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Articles from 2016 In September


Cattle prices drop amid bearish sentiment

Cattle prices drop amid bearish sentiment

Fundamental support was tough to come by this week.

Steers and heifers traded mostly $2-$10 per cwt lower, according to the Agricultural Marketing Service (AMS), as calves and feeders followed fed cattle prices lower, while futures prices continued to dredge new depths.

“As calf and feeder cattle prices continue to decline, once profitable cattle are now resulting in losses for many producers,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The concerning part is that the price decline will likely continue the next few weeks, resulting in even more losses for spring-born calves. It is not just calf prices on the decline as slaughter cow prices have nearly been cut in half since reaching their historical apex.”

Besides leading some producers to postpone marketing in hopes of a turnaround, current uncertainty is cleaving buyer interest.

“With cattle feeders facing large losses and a downward moving market, there are few buyers willing to take on additional risk by buying calves that aren’t fully preconditioned,” explained the AMS reporter on hand for South Dakota's Mitchell Livestock Auction on Thursday.

The same day, at Billings Livestock Commission in Montana, the AMS reporter said buyers bid aggressively on all feeders, despite struggling CME contract prices. That same reporter noted, “The excess supply of corn and feed across the country have many feeders looking to feed cows…Feeding cows sold steady to weak as numerous new market participants helped prices hold near steady.”

On Friday, cattle futures—already tottering from early-week bearishness—crumbled beneath the ongoing weight of increased beef production, plentiful supplies of competing meats—including hog numbers that hint at shackle space running short—and slogging wholesale beef values.

In between expiring spot Sep and newly minted away Sep, Feeder Cattle futures were an average of $8.11 lower week to week ($6.40 to $10.07 lower).

Week to week, Live Cattle futures were an average of $6.16 lower ($4.52 to $8.37 lower).

Cash fed cattle prices were $2-$6 lower (live basis) earlier in the week at $101-$104 per cwt; as much as $10 lower late-week with sales in Nebraska at $100. Dressed sales were $3-$8 lower at mostly $160-$163.

“Every week, it becomes increasingly difficult to prognosticate the direction of the next week’s prices, much less the magnitude of that change,” Griffith says. “However, the hardest part is explaining why prices did what they did in the current week. Steer and heifer slaughter rates have been relatively high due to pulling cattle forward, which may be a key reason for lower prices. If higher harvest rates are in fact the reason for lower prices, then the market should experience substantial price resurgence this fall as the number of market-ready cattle decline.”

 While projected current, positive margins suggest packers have every incentive to boost weekly harvest numbers even more, reports continue to circulate that labor shortages are proving to be a challenge.

According to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, August beef production was up 6.9% (average daily basis) compared to last year and up 5.9% year to date.

Although carcass weights are climbing, Peel explains the seasonal increase is less than last year.

“This seasonal increase in carcass weights does not indicate a lack of currentness in the feedlots,” Peel says. “Steer carcass weights currently are 13 pounds less than the same date last year and there are indications that feedlots have pulled fall marketings ahead in August and early September,” (see Feedlot marketing appears to be current below).  

 

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Over a Cup - October 1, 2016 : farm bills, political contributions, and Prairie Farmer

Over a Cup


AABP, Zoetis award veterinary student scholarships

Walking across the stage with your DVM degree in hand takes a lot of hard work and dedication. It also takes a lot of money.

For 16 veterinary students from across the country, that financial burden has been partially lifted thanks to scholarships presented at the 49th Annual Conference of the American Association of Bovine Practitioners (AABP) in Charlotte, North Carolina, through the AABP Foundation – Zoetis Veterinary Student Scholarship program. The fourth-year veterinary students each received a $5,000 scholarship and travel to the conference.

“The AABP Foundation and Zoetis collaborate to provide students with an opportunity which not only relieves some financial pressure from the cost of their classroom education but also provides them with an opportunity to pursue AABP Annual Conference related networking and educational opportunities,” said M. Gatz Riddell Jr., DVM, executive vice president, AABP. “The combination of financial support and experience gained has an immeasurable impact on the scholarship recipients’ careers.”

The AABP Foundation – Zoetis Veterinary Student Scholarship program, established in 2009, was created to help encourage and support careers in large-animal veterinary medicine as part of the Zoetis Commitment to Veterinarians™ initiative. Scholarship applicants must be entering their senior year of veterinary school and are evaluated on academic performance, essay submission and involvement in bovine medicine and related extracurricular activities.

