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News and views on stocker segment issues from BEEF magazine.
June 13, 2006 A Prism Business Media Publication
Longtime TCFA Exec Charlie Ball Passes Away

Expected Export Market Reopenings Falter

Drought Zaps Wheat Crop

Optimize Your Profit In The New Beef Value Chain

PI Calves Cost Both Ways

Yearlings Boost Market Floor

Questions & Comments

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Longtime TCFA Exec Charlie Ball Passes Away
Charles E. "Charlie" Ball, longtime executive vice president of the Texas Cattle Feeders Association (TCFA), was buried June 8 near his childhood home of Paris, TX. He died June 4 in Amarillo.

Ball was a trained ag engineer and worked as an ag writer for 24 years. Ball was chief author of the Beef Research and Information Act signed into law in 1976 by President Ford. It set up a collections program designed to raise $30-$40 million/year for research and market development. The next year, it failed in referendum but set the stage for the successful national checkoff effort in 1988.

Ball was the author of three books -- "Saddle Up," a book on western horsemanship; "The Finishing Touch," a history of TCFA and the cattle-feeding industry; and "Building the Beef Industry," a history of the people, places, politics and issues that shaped the beef industry. He received many awards during his life, including being named to BEEF magazine's "25 Who Made a Difference" in 1989 and the "BEEF Top 40" in September 2004.

Expected Export Market Reopenings Falter
Surprise. Surprise. Despite hopeful reports the past couple of months, it appears the Pacific Rim's ban on U.S. beef will linger.

Last week, South Korea reported its inspection of U.S. packing plants revealed some shortcomings to address before it will begin importing U.S. beef again.

As for Japan, they're supposedly in the midst of conducting public forums with its consumers. That comes before an audit of U.S. plants, and according to various reports last week, before more procedural steps Japan is saying must also be taken.

We've said it before, while this market is obviously important to the future fortunes of the U.S. beef business, when it does open it won't likely have much impact on the short-term market, given current fundamentals. Moreover, until the zero-tolerance conditions of beef trade with these countries is adjusted, once the border does open, it will likely only be a matter of time before it gets closed again.

Seeing is believing.
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Weather And Crops
Drought Zaps Wheat Crop
It's no surprise to folks in Kansas, Oklahoma, Texas and other drought-stricken areas: winter-wheat production is down significantly from beginning projections.

Lots of folks plowed wheat ground under, some took a stab at harvest if they had their own combines, and custom crews either stayed home or close to home.

Officially, World Ag Supply and Demand Estimates (WASDE) projects the total U.S. wheat crop to be down 59 million bu., based on lower winter-wheat yield. Wheat feed and residual use has been lowered by 25 million bu.; ending wheat stocks are lowered 32 million bu. to 416 million. The projected price range for 2006-2007 has been raised by a dime to $3.60 to $4.20/bu.

The word is still out on corn, although emergence is on par with last year and 4% ahead of the five-year average, according to the National Ag Statistics Service (NASS) for the week ending June 4. All told, 71% of the crop is reported to be in good or excellent condition, compared to 64% last year.

Unsurprisingly, the heat continues to depress pasture conditions compared to last year. NASS says 46% is rated at good or excellent compared to 57% last year. More telling, 25% is rated as poor or very poor compared to 13% last year.

It's worth noting, according to the National Oceanic and Atmospheric Administration's National Climatic Data Center (NCDC)that the last five five-year periods (2001-2005, 2000-2004, 1999-2003, 1998-2002, 1997-2001) were the warmest five-year periods in the last 111 years. The next warmest five-year period was in the 1930s (1930-34), when the western U.S. suffered from an extended drought coupled with anomalous warmth. The warmest U.S. year on record was 1998, where the record warmth was concentrated in the Northeast as compared with the Northwest in 1934.

For the week ending June 4, according to NASS:

Pasture -- States with the worst pasture conditions -- at least 30% of the acreage rated poor or worse -- include: Alabama (30%); Arizona (78%); Colorado (67%); Florida (45%); Kansas (30%); Nebraska (38%); New Mexico (79%); Oklahoma (37%); and Texas (51%).

