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China lifts U.S. beef ban

China lifts ban on US beef

China announced earlier this week that it is lifting its 13-year ban on U.S. beef exports—for animals under 30 months of age.

“While this is an important first step in the process of resuming beef exports to China, USMEF understands that China must still negotiate with USDA the conditions that will apply to U.S. beef exports entering this market,” says Philip M. Seng, president and CEO, U.S. Meat Export Federation (USMEF). “USMEF looks forward to learning more details about the remaining steps necessary for the market to officially open and for U.S. suppliers to begin shipping product.”

 “While these initial reports are positive, we must continue technical negotiations and undergo the process of formally approving export certificates,” explains Kent Bacus, director of international trade for the National Cattlemen’s Beef Association. “China is already the world’s second largest buyer of beef, and with a growing middle class, the export opportunities for U.S. cattlemen and women are tremendous.”

For perspective, China represents vast opportunity for beef exporters, even as that nation’s domestic economy slows from the steamy pace of recent years.

“Q3 is usually the peak season for animal protein consumption in China, and beef prices will be supported by the rising seasonal demand,” say Rabobank economists in that organization’s recent Q3 Beef Quarterly report. “However, in the longer term, domestic beef prices are expected to decline, given exposure to a weaker economy, which is expected to slow further in 2017.”

“To continue to grow demand for our product, our industry relies on fair trade based on sound science,” Bacus says. “This latest announcement by China is welcome news and further highlights the benefits of trade in the Pacific, opportunities that will only be expanded by passage of the Trans Pacific Partnership.”

 

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Calf prices gain

Calf prices gain

Calf and feeder buyers appeared more willing this week, bolstered by stability in the wholesale market and the lingering boost from the previous week’s surging fed cattle prices.

Calves trended steady to $4 higher, according to the Agricultural Marketing Service (AMS). Feeder steers and heifers traded mostly $3-$5 higher, with instances of $7-$10 higher.

“With a little less volatility on the futures board, buyers were more focused on condition and willing to step up on thin-to-average-fleshed, long-time weaned calves,” AMS analysts say. But, they add, “If the excellent condition of pastures and plenty of feed has producers holding back from marketing, they risk more price decline.”

Other than $1.30 higher in spot Sep, Feeder Cattle futures closed an average of $1.40 lower week to week (57¢ to $2.15 lower).

“Seasonal fall runs have been slow to develop, causing some to question if the cattle are really out in the country or if producers are just so depressed with current price levels, they are trying to wait it out,” AMS analysts say.

“As fall calf marketings increase, prices are expected to continue declining,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Wholesale beef values finished the week about where they began, but hinted at stretching higher. Choice boxed beef cutout value was $186.81 per cwt Friday afternoon. Select was $178.31.

Byproduct values continued higher this week, too. The drop value was 19 cents higher week to week on Friday at $11.57 per cwt, continuing the trend that began two weeks ago when the price was $11.19.

Cash fed cattle sputtered, though. There were too few transactions to trend in any region last week, but sales on Friday were trending lower. A few live sales in Nebraska were $5 lower than the previous week at $105 per cwt. A few dressed sales there were $2-$4 lower at $166-$168. Likewise, a few live sales in Iowa-Minnesota were $1 lower at $106, with a few in the beef $2-$4 lower at $166-$168.

Week to week, Live Cattle futures were an average of 68 cents lower (10 cents to $1.20 lower).

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“Packers have been diligent to slow down the upward move by taking 2% out of this week’s harvest number compared to last week,” AMS analysts say. “This is normal during this time of year as packers perform annual plant cleaning and repairs. A combination of formula, forward contracts and negotiated purchases all seem to add up to limited packer needs going into October.”  

Cattle on feed placements up 15%

Cattle and calves on feed Sept. 1 (10.1 million head) were 1% more than a year earlier, according to the monthly USDA Cattle on Feed report issued Friday. That was about even with the average of pre-report estimates.

Placements in August (1.88 million head) were 15% more than a year ago. That’s about 2% more than the average estimate heading into the report.

Almost two-thirds of the August placements weighed 700 pounds or more. Cattle weighing more than 800 pounds were 42.5% of total August placements. Cattle weighing 700-799 pounds were 22.8%.

Marketings in August (1.87 million head) were 18% more than last year, about even with what analysts were expecting.

Herd expansion appears to be slowing

Recent carcass cutout value and retail beef prices are the lowest in years. Stephen Koontz, agricultural economist at Colorado State University, says in this week’s In the Cattle Markets, “Beef production is up but the lower prices are clearly encouraging product movement…"

“Retail beef price showed its largest decrease in years with last month's reported price, and this is a price level that includes none of the discounts from retail featuring. Retailers and packers are commanding very solid beef margins and likely will continue commanding them, possibly, well into next year.”

