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Meat Market Update | Prices up, but lower year over year, as grilling rally continues

The daily spot Choice box beef cutout ended the week last Friday at $230.97 which was $2.67 higher compared to previous Friday. This is on the heels of the daily Choice Rib and Loin primals that were $2-8 higher. However, two weeks ago the daily Choice cutout started the week only $.04 lower than last year, but ended on Friday about $17 lower than last year, so a good rally, but again, not quite as good as last year. The daily Choice Rib primal, which is quite often the main driving force in the grilling season rally, finished the week on Friday up $2 at $380 but last year it was $406 and had jumped $17 during the same week.

USDA releases fourth report from 'Equine 2015' study

Shutterstock horse

The U.S. Department of Agriculture’s National Animal Health Monitoring System (NAHMS) has released the fourth report from its "Equine 2015" study, "Biosecurity Assessment of U.S. Equine Operations, 2015."

The "Equine 2015" study was conducted in 28 states and was designed to provide participants, the industry and animal health officials with information on the nation’s equine population, NAHMS said.

From May 1 to Oct. 15, 2016, USDA veterinary medical officers and/or animal health technicians administered a questionnaire as part of the second phase of the equine study. Operations that participated in phase II were offered a free biosecurity assessment of their facilities, performed by one of these USDA officers or technicians. The new report is based on those assessments.

NAHMS said the biosecurity assessment identified the operations’ potential risk of introducing or spreading disease agents by viewing the following: (1) storage of feed and water sources, (2) cleanliness/maintenance of the equine areas, (3) the presence of equine health records and written biosecurity protocols and (4) infection control related to new arrivals or contagious disease cases.

NAHMS provided the following highlights from the report:

* Overall, 69.8% of operations had clean stalls, and only 9.2% had stalls assessed as not clean. The remaining operations did not have stalls.

* Overall, 64.8% of operations had an area where newly arriving equids or equids with a contagious disease could be housed and kept separate from healthy resident equids.

* Of those operations that had a separate contagious disease area for new arrivals, 61.3% isolated these animals in a secluded barn, pen or run to ensure no possible direct contact with resident equids.

* For the 95.8% of operations with pasture for equids, 85.7% had well or moderately well-maintained pastures.

More slaughter cows continue to hit auction barns

Dropping feedlot cattle prices and CME prices pushed feeder cattle prices mostly $7-8 lower, but the early week tops continued to drop even more during the week. Receipts at the test auctions were 42,200 head which was down just a little from the previous week but 8,000 head lower than last year as dry conditions continue to force earlier movement off of dryland wheat pastures.

Slaughter cow receipts at the test auctions continue well over last year with 10,800 head, down only 300 head from the previous week and much higher compared to the 7,000 head the same week last year. Prices firmed up a little on the heels of improving cow meat prices.

Is NAFTA deal within reach?

AlexLMX/ThinkstockPhotos NAFTA gears

by Jenny Leonard

The U.S. and Canada will hold high-level meetings in Washington on Thursday to assess if a new NAFTA deal is within reach, according to Canada’s ambassador to the U.S. 

“We will be having some meetings today to really sort of do an assessment of where are we and is there a chance of pulling all this together in a fairly rapid fashion or not,” David MacNaughton told reporters Thursday in Washington.

“We’re pretty close,” said MacNaughton, referring to comments by Canadian Prime Minister Justin Trudeau earlier this week. “There’s still some tough issues, but do we really want to kick this down the road and miss the opportunity to do a lot of the good work?" 

House Speaker Paul Ryan has said he’d need to be notified of intent to sign a new North American Free Trade Agreement by May 17 to give the current Congress enough time to approve the deal this year. U.S. Trade Representative Robert Lighthizer on Wednesday told a group of Democratic lawmakers that he doesn’t expect that a deal will be completed by Thursday’s deadline or in the immediate term. A spokeswoman for Lighthizer didn’t reply to a request for comment.

