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Articles from 2006 In March


Market Treads Water But Looks Lower

First, the good news. Feeder steers and heifer sold steady to $3 higher last week, according to the Agricultural Marketing Service (AMS), and the fed market was steady to $1 higher at $86-$87.

Now, for the other boot.

Year-to-date slaughter of cattle is down 1.1% from a year ago, but total beef production is up 4.3%. "Heavyweights and increased numbers are the culprits in the beef supply picture," say AMS analysts. "Average dressed carcass weights at 782 lbs. are 31 lbs. heavier than at this time last year."

Cheap cattle feed and ideal feeding weather has a way of doing that. "This entices putting on another 100 lbs. to lower overall unit production cost and help the red ink a little bit. However, this is temporary relief and counterproductive to long term objectives," AMS says.

Slaughter cattle prices have dropped around $10 since the first of the year, and the CME feeder cattle index is down a similar amount.

Last week's Cattle on Feed report was bearish, too. Numbers in feedlots are up 8% from a year ago; February placements are up 5% and February marketing's are down 1%.

The summary below reflects the week ended March 24 for Medium and Large 1 -- 500- to 550-lb., 600- to 650-lb., and 700- to 750-lb. feeder heifers and steers (unless otherwise noted). The list is arranged in descending order by auction volume and represents sales reported in the weekly USDA National Feeder and Stocker Cattle Summary:

Summary Table State Volume Steers Heifers Calf Weight 500-550 lbs. 600-650 lbs. 700-750 lbs. 500-550 lbs. 600-650 lbs. 700-750 lbs. OK 20,400 $135.96 $124.19 $109.01 $119.43 $111.26 $97.75 MO 19,300 $135.63 $122.22 $108.07 $118.77 $107.43 $95.26 TX 18,600 $128.28 $113.91 $103.61 $124.13 $105.78 $94.97 Dakotas 16,800 North South $136.16 $139.77 $121.55 $125.11 $104.686 $111.28 $118.102 $128.08 $111.52 $114.71 $104.50 $103.10 KY* 16,200 $114-124 $102-112 $89-995 $99-109 $92-1023 $82-925 IA 7,300 $143.42 $129.36 $111.76 $128.83 $113.05 $98.60 GA*(***) 7,200 $109-134 $100-117 $91-101 $101-125 $91-105 $82.50-90 Carolinas* 6,400 $107-136 $90-1173 $83-1025 $95-119 $85-1063 $82-97.505 NE 6,200 $141.95 $124.34 $109.06 $129.22 $113.96 $103.28 TN* 6,100 $123.68 $109.02 $98.82 $112.70 $100.25 $89.64 AL 5,600 $125-134 $104-1143 $94-1004 $115-122 $103-109 ** KS 5,300 $130.90 $122.974 $108.17 $114.692 $103.804 $95.91 AR 4,700 $129.84 $115.55 $103.26 $116.82 $105.59 $98.61 FL 4,300 $109-124 $94-113 $91-97 $101-115 $92-93 ** VA 4,200 $128.37 $116.42 $102.94 $112.75 $98.93 $93.51 MS* 2,400 $115-1251 $105-115 $88-945 $105-1151 $95-105 $90-954 CO 2,100 $137.42Z2 ** $102.806 $130.01 ** ** WA* 1,900 ** $117.08 $103.94 ** $108.26 $101.65 LA* 1,700 $120-127 $111-1212 ** $109-119 $105-1152 ** WY 1,600 $139.87 $115.332 $105.446 ** $122.182 $107.944 NM 1,500 $126.642 ** $106.09 $113.92 $110.682 **

* Plus 2 ** None reported at this weight or near weight (***) Steers and bulls NDNo Description 1500-600 lbs. 2550-600 lbs. 3600-700 lbs. 4650-700 lbs. 5700-800 lbs. 6750-800 lbs. 7800-850 lbs.

Return On Investment

There are plenty of ways to lose money in the stocker business, but the returns can be more lucrative than some realize, too.

At the Mid-South Stocker Conference, Mike Murphy, an analyst for Cattle-Fax, pointed out just a few dollars return, relative to the equity requirement per head and the length of ownership can produce astounding return on investment (Table 1).

Rather than think in terms of dollars per head, Murphy explains, "Return on equity is how we should be measuring our business."