As prices continue to seep lower across the cattle complex, already there are signs that expansion may be coasting to a quick stop.

“Expansion has likely not stopped but will prove to be lower than initial forecasts and appears unlikely to continue substantially into 2017,” Koontz says.  

Likewise, at this week’s Kansas State University (KSU) Beef Stocker Field Day, Glynn Tonsor, KSU agricultural economist, said various indicators suggest muted expansion ending sooner and with fewer cattle numbers than originally anticipated.

Tonsor shared the most recent price forecasts from the Livestock Marketing Information Center (LIMC). For the third quarter, calf prices (Southern Plains steer 500-600 pounds) are forecast at $161-$164 per cwt and then $160-$165 in the fourth quarter.

LMIC price forecasts for feeder steers (Southern Plains, 700-800 pounds) are $147-$149 in the third quarter and $146-$150 in the fourth.

For fed cattle (steers, 5-Area weighted average) price projections are $117-$118 in the third quarter and $120-$122 in the last quarter of this year.

In the meantime, Griffith says, “The market is incentivizing those who can add weight to calves. Producers should consider weaning, preconditioning, and backgrounding calves this fall and early winter if at all possible.”

Griffith offers the example of a steer weighing 525 pounds being worth $658 this week (Tennessee market average).

“The expected value of gain is 98 cents when carrying that animal for 120 days and 240 pounds,” Griffith explains. “Based on the weight class and a similar production scheme, the value of gain on starting weights ranging from 425 to 625 pounds is 91 cents to $1.07.”

Extended ownership comes with more risk and demands extra effort.

“These production practices require marketing the animals through a feeder calf sale, marketing alliance, or through some method where load lots are sold to capture all of the value,” Griffith explains.

“A range of factors are expected to cause cattle and beef prices in many major beef countries to stay subdued or soften over the second half of 2016,” explain analysts in Rabobank’s Q3 Beef Quarterly report. “At a global level, lower beef prices in the U.S. and a slowing Chinese economy are creating a downward pull on prices (see “China lifts U.S. beef ban”). Brazil is an exception, however, with an improving economic outlook and increased beef exports, cattle prices are expected to increase.”

 

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Calmer’s class-leading custom-built corn heads and aftermarket stalk rolls deliver reliable and practical solutions for some of farming’s most complex problems. A key focus of the company’s work is to deliver reliable, farmer-proven answers that provide farmers with a positive return on their investment.

Better residue management is key, and that’s added benefit for beef producers. With Calmer BT Choppers, residue can be bailed shortly after harvest without the need for extra field passes to size the stalks, saving you both time and money. These chopped stalks make for comfortable bedding and offer a greater feed value for cattle grazing on corn stubble.

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Corn or cattle? Neither look good, but at least corn farmers know why

Fall corn harvest

Grain and cattle producers certainly share some similarities right now, especially from a market perspective. Prices down, supplies growing, margins tightening or even going negative.

That, however, is where the similarities end. The grain market is the definition of the classical commodity market, whereas the cattle market is increasingly becoming differentiated. The grain market, though, is nearly perfect from a market transparency, liquidity and ability to manage risk standpoint.

The good and bad news for the grain market is that we know what it will take to raise prices. We will either have to see increased demand through reducing the value of the dollar or a growing global economy, or we will have to decrease supplies through acre reduction and/or weather disturbances. None of those seem likely in the short term, but the drivers and causes for the market’s direction are well known and well understood.

The good and bad news for the cattle market is that nobody knows how to fix it. We will have small increases in supplies for the next several years, but demand is improving. Risk management with the huge variation in basis is difficult and when coupled with volatility almost impractical.

The cow dynamics take longer to change but they also provide more long-term opportunities not only to differentiate our product but to expand margins. The grain market dynamics change much more quickly but it is almost impossible to separate the individual from the aggregate effects.

Someone asked me the other day about the value of diversification and whether I would rather be a grain farmer or cattlemen. I’m not sure the diversification argument holds as much clout, with grain and cattle moving more in synch than ever before, but they are certainly two sides of the same corn…uh, I mean coin.

Both markets have left producers frustrated in the results; ranchers are just more clueless about why the market moved and what the future holds. 

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China to lift ban on U.S. beef

China to lift ban on U.S. beef

In an announcement that was as surprising as it was welcome, China’s premier announced that the country will begin accepting U.S. beef from animals under 30 months of age.