“We believe the combination of financial, experiential and mentorship support helps shape future veterinary leaders to support producers in raising healthy animals and producing safe food,” said Doug Braun, DVM, veterinary segment manager at Zoetis. “We have a strong veterinary community and know connecting students with these established leaders will continue to strengthen our industry.”

2016 AABP Foundation – Zoetis Veterinary Student Scholarship recipients include:

  • Kelsey Arellano, University of Florida
  • Dan Breuer, Iowa State University
  • Kaitlyn Briggs, Cornell University
  • Ross Chewning, University of Georgia
  • Lisa Dauten, Purdue University
  • Brandon Debbink, University of Wisconsin
  • Fred Gromalak, The Royal School of Veterinary Studies
  • Erica Izer, Virginia-Maryland College of Veterinary Medicine
  • Jared Lyzenga, Michigan State University
  • Drew Neilley, Ohio State University
  • Aaron Pospisil, Ohio State University
  • Brandon Scharping, University of Wisconsin
  • Julia Simons, University of Wisconsin
  • Alan Smith, Mississippi State University
  • Jennifer Storer, University of Tennessee
  • Ellen Unruh, Kansas State University

“I had the privilege of working with a group of veterinarians who inspired me to continue my education. However, with yearly tuition increases, the cost can be prohibitive. Through the scholarship, I will be able to explore new opportunities and continue to broaden my horizon in the cattle industry,” said Ross Chewning, scholarship recipient and veterinary student at the University of Georgia.

In addition to scholarships, the Zoetis Commitment to Veterinarians initiative also supports the future of the veterinary profession through training and education, research and development and philanthropy. Visit www.zoetisUS.com/c2v to learn more.

 

Material on BEEF Briefing Room comes directly from company news releases. Source: Zoetis

A rancher’s time warp: the insanity can’t continue, right?

Marketing cattle

Last April, a rancher friend packed his horses and went to the high country. The grass was turning green, markets were near all-time highs and all looked to be in pretty good hands. No cell phone, no TV; just cows, grass and horses for the next 5½ months.

It wasn’t the first time he has taken an extended break from civilization, but this go-round he is having a hard time coping with all the changes that confronted him when he returned. He said it feels like he was caught in a rancher’s time warp and is considering trying to winter at the line camp cabin and just eliminate his contact with the outer world altogether.

Corn was lower, but when he headed to the mountain there were planting concerns and talk about shifting acreage from corn to beans. Upon his return, he is staring at an all-time record crop and lower grain prices than he can remember.

That wasn’t bad news; cheap corn makes for high cattle or so the saying goes. Those calves he took to the mountain ought to be worth a pretty penny now. After all, when he took them to grass he was anticipating a crisp $50 bill in profit for each calf, but somehow the market turned considerably lower and that profit has turned into losses. 

Had demand plummeted while he was gone? The experts reassured him that wasn’t the case; in fact, demand is quite good. Well, had we become uncurrent on the feedyard sided of things, had a global economic disruption occurred, or did we pull cattle ahead or discovered a bunch of new cattle? Again he was reassured that none of that had happened and all was well.

He has been trying to get an answer to why his equity had turned into a liability, but all he can get is a shrug and a smile. He heard some talk about the futures market and changing rules of the game, but nobody seems to really be able to explain what is happening.

election debate

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Then there’s the election. He thought he was dreaming before he left, but figured the voters would work something else out, only to discover this really was the choice he was going to have to make. A friend made him a cheat sheet, since the Republican candidate is now against trade and the Iraq war while the Democrat is in favor. Neither candidate even mentions the deficit or talks about financial responsibility.

He got back in time to listen to the debate, but is struggling with the fact that both candidates’ primary strategy is to push the unworthiness of the other. Actual policy discussions are considered to be relics of the past and totally irrelevant.

Instead of talking about the economy, they were talking about emails, personal tax returns, foundations, racism, stamina and beauty contestants. Instead of talking about solving our problems and moving forward, he was told that this was the most divided electorate of all time, and that everyone is expected to vote based not on the issues but rather on the basis of race, gender or economic status. Unless, that is, your one issue is important enough to override the grouping you have been assigned to.