Annualized Percentage Return on Equity (Assumes $150/head collateral) Dollars/Head Profit Days on Grass $10 $20 $30 $40 $50 100 24% 49% 73% 97% 122% 120 20% 41% 61% 81% 101% 140 17% 35% 52% 70% 87% 160 15% 30% 46% 61% 76% 180 14% 27% 41% 54% 68% 200 12% 24% 37% 49% 61%

Source: Cattle-Fax

Wildfires Can Harm Cattle in Surrounding Areas, Too

The wildfires that have ravaged parts of Texas, Oklahoma and New Mexico create a cascade of long-lasting misery.

In the March 12 fires that swept across the Texas Panhandle, loads of cattle were trapped in the raging fires -- 10,000 by one estimate -- and more than 700,000 acres burned. This means that grass -- already at a minimum due to drought -- is years away at best. As many as 25,000 head of cattle were estimated to be in the affected area, according to Steve Amosson, a Texas Cooperative Extension economist.

"We probably had a lot of calves that were lying out susceptible to the fire, as fast as it was moving across there," says Ted McCollum, Extension livestock specialist for Texas A&M University (TAMU). "They had no place to go. Also, there will be a lot of mothers with potentially scorched udders. The calves that survived won't be able to suckle the mothers who have sore udders."

Health disorders, such as burned eyes, feet, udders, sheaths and testicles, as well as smoke inhalation with lung inflammation and edema, are the most common problems in these situations, says Floron "Buddy" Faries, the Extension program leader for veterinary medicine at Texas A&M University.

"One of the problems we've run into in the past is with the feet," explains Ron Gill, Extension livestock specialist in Stephenville. "It may take 10 days to two weeks for the damage to start showing. The cattle will start sloughing the hoof wall and become crippled." Extension service personnel and veterinarians are working on determining major symptoms to look for and what actions to take if lameness begins to appear, he says.

"To assure the welfare of the affected animals, veterinarians need to be consulted," Faries says. "If, in the event the animal is not going to be able to be treated, decisions concerning sending them to market need to be made immediately, before secondary complications develop."

Faries also advises designing an animal evacuation and rescue plan to prepare for wildfires. He says plans should include ways of moving livestock out of the fire danger zone. This may include hauling the livestock out in trailers, opening gates or cutting fences and releasing the livestock; allowing them to move to a safer place, including plowed ground or wheat pasture, he says.

Keep in mind the fire danger zone isn't just where the fire is, Faries says. It's where the livestock risk inhaling smoke. Smoke can move for miles, and cattle that aren't near the flames or heat can suffer damage, too.

Contact with burning grass, weeds and brush causes immediate burns, Faries says. However, he explains inhalation of smoke causes immediate irritation to the lining of the respiratory system, including nasal passages, trachea and lungs. This can lead to inflammation, edema and emphysema, with the severity determined by the duration of inhaled smoke.

"The time it takes to cause damage might only have to be a few minutes with high quantities of smoke, and may be hours in low quantities of smoke," Faries says. He adds the lining of the eyelids and eyeballs can be irritated and lead to secondary infections, which can be fatal.

Once the fire has passed, Faries advises immediately consulting a veterinarian for any animals with severe burns or direct smoke exposure. They will evaluate if the animal can be salvaged, or for humane reasons, should be slaughtered or euthanized. Other livestock should also be evaluated for possible health disorders.

Monitoring should continue for weeks after the event, Faries says. "Before these secondary complications of infection occur (such as cough or cloudy eye), immediate slaughter for human consumption may be the most appropriate humane procedure," Faries explains. "Prior to slaughter, an antemortem inspection will be conducted by veterinary meat inspectors to determine safety and wholesomeness for human food."

National Stocker Award Applications Due April 30

If you haven't already nominated your own stocker program -- or a peer's -- for BEEF's National Stocker Award (NSA), look for the details at www.beef-mag.com and consider doing so.

Three finalists will be chosen from the following categories: Summer stocker operation (forage-based),

Fall/winter stocker operation (forage-based), and

Backgrounding/dry lot stocker (feed-based). Of these, one will be selected to receive the National Stocker Award and a $10,000 cash prize. The winner also receives a trip to the 2007 Cattle Industry Annual Convention for special recognition. BEEF will announce the winner and publish stories about the three finalists in the October issue.