Speaking to U.S. business groups in New York, Chinese Premier Li Keqiang said China would soon allow imports of U.S. beef, according to a Wall Street Journal (WSJ) report. “We also recognize that the United States has very good beef, so why should we deny Chinese customers this choice?” Li said.

The announcement potentially ends a 13-year ban on U.S. beef by China, first implemented following the first BSE case in America. But much work still remains before shipments resume.

“This is great news for U.S. beef producers,” said Kent Bacus, director of international trade for the National Cattlemen’s Beef Association. “While these initial reports are positive, we must continue technical negotiations and undergo the process of formally approving export certificates.”

China is already the world’s second largest buyer of beef, and with a growing middle class, the export opportunities for U.S. cattlemen and women are tremendous, Baucus added.

The next step is for USDA officials to work with China’s Administration of Quality Supervision, Inspection and Quarantine to approve the certificates and protocols for exports.

The news was welcomed by ag groups in the U.S., including the North American Meat Institute and the U.S. Meat Export Federation. “Reopening the Chinese market has been a top priority for Meat Institute members for more than a decade,” said President and CEO Barry Carpenter. “It is a market with a high demand for beef and our members are prepared to offer the highest quality beef in the world.”

 “USDA and USTR have led the way in restoring market access for U.S. beef in recent years, and we are proud to partner in those efforts,” said Carpenter. “Science-based free trade has numerous benefits for the U.S., and reopening the Chinese market as well as a TPP deal are great examples of the opportunities in the Pacific region.”

Though the premier didn’t give a specific timetable, trade groups have previously said imports may resume before the end of the year, according to the WSJ report.

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Meat Market Update | Dropping cutout prices spur sales

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 down $2.52 at $186.69 which was close to the daily Choice cutout close on Friday. Dropping prices spurred sales and refilled the shelves at the stores after the holiday pushing the sales volume higher. There were 6,633 loads sold which was 471 loads higher than the previous week on the heels of packing plants working a full week instead of that previous week when plants were shut down on the Monday holdiay.

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

Watch for sand colic in horses this winter

Watch for sand colic in horses this winter

If you don’t live in sandy country, you probably think your horse isn’t at risk for sand colic. Think again.

When a horse grazes on short, sparse pasture or is fed hay on the ground, he can ingest sand or dirt. And problems can develop when sand or dirt builds up in the intestines. Diarrhea, chronic weight loss and colic caused by irritation and obstruction of the gastrointestinal tract can occur as a result of sand retention. When large amounts of sand are present, routine treatment for sand colic may not be effective, and surgery may be necessary.

Sand colic may occur when horses ingest any type of earth, so you’ll want to be proactive. For starters, never feed hay on the ground or on any surface where dirt or sand may be present, including stall floors.

There are a number of “slow” feeders on the market designed so that the horse only pulls out a mouthful of hay at a time. Using this type of feeder will greatly limit the amount of hay that falls on the ground. If your horse has a knack for spilling his grain, look for a feed tub with a rim that helps prevent this.

As an additional precaution, you may want to place a rubber mat under the hay feeder and grain bucket or feed tub. Sweep the mat before each feeding to remove any stray dirt or sand the horse might have tracked onto it.

Studies have shown that daily turnout on fresh, green grass helps horses clear accumulated sand. Exercise is also credited with helping remove sand from the gut.

Along with feeding practices to reduce sand or dirt ingestion, grass turnout and regular exercise, many horsemen use psyllium-based products in an effort to clear accumulated sand out of the horse’s intestines.

These products are made from plants in the genus Plantago, including P. ovata and P. psyllium. Psyllium seed husks are able to absorb large amounts of water. Once psyllium enters the digestive tract, it can increase in volume as much as five times or greater. The resulting gelatinous substance helps support intestinal regularity to help move accumulated sand out with the stool.

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Used as a supplemental source, a psyllium-based product is typically given daily for one week out of every month.

You shouldn’t dampen your horse’s feed or grain ration when adding a psyllium supplement because this will make the product sticky and gooey, and your horse may turn his nose up at it. The idea is for the psyllium to become sticky and gooey after it’s in the digestive system so it can do its job.

Always make sure your horse has access 24/7 to clean, fresh water. Water is crucial to your horse’s health year-round, whatever the weather conditions, and it’s especially important when feeding a psyllium-based product.

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Beware of winter risks when grazing stockpiled forages

Beware of winter risks when grazing stockpiled forages

Grazing stockpiled forages, whether annual crops or native range, offers many benefits in extending the grazing season. Among them is that annual forages can be grazed standing or windrowed.

“In our research, we used windrows, but a producer may see benefit in leaving it standing, hoping there won’t be snow accumulation. A heavy snow will lay it down,” says Bart Lardner, Western Beef Development Center, University of Saskatchewan.