‘That Close’

Asked about how much time negotiators had left to wrap up the talks, MacNaughton said “it’s really a function of whether or not people are going to roll up their sleeves. There’s no such thing as getting it done next week or the week after that if all people are doing is restating the positions they’ve been stating for the last eight months.”

A deal over the rules on regional content in vehicles would remove one of the biggest sticking points in the talks.

“We’re that close on autos,” said MacNaughton, showing a small gap between his index finger and thumb. “So if you want to get this over the finish line we’re a long way toward getting it done. So let’s wrap it up and get it done.”

Canadian officials also plan to meet with their Mexican counterparts in Washington to examine progress on a revised NAFTA, said MacNaughton.

Lighthizer is juggling a packed trade agenda. He’s part of a senior Trump administration team meeting Thursday and Friday with Chinese President Xi Jinping’s top economic adviser, Liu He, in Washington to head off a brewing trade dispute. 

--With assistance from Josh Wingrove.

To contact the reporter on this story: Jenny Leonard in Washington at [email protected]

To contact the editors responsible for this story: Sarah McGregor at [email protected]; Brendan Murray at [email protected]

Randall Woods

© 2018 Bloomberg L.P

Testing your way to the top

Black cow calf pair

By Miranda Reiman

Just like many things in society today, it seems cow-calf producers are separating themselves into two distinct camps. And unfortunately, the philosophical divide doesn’t leave room for much middle ground.

Or does it?

“On one hand, we have the high-octane, high-input, high-production, high-return operations that are geared to go big,” says Ryan Noble, of Yuma, Colo. “Put on the gas. You get what you pay for.”

The opposite of that?

“The cow does all the work, minimum inputs, moderate return, maybe not so stellar performance in the feedlot or on the rail.”

But for Noble, the fourth-generation cattleman refuses to fit neatly into one of those boxes. During the past four years, he’s used genomic technology to make sure the cows that thrive on his resources can also deliver the total package after leaving the ranch.

“We can, in fact, as an industry, run cows that are moderate, efficient, low overhead, low-input cattle,” he says. “At the same time, you can have the genetic potential to go to the feedyard. Gain the big pounds efficiently and produce a discount-free carcass that will net you real dollars.

“But most important, bring a memorable eating experience to the most important person in the production chain: the consumer,” Noble says.

It took a year like 2014 to inspire a strategy to get there.

“The market was just sky high,” he says. Steer calves were worth upwards of $1,500, so he decided to look at retaining heifers.

“We were signing up for $2,475 of expenses before we sold her first calf. We had never in our lives invested that much money in commercial cows,” Noble says. “I knew right then and there, we needed to find a tool to be sure we were keeping the best ones.”

He turned to genomic testing.

That first year, the rancher culled about 17% of the heifers they’d already visually sorted for possible replacements. In the fourth year of testing, that number was down to 2%.

“Almost every heifer calf we raise now out of these cows has breeding potential,” he says. “Historically, the cheapest commodity we can produce on our ranch is a non-breeding heifer calf. The most profitable commodity we sell from our ranch is bred heifers or bred cows. This is a financial breakthrough for my business.”

Armed with new information, Noble worked with his seedstock supplier to find bulls that built on his herd’s strengths but added carcass weight and carcass quality.

“Lucky for us, marbling is highly heritable,” he says. “It’s easy to fix, but you cannot fix what you don’t measure.” And you don’t want to measure it for the first time in the packing plant, he says.

“It’s an expensive place to find out that you could possibly be raising low-margin cattle,” Noble says. After a few rounds of genomic tests and making adjustments based on results, he retained ownership of his first set of heifers this past year. They gained 5.2 pounds per day and 60% earned a Certified Angus Beef (CAB) brand premium.

“What I’m most proud of is…we had no discounts for Select,” he says.

The leap in quality was more apparent because he worked on it from all angles. “You can improve with bulls, but it’s a lot faster if you’re working at it on the bull side and the cow side,” Noble says.