He left thinking this was an election about change, and returned to find out the change is whether to return to the failed policies of the last 30 years or the failed policies of 50 years go.

I could kind of sympathize with him, as he related his complete dismay at the world he had returned too. In exasperation, he told me that he was just going to watch some football. At least that still makes sense, but he had to ask me if there was anything he needed to know there.

I told him the good news was that both the Denver Broncos and New England Patriots were undefeated, but that both are starting quarterbacks who began the year third on the depth chart.

He paused contemplating that, then asked if there was anything else. I told him that Oklahoma, Notre Dame and USC were no longer ranked, but it looked like Louisville and the University of Houston would make the playoffs. In retrospect, I shouldn’t have added that if he saw people kneeling during the anthem it’s because they don’t believe in a country that is so inherently flawed.

He didn’t say anything. He just threw his leg over his horse and headed back toward the mountain. But before he got too far, he reined up and said to send him word if it was safe to come back down next fall. All I could say was “goodbye, old friend” as he rode off into the sunset. 

I have a feeling I will see him next fall. After all, this insanity can’t continue. Can it?

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Meat Market Update | Is a price rally ahead?

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

The weekly average Choice cutout was only 32 cents higher, but the big news is that we had increased sales on the heels of a firmer market which is a very positive item that often is a precursor to a price rally. The daily Choice cutout climbed only 61 cents last week but then followed that precursor and jumped almost $4 by Wednesday, September 28. Cooler weather for grilling no doubt also had some positive influence because the daily Choice primal rib jumped from $301 to $310 during the last eight days, which helped to pull the cutout higher.

Find more cattle price news here or bookmark our commodity price page for the minute-by-minute updates.

Feed your cows this winter, not the parasites

Beef producers have more tools in their herd health toolbox than just reproductive vaccines. While a strong vaccination program is part of stockman’s herd and reproductive health program, vaccines aren’t the only herd health protocol that can help ensure the reproductive performance of a herd, according to Gary Sides, PhD, managing nutritionist, Beef Strategic Technical Services at Zoetis.

“As beef producers head into fall, it’s important to remember that with parasites, the same effects you see in feedlot cattle also occur in the cow herd,” Sides said. “Producers can see reduced feed intake and less energy utilization. Heading into winter, cows trying to grow a fetus with a parasite load can bring down the body condition of those animals. It may even affect the subsequent reproduction of the cow.”

Additionally, Sides says, parasites can be responsible for depressed immune systems, making cattle more susceptible to disease challenges. When added to the losses from increased days to market and longer postpartum intervals, producers could be losing as much as $200 per head each grazing season they do not deworm cattle.1

What’s more, many producers think that cold winter weather will help kill parasites, like Ostertagia ostertagi, overwintering on pastures; however, this often is not the case. It has been shown that infective larvae were able to survive on Minnesota pastures during winter months.

“There is no reason to feed the cow, calf and the parasites,” Sides said. “If you deworm in the fall, you’re making sure you’re feeding only your cattle and not parasites.”

To control parasites Sides recommends producers look for broad-spectrum dewormers like DECTOMAX® (doramectin) products. DECTOMAX Pour-On or Injectable treats and controls Ostertagia ostertagi, also known as the brown stomach worm, for up to 21 days and is safe for pregnant cows, newborn calves and bulls.

Research has shown an advantage in parasite control for DECTOMAX. Stocker trials showed DECTOMAX Injectable controlled parasites to outgain cattle treated with ivermectin by up to 26 pounds.2 In a study comparing DECTOMAX Pour-On with ivermectin pour-on, the animals treated with DECTOMAX showed a 21-pound advantage in live weight at slaughter.3

“With DECTOMAX, the label claims for internal parasites and external parasites are superior,” Sides said. “That’s why I continue to recommend it.”

DECTOMAX Injectable has a 35-day pre-slaughter withdrawal period. DECTOMAX Pour-On has a 45-day pre-slaughter withdrawal period. Do not use in female dairy cattle 20 months of age or older. Do not use in calves to be processed for veal. DECTOMAX has been developed specifically for cattle and swine. Use in dogs may result in fatalities.