“Many producers leave it standing until snow prevents grazing. If some forage is not utilized, you can put cattle out there in the spring or use it as a calving pasture when cows are looking for something besides hay,” he says.

“I suggest strip grazing stockpiled forage, to minimize waste. In a large pasture, I recommend giving cattle access to about 3 to 4 days’ worth at a time. If there’s a legume in the pasture, you want to minimize selective grazing and risk for bloat. Using portable electric fence usually works best.”

Windrowing adds cost, but there is more nutrient quality captured when cutting forage at optimum stage of maturity rather than having it continue to mature and dry out. “If you leave it standing, you lose some quality. Cutting it at a higher quality stage tends to keep that stage; you are preserving it in the windrow. During those first snows, you see cattle opening a windrow and it’s still green—like opening a bale of hay,” Lardner says.

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When grazing native range, the biggest risk is heavy snow, or snow that melts and freezes again, creating a crust. “Stockpiled forages reduce costs, keeping cows grazing longer, but you increase risk. The biggest risk in the West, especially at high elevation sites, is deep snow,” says Tim DelCurto, Nancy Cameron Chair of Animal and Range Sciences at Montana State University.

DelCurto was previously at Oregon State University’s Eastern Oregon Agriculture Center. “When we studied winter grazing in the Great Basin, it worked great the first three years, and we had a field day at our Burns, Oregon station. A large group of producers attended, and some range conservationists from the Bureau of Land management (BLM). Several of them converted to winter grazing permits. Then we had one of the worst winters on record, with deep snow, and it didn’t work very well.”

“Cattle can do fine grazing rangelands in snow up to 12 inches, as long as bunch grasses are sticking above the snow, and cows will utilize snow for water. The situations that don’t work are when snowfall covers the grass or becomes crusted to where cattle can’t graze down through it,” he says.

Heather Smith Thomas is a rancher and freelance writer based in Salmon, Idaho.

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Median household income headlines are misleading

Median household income headlines are misleading

During the past several weeks, this column has focused on the state of the general economy and potential implications for beef demand and the beef industry.  The columns highlighted several key economic indicators, including:

  1. Job creation since the financial crisis;
  2. Trends in family wealth between 1998 and 2013;
  3. Food spending as percent of disposable income

Let’s continue that discussion by looking at household income, which has been actively reported on during the past week. The interest by the media was generated when the U.S. Census Bureau released new data related to median household income. The headlines have generally read something to the effect of, “household income up 5% in 2015.” 

This week’s graph provides some historical context around the new data. Indeed, real household income increased 5% to $56,500 in 2015 versus 2014 ($53,700). However, the longer view provides a somewhat different perspective. 

real median U.S. household income

The three-year moving average equals $54,920. Meanwhile, the 2015 mark still falls short compared to previous peak years in which the median income exceeded $57,000. Those years were 1999, 2000 and 2007. In other words, household income still hasn’t fully recovered to its prior peak established in 2007 just before the financial crisis.

Considering the previous discussions, and in light of this new data, how do you interpret the current state of the economy? Is the U.S. tracking amidst economic recovery? Or will the economy sputter in the coming years? Given your assessment, what implications might that have on beef demand and agriculture? Leave your thoughts in the comments 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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There’s still time to enter our fall photo contest!

There’s still time to enter our fall photo contest!

Sept. 22 marks the Fall Equinox, and as the autumn season officially gets underway, today is the last day of the year that we’ll have equal amounts of day and night. As the days get shorter, it’s crunch time to get our tasks on the ranch accomplished.

READ: 7 keys to ranch profitability

This is such a busy time with hauling manure, fall harvest, weaning, pregnancy checking cows, and winterizing the ranch, it seems like we’re never short on something to do around our ranch. Despite the hustle and bustle of the season, we’re taking a minute to truly appreciate the beauty of the fall season with a photo contest, “Cattle & Colors.”

Photo Credit: Courtney Tarvin

We kicked off the contest last week, and we’ve already received some gorgeous photographs depicting life on the ranch during the autumn season.

Check out reader entries for the “Cattle & Colors” contest here.


Hopefully the photos inspire you and remind you to slow down a little bit during this busy season to enjoy the beauty of fall on the ranch.

There’s still time to enter the contest and be eligible to win a $100 or $50 VISA gift card. The deadline to enter is 8 a.m. on Monday, Sept. 26. From there, we’ll narrow down the entries to 10 finalists and let you choose our winners! Champions will be announced on Oct. 3. Good luck to all who enter and thank you for participating!

Check out the contest details here.

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

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