The rancher admits he was skeptical of the $28 per head cost at first. Then he ran the math. Noble says if he can reduce cow cost by “a dime a day,” then he’s made that back in 280 days. If he could stack that with an increase in production of 10 cents per day, it would pay for itself in about five months.

“We’ve identified the elite cattle out of this program,” he says.

Miranda Reiman is director, producer communications with Certified Angus Beef LLC 

How fast do your cows shed winter hair? It matters

Cowherd on grass

Courtesy of University of Missouri Extension

How quickly your cows slick off in the spring has implications, and not just the opportunity for your neighbors to jab you about how scroungy they look. Early shedders wean heavier calves, suffer less heat stress, tend to breed back more readily and are more attractive to look at than animals that retain their winter coat all summer.

"Hair shedding is around 0.35% heritable. That means you can select cattle that shed off more quickly than others," says Eldon Cole, livestock specialist with University of Missouri Extension. May is a good time to score your cow herd for hair shedding, he adds.

That’s particularly true for cattle producers in fescue country as warm weather sets in and the threat of fescue toxicosis comes with it. "One practice that may help your cattle's performance on 'hot' fescue is to observe your herd for quick shedding animals," Cole says.

A scorecard on each animal can be made on a 1 to 5 basis. Each April or May, simply observe each of your breeding females for completeness of hair shedding. A score of 1 is an animal that is completely shed off; their coat is sleek and shiny with even hair on the lower part of the body gone.

 

This cow is a 1 on hair score. The picture was taken in the same pasture as the 4 hair score cow, also in late May.

A score of 2 is given to animals with about 75% of their hair shed off. Most of the hair on the upper part of their body will be gone. The 3's have shed about 50% of their hair and a 4 will only have shed 25% of their winter coat. Finally, a 5 score is one that retains their winter coat even in the heat of mid-summer.

This cow is a typical 4 hair score. This picture was taken in late May.

"You will be surprised at the variation you find within your herd for shedding. As you work toward a more productive cowherd, use shedding along with growth, performance, carcass EPD's," says Cole. "We do not have a hair shedding EPD yet, but someday we might."

Cole says it is important to note that besides genetic differences; age, nutrition and season of calving can all affect shedding status.

"Some slow shedders may still calve on a regular basis and wean above average weight calves and vice versa. If that's the case, I will hold on to them as long as they perform well," said Cole.

Cow costs and pasture values

Land prices and cow costs

Last week’s Industry At A Glance zeroed in on historical cow-calf returns. Ignoring the anomalies of 2013-2015, the average annual return since 1990 is approximately $30 per head. The Livestock Marketing Information Center (LMIC) in Denver, Colo., is currently estimating an average of about $15 per cow over the course of 2018.  

And as noted last week, there’s huge variation across operations. Nevertheless, the underlying premise is that large returns are hard to come by in the cow-calf business. In other words, cash flow is often tight for many cow-calf enterprises.  

That said, for many operations the primary source of wealth (not cash flow) is the general rise of land values over time. That fact underscores the importance of the inheritance tax – another issue for another day.

With all that in mind, this week’s illustration provides an overview of recent land values (per USDA) and operating cow costs (per LMIC). The data are reflective of the post ethanol era mandate.  

There are many potential interpretations around the data. However, it’s important to remember that land values do play an important role in the overall economic assessment of an operation.  


But interestingly enough, cow costs have increased about $260 per cow since 2007. Simultaneously, land values have increased $320 per acre. That’s roughly a $1-to-$1 run over time. Conversely, cow costs represented about 53% of pasture value in 2007; that’s since jumped to 60%.  

How do you perceive the data? Is land value keeping up with cow costs? Or are cow costs outrunning land values? Do you keep a watch on general land values when it comes to assessing how you manage your costs year over year? Leave your thoughts in the comments section below.

Speer serves as an industry consultant and is based in Bowling Green, Ky. Contact him at [email protected]

House approves ag appropriations bill

sborisov/iStock/Thinkstock US capitol building in Washington DC against bright blue sky

The House Appropriations Committee on Wednesday approved the fiscal 2019 Agriculture Appropriations bill on a vote of 31-20. The bill funds important agricultural and food programs and services, including food and medical product safety, animal and plant health programs, rural development and farm services, agricultural trade, financial marketplace oversight and nutrition programs.