Selection will be based on information provided in the NSA nomination form (available at www.beef-mag.com) and follow-up phone interviews by the selection committee. The main eligibility requirement is that the nominee derives the majority of cattle income from the stocker/backgrounding business.

The deadline for nominations is April 30, 2006. The selection committee includes representatives from private industry, university Extension and BEEF magazine.

Besides recognizing the best of the best stockers and backgrounders, the program will give peers a chance to find out how the winners excel. This is in keeping with BEEF's philosophy of helping producers learn from one another.

Cattlemen Establish Fire Disaster Relief Fund

The Texas Cattle Feeders Association (TCFA), Texas and Southwestern Stock Growers Association, and Livestock Marketing Association of Texas have established The Cattlemen's Disaster Relief Fund to assist cattlemen affected by wildfires in Texas, Oklahoma and New Mexico.

Tax-deductible contributions can be made to: Cattlemen's Disaster Relief Fund, 5501 I-40 West, Amarillo, TX 79106. Hay and feed donations are also being accepted. For more information about donating hay and feed, contact Burt Rutherford at TCFA, 806/358-3681.

Clarifying The South Dakota Position On ID

Regarding the March 10 BEEF Cow-Calf Weekly article, "South Dakota Stockgrowers Circulate ID Petition," I want to comment that my organization, the South Dakota Cattlemen's Association (SDCA), hasn't officially supported a mandatory ID program. We do, however, recognize it's going to be a reality and we support efforts by NCBA to develop a privately held database to protect confidential producer information and to hold down costs.

While we recognize hot-iron brands can and historically have played an important role in tracing cattle, a paper-based system is inefficient and cumbersome. That's without considering that a brand can be registered in the same location in any adjacent state, and states east of South Dakota have no inspection system or inspectors, not to mention the cost of hiring and training them!

SDCA believes the market should and will drive development of, and participation in, a national livestock ID system. Scott Jones President Elect South Dakota Cattlemen's Association

K-State Plans "Electronic Beef ID Crash Course"

Live-animal demos, hands-on use of animal ID equipment, a review of available technologies, and costing a system are areas of coverage in a pair of "Electronic Beef ID Crash Course" programs planned at Kansas State University (KSU) this summer. KSU Extension beef specialist Dale Blasi says the programs, each aimed at different audiences, are a follow-up to the KSU Beef ID Academy programs of summer 2004.

With both programs to be staged in the KSU Stocker Unit facility outside Manhattan, the June 21-22 program is aimed at operators of feed yards, sale barns and stocker-grower operations. The second program, set for July 19-20, is aimed specifically at cow-calf producers and veterinarians. Space is limited to 100 attendees in each session.

For more info, contact Lois Schreiner at 785-532-1267 or [email protected] -- Joe Roybal

Check Out These Great Management Web Sites

If you're looking for information on virtually any cow-calf management, stocker or animal ID question, BEEF magazine has a Web site for you. www.beef-mag.com is the official site of BEEF magazine. Here you can find an archive of our monthly magazine articles, and past issues of our electronic newsletters -- BEEF Cow-Calf Weekly, BEEF Stocker Trends and BEEF Quality Strategies.

www.beefcowcalf.com includes links to more than 2,000 fact sheets and research reports on cow-calf production and management topics. In addition, you'll find listings of the university animal science departments in the U.S. and Canada, breed associations and ranch-horse listings, and more.

www.idcattle.com is a Web site for cattle producers interested in the National Animal Identification System (NAIS) and its potential implications on their business. There's a glossary of ID terminology, and listings and details on manufacturers of all the various ID-system components -- tags, handheld readers, stationary readers, scale heads, software and data storage. There's also a library of links for more info. -- Joe Roybal

USDA Technical Beef Team Headed To Japan

USDA Secretary Mike Johanns says a USDA technical team headed by Chuck Lambert, acting under secretary for marketing and regulatory programs, will meet with Japanese officials March 27 to answer questions and press for the reopening of Japan to U.S. beef.

Johanns says the U.S. "is eager to provide any additional clarification Japan may request so we can resume beef exports to Japan as quickly as possible. I believe our report is thorough and actions address the unique circumstances surrounding this ineligible shipment."

Accompanying Lambert will be reps of USDA's Food Safety & Inspection Service, Ag Marketing Service, Foreign Ag Service, and the Animal Plant Health Inspection Service. -- P. Scott Shearer, Washington, D.C., correspondent

Japan Situation Continues To Haunt The Market

Little progress has been made in reopening the border with Japan, and the delay is being felt in the fed-cattle market. Given the projected summer breakevens and the losses anticipated for the feeding industry, one would expect the political pressure to reopen the border to intensify.

