enter the middle class.

 

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Those 3 billion people will want to upgrade their diets. That means the world will need 60% more animal protein—meat, milk and eggs. And we’ll need to increase our production more efficiently, using fewer resources. In many developing countries, technology for humans and animals alike can simply be clean water, a vaccination and food to eat.

According to Simmons, 25,000 kids die worldwide every day from starvation and disease brought on by polluted water. Think about that. That many kids would fill almost 36 schools like the one my wife runs.

Dead.

Every day.

And collectively, they’re just one of the faces of food insecurity. Many of those faces live in your town, go to school with your kids or grandkids.

However, there’s the 1% vocal, anti-technology fringe who want to prevent those children from being able to meet their basic survival needs—adequate food and drinkable water. And the vocal fringe flood chat rooms and social media with their deadly poison.

That’s where the Enough campaign comes in. Technology is not just important; it is absolutely, critically and completely necessary if we’re to fulfill our moral and humanitarian obligations as humans and as food producers. By providing information and encouraging social media use, those of us who understand that can change the direction of the dialog.

 Go to www.sensibletable.com. Sign up for the Enough initiative. Then do what you can to change the dialog so people understand that we have the answers to provide food security in a hungry world.

 

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Cattlemen Meet In Tennessee For 2014 Cattle Industry Convention

The 2014 Cattle Industry Convention and Trade Show is underway in Nashville, TN. A record-breaking number of attendees are expected at this year's beef meeting. See photos from the trade show and event here.

Visit the BEEF magazine staff at booth #1519!

USDA Releases Cattle Inventory Report; Heifer Retention Is Underway

usda report shows heifer retention is underway

USDA released its much-anticipated Cattle Inventory Report on Friday, Jan. 31. As expected, the report showed All Cattle and Calves were down 2% from last year, making 2014 the lowest January 1 inventory of all cattle and calves since the 82.1 million reported in 1951.

Here are the highlights:

  • All cattle and calves, 87.7 million, down 2%
  • Cows and heifers that have calved, 38 million, down 1%
  • Beef cows, 29 million, down 1%
  • Dairy cows, 9.2 million, unchanged
  • Heifers 500 lbs. and over, 18.8 million, down 2%
  • Beef replacement heifers, 5.5 million, up 2%
  • Dairy replacement heifers, 4.5 million, unchanged
  • Other heifers 8.7 million, down 5%
  • Steers 500 lbs. and over, 15.4 million, down 3%
  • Bulls 500 lbs. and over, 2 million, down 1%
  • Calves under 500 lbs., 13.3 million down 4%
  • 2013 calf crop, 33.9 million down, 1% from 2012.
  • Cattle on small grains pasture in KS, OK and TX, 1.61 million, up 20%

While the beef replacement heifer number, up 2% at 5.5 million, shows a robust desire by cattlemen to begin restocking pastures, last year’s report showed a similar figure. Much of that desire to restock withered along with pastures, and many of those heifers wound up in a feedyard as drought conditions prevailed throughout much of cattle country. Drought conditions heading into 2014 are better than a year ago, but Mother Nature still is the deciding factor, as dry conditions are prevalent in parts of the High Plains and throughout the West and Southwest.

Read the full USDA Cattle Inventory Report.

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When It Comes To Technology, Should We Educate Or Eliminate?

News about Chipotle’s forthcoming, four-part video series, “Farmed and Dangerous,” has created some consternation within the livestock industry despite the fact that it’s likely to get low exposure as it’s only being shown on HULU. The series may be fraught with half-truths, but it is a unique combination of humor and propaganda that has a serious message as it attacks modern agriculture, and particularly the use of hormones and antibiotics in livestock production.

A report this week showed that concerns about hormones and antibiotics continue to grow with consumers. Unfortunately for livestock producers, the increased concern doesn’t correlate to increased knowledge. In fact, those who oppose modern agriculture, technology, antibiotics, hormones, etc., don’t want the debate to be focused on facts.

Chipotle’s video series isn’t designed to increase knowledge, it’s intended to feed a general perception of modern agriculture and sell more burritos as a consequence. It seeks to depict conventional livestock production as being wrong at some deep intrinsic level.