On the wet side of the fence, states with the most lush pasture conditions -- at least 40% rated good or better -- include: Alabama (40%); Arkansas (56%); California (80%); Idaho (90%); Illinois (81%); Indiana (83%); Iowa (76%); Kentucky (70%); Maine (98%); Maryland (48%); Michigan (72%); Minnesota (74%); Mississippi (43%); Montana (58%); Nevada (88%); New York (83%); North Carolina (60%); North Dakota (49%); Ohio (71%); Oregon (74%); Pennsylvania (57%); South Dakota (45%); Tennessee (74%); Utah (79%); Washington (74%); West Virginia (47%); and Wisconsin (78%).
  • Corn -- 94% of the acreage has emerged, about even with last year but 5% ahead of the normal pace.

  • Soybeans --
  • 89% is planted, the same as last year and 8% ahead of the five-year average; 70% has emerged, which is 3% ahead of last year and 12% ahead of the average.

  • Winter Wheat -- 88% was at or beyond the heading stage. That's 2% ahead of last year and 4% ahead of the normal pace. Harvest has occurred on 9% of the acreage, 6% ahead of last year and 4% ahead of normal. That happens when you don't have as much crop worth harvesting. Spring Wheat -- 97% of the crop has emerged, compared to 95% last year and 89% for the five-year average.

  • Barley -- Emergence advanced to 93%, the same as last year and 5% ahead of normal.

  • Sorghum -- 66% of the acreage is sown, which is 5% ahead of last year and 1% ahead of average.

  • Oats -- Heading advanced to 28% of the acreage, the same as last year and the average.

Profit Tip
Optimize Your Profit In The New Beef Value Chain
Making the most of current and future industry trends to maximize profit on your calves is the focus of the 2006 BEEF Quality Summit, set for Nov. 14-15, at the Clarion Convention Center in Oklahoma City, OK. Presented by BEEF magazine, the two-day program is aimed at instructing attendees on how to optimize profit in the new beef value chain.

The Nov. 14 program gets underway at 9:45 a.m. and focuses on new opportunities. Opening the session are reps of Wal-Mart Supercenters, McDonald's and Outback Steakhouse addressing the topic, "How do U.S. beef consumers define quality?" Next, BEEF magazine economist Harlan Hughes will address "Quality, profit and the cattle cycle;" followed by in-depth discussions on "International competition and opportunities for U.S. quality beef" and "Current international beef-trade opportunities." That evening a panel of producers will lead an open discussion on "How we are getting paid for the quality we produce."

The Wednesday program centers on how attendees can link their production into the new beef value chain. The day's topics include a discussion by Smithfield Beef Group's Travis Choat on "What to look for in selecting a marketing partner," followed by a workshop on value-chain production and marketing.

Wednesday afternoon, Colorado State University's Gary Smith will discuss "Why quality matters," followed by an opportunity with attendees to meet one-on-one with participating market-channel reps.

"This conference is designed specifically for producers and is focused on practical take-home information that attendees can use to capitalize on opportunities made possible by the new beef value systems," says BEEF editor Joe Roybal. "The entire meeting is focused on providing the background, the education, the tips and the connections for garnering more money for better cattle."

The registration fee of $195/person ($170 for a second person) covers the two-day conference program, tradeshow, Tuesday lunch, evening reception and dinner; and Wednesday's breakfast and lunch. To register, call 1-800-722-5334 or visit


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Stocker Business
PI Calves Cost Both Ways
Based on the growing knowledge about the economic impact of cattle persistently infected (PI) with bovine viral diarrhea virus (BVDV), stocker producers may find added production and marketing opportunity by getting their arms wrapped around it.

Consider a trial conducted by Bill Hessman, DVM, of Central States Testing and the Haskell County Animal Hospital at Sublette, KS. One of his feedlot clients, Cattle Empire, LLC, began wondering how prevalent the disease and pen-infection rate were in their operation. They wanted to know to what extent PI calves were impacting their bottom line.