 

Material on BEEF Briefing Room comes directly from company news releases. Source: Zoetis

1 Lawrence JD, Ibarburu M. Economic Analysis of Pharmaceutical Technologies in Modern Beef Production in a Bioeconomy Era. http://sustainablebeef.org/_assets/SBRC-Economic-Analysis-2007-Prices.pdf. Published 2007. Accessed August 12, 2016.
2 Data on file, Study Reports No. 2239A-60-00-029, 2239A-60-00-030, 2239A-60-00-033, 2239A-60-94-003, 2239A-60-94-007, 2239A-60-94-067, 2239A-60-94-068, 2239A-60-94-070, 2239A-60-95-156 and 2839A-60-97-123, Zoetis.

3 Data on file, Study Report No. 2339D-020003D, Zoetis.

 

 

Beef sustainability calculator app helps detail production chain

Sustainability has become more than just a buzz word for beef producers. More and more, it is a concept that will be part of everyday management.

To help cattle producers in that regard, Merck Animal Health has launched a new app, the Meat Sustainability Calculator, which is designed to help producers, suppliers and others in the food chain better understand how the beef production systems and technologies they use impact the environment. The app was created in partnership with Jude Capper, Ph.D., an independent sustainability consultant. Data from peer-reviewed journals was utilized to establish a standard of the environmental impact of North American beef production practices.

The app enables users to evaluate their own impact on sustainability by comparing their results to the North American average. Producers and suppliers can compare on a per-head-of-cattle scenario, while food service members or retailers can assess based on amount of beef produced or purchased. Users simply enter the number of cattle they desire to evaluate, or the pounds or kilograms of beef they will be supplying or purchasing. Next, they select various production technologies to determine how they impact sustainability. By comparing individual results to industry benchmarks, individuals can identify opportunities to improve the sustainability of their operations through things such as water usage and land management.

“We are excited about this app, as it is unique to the industry – helping those in the beef supply chain realize the impact of their current production methods,” said Jennie Hodgen, Ph.D., Senior Account Manager, Veterinary and Consumer Affairs Team, Merck Animal Health. “Regardless of a person’s role in the chain, the calculator helps assess an operation’s greenhouse gas emissions, as well as water and land usage. Armed with this data, users can be more mindful of their environmental footprint by making a conscious effort to use fewer natural resources to raise healthy animals.”  

The app is available for download on tablets and iPads in both the Apple and Android app store.

Material on BEEF Briefing Room comes directly from company news releases. Source: Merck Animal Health

Is ground beef losing out to pork and poultry?

Is ground beef losing out to pork and poultry?

Last February, Industry At A Glance featured shifting dynamics in the beef case. Specifically, the retail market was beginning to show signs of ground beef fatigue and that reality was causing some challenges for both the wholesale and fed markets. At the time, Cattle Buyers Weekly (CBW) explained that,

“Retailers featured beef aggressively in January, especially ground beef.  But sales of this critical category were weaker than expected. Consumers have become a little tired of ground beef after having to trade down to it during the 2009-2010 recession, say analysts. They have been eating more pork and chicken, especially as they remain cheaper than beef. Ground beef is no longer their “go to” protein, even in hamburger form, say analysts.

Now that summer’s over, this is an opportune time to review pricing dynamics within the retail beef case. This week’s illustration features a comparison among six-month moving averages (to remove month-to-month variation) for ground beef, lean and extra lean ground beef and uncooked steaks.

Several distinct trends are evident. First, retail prices for all three products peaked in 2015. Second, and not surprisingly, beef retail prices have since trended in a negative direction. 

retail beef prices

However, most pertinent to this discussion is that the downward shift is variable between offerings: 

  • The current six month moving average for steaks is running at $7.67 per pound versus the peak of $7.88 per pound in October and November 2015. As such, the current average is around 97% of last year’s peak price. 
  • Meanwhile, the lean and extra lean ground beef moving average peaked in July 2015 at $6.15 per pound. The average through August 2016 is $5.76 per pound – or around 94% of last year’s peak. 
  • Lastly, the general, non-lean ground beef category slipped the most. The six month moving average now stands at $3.76 per pound – just 89% of last spring’s peak of $4.21per pound.    

As such, it appears CBW’s observations about the market remain intact. That’s an important development. There’s increased pricing pressure because of additional supply from all three sectors (beef, pork and poultry). And that additional supply is pressing hardest on the low-end and most commoditized sector of all – ground beef, with the lean and extra lean products faring better in the face of that pressure.  Meanwhile, the higher end of the market in terms of both cuts and quality has proven more successful in fending off pricing pressure. 