This past week, Secretary of State Condoleeza Rice and U.S. Ambassador to Japan Thomas Schieffer again pressed the issue. Schieffer even suggested an all-out trade war could ensue if the issue isn't resolved soon. Still, Japan remains recalcitrant, and who can blame them? Japan has endured absolutely no consequences for its failure to abide by its agreement.

The billions of dollars the U.S. cattle industry has lost due to BSE are easy to dismiss when profits are at the record levels of recent years. The pain of lost opportunity, however, will be felt more directly in the coming months by feeders, and by cow-calf producers in next fall's calf market.

It's absolutely amazing the export situation hasn't evoked a greater outcry from grassroots cattlemens. We're either blind to it because of recent profits, or we've been distracted by frivolous internal debate about trade and BSE. These billions in losses will never be recaptured, and history likely will reveal the U.S. cattle industry largely allowed it happen through our passive, almost welcoming, acceptance of such treatment from a leading trading partner.

It's time for a revolt. Cattlemen should be throwing Sony Walkmans into Boston Harbor in outrage. Instead, we seemingly join Japan in concerns about the safety of our product -- despite all the scientific data to the contrary.

I've been criticized for seemingly abandoning my basic marketing principle of the customer always being right. First of all, I don't advocate the philosophy entirely. A customer focus is absolutely paramount but customers often don't know the possibilities or their true desires. Listening solely to the customer has a tendency to inspire incremental improvement while stifling innovation and radical bold new ideas.

Second, this isn't an issue of responding to consumer demands. It's an issue between two governments and whether Japan will live up to the agreement it signed. If the U.S. had access to Japanese markets and consumers and, through their purchases, Japanese consumers were signaling they wanted additional safeguards, that would be one thing, but that's not the case.

Those who advocate the U.S. accept whatever Japan -- as the customer -- demands is giving the green light to any non-tariff trade barrier. It effectively puts the global beef trade at peril, and is the very reason we have trade agreements, and why they need to be respected and enforced.

BSE is a case study in overreaction. No health risk has been more overstated or inflated in the minds of consumers. The U.S. has nothing to apologize for regarding the safety of its product. The U.S. has three cases of BSE out of a cattle inventory exceeding 100 million head.

Japan is the country that failed to institute safeguards and firewalls for years after the U.S. implemented them. Japan has had 24 cases of BSE and can expect to continue to see cases for quite a few years -- in a national cowherd that is a small fraction of that of the U.S.

While there's no risk to the Japanese consumer from eating beef of either Japan or U.S. origin, the fact is that if there were a risk, the risk from eating Japanese beef would be astronomically higher.

Lastly, it's time everyone understood what testing is all about. It's not about protecting consumers; that's done via age requirements and removing SRMs. Our politicians have allowed the largest segment of production ag in the U.S. to lose billions for no justifiable reason, and we in the industry have failed to adequately express our concern.

Last week's case of BSE, our third, underscores the U.S. system's difficulty in tracing the cow and documenting her age. It's been nearly three years since Canada had its first case of BSE, which underscored the importance of animal trace-back. Yet, the U.S. still doesn't have a national program in place.

When BSE was found in North America, some in the industry tried to tell people it was a Canadian problem. They tried to leverage the issue into achieving their political agenda relative to trade. They were willing not only to elevate the risk of BSE in consumers' minds but ignore sound science. Why isn't someone asking where we'd be today if these activists' agenda had been adopted. What would the consequences of their direction have been?

Others also claimed trade harmed the industry; the economists were all wrong, they howled. They pointed to record prices and profitability despite losing our world markets as proof.

Now, we can now look back and see prices were demand-driven, not supply-driven. We can see that in this time of record prices we actually imported near-record volumes of product, that we were suffering through the most negative trade balances in history, and actually had record net beef supply levels.

Where are these people who spread these assertions since proven false? Let's compare results to predictions.

I'm not saying we should spend a lot of time pointing out failures, and the incongruence between promises/assertions and results. I advocate moving forward, but it's dangerous to not study and grasp the failures of the past. The danger, of course, is we may be prone to repeat them. -- Troy Marshall