 

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Once those perceptions are firmly cemented in the public consciousness, the next step is to attack anyone who wants to debate the accepted premises as being either uneducated or immoral. Let’s look at global warming as an example: If you challenge the theories regarding what is driving climate change, you’re considered a heretic. Even President Obama in his State of the Union address this week made the claim that there is no debate on climate change. Thus, the approach is that the climate models that are failing, as well as the growing list of skeptics within the scientific community, are to be minimalized and ignored. 

If we do not find an effective way to educate consumers on antibiotics, hormones and other technologies that are under attack, then we must begin making plans on how to eliminate them and cope with their demise. We have to determine what we can and should defend, and then be proactive in our approach to doing so.

As an industry, we struggle with the concept that good science isn’t the final arbitrator. We also have a tendency to believe that we should defend ourselves against all unfair attacks. We understand and appreciate the danger of the slippery slope, but we also find it difficult to acknowledge and accept that we are outmanned and outgunned in this battle. The bottom line is that we must be selective in picking our battles, because we simply don’t have the resources to win them all.

 

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Finally And At Last, Here Comes A Farm Bill!

Finally And At Last, Here Comes A Farm Bill!

The Etta James song “At Last” is a classic love song, but it sure seems appropriate for the long-awaited arrival of a federal farm bill.

The whole world agreed that we needed more certainty for farm programs, as well as for the nutritional assistance programs that are contained in the farm bill. Disaster relief for those producers severely affected by drought – as well as for those impacted more recently by extreme winter weather – has languished for over two years as Congress was stalemated on a final resolution, and the grand compromise came this week. This week, the House approved the 900+ page conference report and the Senate is expected to vote on it next week.

While the real debate has focused on the big budget items like direct crop subsidies, the dairy program and, of course, the major share of the farm bill – nutritional assistance programs, the livestock title did have many issues for cattlemen ranging from disaster assistance to mandatory country-of-original labeling (MCOOL).

Not everyone is happy with what has resulted, but at least we will finally have some sense of certainty. As expected, the cuts (yes, they are not real cuts, but cuts in spending growth), were less than the fiscal conservatives demanded and largely cosmetic in nature. As has become the norm in Washington, there were a million promises broken in the final hours of negotiations as politicians scrambled to reach the consensus that would move the measure forward.

The National Cattlemen’s Beef Association (NCBA) is one group that saw its wishes drift to the cutting floor as the final political trading began. As result, NCBA was opposing the bill, though it is expected to pass as additional changes at this point would be problematic. Unfortunately, the issue of MCOOL wasn’t addressed, and the U.S. will soon be facing trade retaliation and World Trade Organization judgment as a result. Perhaps that is the only way they will get addressed.

 

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It has to be sobering to the livestock industry that its interests and concerns were largely ignored in the farm bill. The anti-trade, anti-modern agricultural groups somehow seem to garner ever-more interest than the mainstream producer groups. The livestock industry, and agriculture in general, were perhaps too pragmatic from the beginning of the farm bill discussions.

They understood that the political winds dictated some budget cuts, and they knew the focus would largely be on the nutrition elements because they dominate the budgetary constraints. Yet they went in acknowledging that times had been pretty good, and that support would be reduced. I thought the attitude by the commodity groups was admirable and realistic, but we took any bargaining chips off the table. In addition, the lack of certainty without a farm bill led to a lot of pressure to just get something passed. Thus, in the final moments, the large mainstream groups had lost their leverage, and the activist groups were able to dictate the outcome in the end.

 

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Meat Market Update | Daily Choice Cutout Remains High, Out-Front Sales Drag Behind

Ed Czerwien, USDA Market News reporter in Amarillo, TX, provides us with the latest outlook on boxed beef prices and the weekly cattle trade.

The Daily Choice Cutout closed the week on Friday, Jan. 25 at $237.26, which was $5.55 higher than the previous week, with 543 loads sold for the week. This was about 9% of the total sales for the week. However, the week ending price was down from the mid-week high of $240.

Out-front sales have been dragging behind previous years for much of the last few months. This indicates a reluctance by buyers to committ to purchases ahead, which has forced more buyers into the negotiated trade at the same time causing wider swings in prices for short-periods of time.

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