Total discretionary funding in the legislation is $23.27 billion, which is $14 million above the fiscal 2018 enacted level. In total, the bill allows for $145.09 billion in both discretionary and mandatory funding – $922 million below the fiscal 2018 enacted level.

The bill provides funding for key programs and services, including $3.1 billion for agricultural research programs and $1.92 billion for international programs designed to promote U.S. agricultural exports overseas. The Agriculture & Food Research Initiative received a $15 million increase, pushing total funding for the program to $415 million. This is a nearly 4% increase over fiscal 2018 and an 11% increase over the President’s budget request for fiscal 2019.

The legislation also provides $255 million in funding for the Commodity Futures Trading Commission, an agency that works to ensure that the derivatives markets operate effectively and helps deter and prevent fraud and manipulation in the futures markets.

“The Rural Development account in the bill contains over $620 million of continued commitment to expanding rural broadband and erasing the rural digital divide. Combined with the $685 million in the recently passed omnibus, Congress is ensuring that the days of looking past rural America are over,” subcommittee chairman Rep. Robert Aderholt (R., Ala.) said. “In addition, access to high-speed internet is now just as important to a high quality of life as electricity, water and sewer. As a country, we cannot allow large sections of our population to be cut off from the rest of the world and, therefore, be cut off from economic opportunities.”

The fiscal 2019 Agriculture Appropriations bill specifically directs the secretary of agriculture to oversee lab-grown meat and issue regulations to ensure that the product is safe and accurately labeled.

The legislation passed by the committee includes an amendment from Rep. Dan Newhouse (R., Wash.) to improve the nation’s H-2A legal agricultural labor program by directing the secretary of agriculture to work with other federal agencies to establish a comprehensive online system for agricultural employers to complete the H-2A application process. Currently, if a farmer petitions for workers, he or she must send multiple applications to multiple agencies, often on paper, to complete the application process.

“I am pleased that my amendment was adopted to encourage streamlining of government and providing better customer service by directing the appropriate federal agencies to move forward on an online portal to process H-2A applications,” Newhouse said. “During my recent roundtables in central Washington, one of the biggest concerns I heard from farmers was how inefficiently the current H-2A program operates for their businesses, which rely on consistent and reliable labor.”

As with the fiscal 2018 bill, this bill makes no cuts to farm bill mandatory spending for the Conservation Stewardship Program or the Environmental Quality Incentives Program -- the U.S. Department of Agriculture’s premier working lands conservation programs. It also increased funding for the Conservation Technical Assistance (CTA), which provides farmers with on-the-ground conservation planning support. The House bill proposes $890 million for conservation operations, including $790.9 million for CTA.

Farm Service Agency loan funding levels remained the same as in fiscal 2018. The bill maintains programs levels for direct operating loans at $1.53 billion, guaranteed operations loans at $1.96 billion, guaranteed farm ownership loans at $2.75 billion and direct farm ownership loans at $1.5 billion.

The Senate agriculture appropriations subcommittee will likely announce a markup for its appropriations bill shortly.

MORNING-MidwestDigest-05-17-18

Michigan State University is paying out half a billion dollars to victims of Larry Nassar. It's a chance for the women to begin to move forward, and is a step in the right direction.

Ag trade will be discussed in Washington today, including NAFTA and tariffs. 

Farm bill amendments are being made this week. A full House vote could come today or tomorrow.

More than half Americans surveyed wish to be cremated, due in part to cost. 

Farm Progress America, May 17, 2018

Max Armstrong shares some insight into a new California Proposition that would go farther in managing confinement of animals - building on Proposition 2 which is more than a decade old. Max digs into the provisions of this newest measure, also being driven by the Humane Society of the United States. The measure impacts more than eggs, but also swine and veal.

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: barbaragibbons/iStock/Getty Images Plus