For more discussion on the last aspect see:

  1. Choice beef rules consumers' shopping cart
  2. Prime and choice beef dominating production
  3. Supply or demand driving fed cattle market?

With those comments in mind, do you perceive the market will see even greater pricing diversion in the future? Or will these categories come back into line in the near future? Does the trend represent greater price consciousness among consumers when deciding between products at the bottom end of the protein market? Meanwhile, can high-end, differentiated beef products maintain their pricing power going forward?  Leave your thoughts in the comment section below.

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

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2016's top alliance marketing programs for U.S. beef producers

Here are the latest listings of the U.S. beef industry’s top value-based marketing alliances for cattle and calves. This 2016 edition is the 19th annual listing by BEEF magazine and includes a total of 22 programs categorized into consumer-based programs and calf-based programs.

Consumer-based programs focus on finding, feeding and marketing cattle according to predefined consumer product specifications. Meanwhile, calf-based programs are focused on procuring calves that fit specific value requirements. These program listings include contact information, history, specifications and premiums for each of these top value-based marketing programs.

DOWNLOAD THE FILE HERE.
 

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Should producers double down or exercise caution right now?

I recently read an article on theweek.com titled, “America’s birth rate is now a national emergency.” Written by Pascal-Emmanual Gobry, the article reveals that the U.S. birth rate is at an all-time low with only 59.6 births per 1,000 women. This is partly because of a decline in teen pregnancies and partly because people are choosing to marry later in life and have fewer children. However, a more troubling reason why there are fewer babies born could be that folks are exercising caution during times of volatility.

Gobry writes “It used to be taken for granted that the best indicator of a nation's health was its citizens' desire and capacity to reproduce. And it should still seem self-evident that people's willingness to have children is not only a sign of confidence in the future, but a sign of cultural health. It's a signal that people are willing to commit to the most enduring responsibility on Earth, which is raising a child.

“But reproduction is also a sign of national health in a more dollars-and-cents way. The more productive people you have in your society, the healthier your country's economy. It's an idea that was obvious back in the 17th century, when economist Jean Bodin wrote ‘the only wealth is people.’”

READ: America’s birth rate is now a national emergency

Aside from the fact that I just gave birth to my second child in June, I get why people are feeling a little bit hesitant about expanding their brood. In addition to the cost of health insurance, other “input” costs for raising a child continue to go up, but incomes are not necessarily following suit.

Then if you factor in the first U.S. presidential debate earlier this week, which left people frustrated and wondering how these could be the two best people America could come up with to lead the nation, it’s no wonder people are worried about the future and whether new leadership could further hinder their ability to raise a growing family.

Switching gears to the cattle business, the growing frustration with the current state of the markets has many predicting that competent ranchers will find themselves exiting the business.

This isn’t the first economic low cattlemen have weathered, nor will it be the last, but with the escalating costs of family living, along with high pasture rental rates, increasing upfront capital needed to run the operation, and confusing cattle markets, I fear that the pessimistic predictions might come true.

However, despite the negative rhetoric, my husband and I found ourselves having a conversation with our banker this week about expanding our cow herd. I don’t know if we’re dumb, foolish or risk takers, but we want to take a chance that there will be some opportunities to buy high-quality registered seedstock at low prices this fall and winter, given the state of the market currently.

After punching the numbers, sharing our business plans and weighing the pros and cons, the banker gave us his stamp of approval, and we’ll be headed to some cattle sales in the upcoming months, searching for some good deals and hoping we can sell our own calves in our upcoming fall female sale at a premium to help pay the bills.

Clearly, we aren’t following market indicators to hunker down and weather the storm. We’ve added another child to the family and we’re expanding our cow herd, despite what the market signals might be telling us. Granted, I fully realize that without our other sources of income to serve as a safety net, this move toward expansion would more than likely not be possible.

So I’m curious — what are your feelings as we near the fall calf run? Are you exercising caution in your business model, or are you feeling optimistic and are gearing up to take advantage of opportunities that will arise in this market? Do you think we’ll lose some young producers in this market? Share your thoughts, tips and strategies in the comments section below.

The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Penton Agriculture.

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