According to Hessman, the cost per head exposed to PI in that operation is $67.49/head, resulting in a total average cost per head across the entire population of $41.17/head. That's based on the largest PI trial I've heard of -- 21,743 head across 240 pens.

The trial began in July 2004 at one of the firm's starter yards (10,000-head capacity) where cattle are limit-fed for 60 days and aren't implanted. Every animal was tested. PI animals were removed from some pens and left in others so Hessman and Cattle Empire owners, Paul and Roy Brown, could get a handle on how PI calves influenced pen health if they'd been in a pen then removed, left in a pen, or whether they existed in an adjoining pen to a non-PI set of calves, or ever had.

All said and done, the prevalence rate of 0.4% was just slightly higher than what's usually been seen in smaller trials. But, at least one PI calf was discovered in 71 of the 240 pens for a pen-infection rate of 31%. In other words, about one out of every three pens had been exposed to a PI calf.

Despite longstanding industry conjecture, when Hessman tracked the source of the calves, the infected ones weren't any more likely to come from one particular state than another (10 states were represented). What did increase the likelihood was the order buyer.

Of the 15 buyers who bought 300 or more head represented in the study, the PI-prevalence rate, by buyer, ranged from 0 to 2%. It turned out that buyer behavior contributed to the fact some were more likely to send PI calves. In particular, Hessman said calves bought as singles or doubles through the auction were more likely to be infected.

The resulting pen rate of infection was just as startling. Of the buyers purchasing three or more pens, the rate ranged from 0 to 70%.

These findings mirror those from a smaller trial (2,284 head in 24 pens) in which cattle were tested in Cattle Empire's finish facilities. Using close-out performance to compare between PI pens and non-PI pens, they found a prevalence rate of 0.31% and a pen infection rate of 21%. In sum, the economic damage in that trial was $47.43/head in the pens exposed to PI.

Keep in mind the bulk of the damage came from lost performance in the cattle exposed to PI animals, not to mortality and morbidity among the infected animals. Hessman points out that while many PI calves die early on, some survive all the way to slaughter. Tracking those in Cattle Empire's starter-yard trial, only 25.6% of the calves died during the 60-day starter phase. Of those, 64% of the deaths were due to mucosal disease and 27% were due to respiratory disease. In the smaller trial in the finish yard, 71% of the PI calves survived to slaughter.

Suspicions are that the damage would be at least as significant and probably more so.

Consequently Hessman says cow-calf producers and stocker operators may find added marketability for PI-screened calves. Spun differently, buyers may be willing to pay more for calves that already tested.

Using Cattle Empire's starter-yard trial, Hessman points out the $41.17 cost that PI calves levied on the entire population is equivalent to about $8.23/cwt. on a five-weight calf. That's not what cattle feeders would likely be willing to pay, but at least part of that would provide added negotiation power for produces with screened calves or PI-free herds.

That's in addition to the economic advantages of identifying and removing PI animals from the herd to begin with. For stockers, Hessman emphasizes that by getting rid of PI animals, you'll likely see improved health and performance, along with additional marketing opportunity.

At the very least, it seems this kind of economic impact might make buyers more willing to at least share in the cost of screening calves they're considering for purchase.

It's already apparent that such major feed yards as Cattle Empire are trying to wrap their arms around the problem. Judging by the conversation at the recent Elanco Professional Stocker Operators Symposium, where Hessman presented this information, at least some of this nation's largest and cost-progressive stockers also are in the midst of trying to sort out PI calves as early in production as possible.



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Yearlings Boost Market Floor
"Feeder buyers were aggressive this past week following last week's $2 gain in the fed-cattle market and the expectation of tight supplies of yearlings through the summer," say Ag Marketing Service (AMS) specialists. "Feedlots reluctantly accepted lower packer bids on Friday, after a week of downside pressure from the CME board. Slaughter steers and heifers sold $1.50-$2 lower from $81-$81.50. Packers continue to operate at aggressive chain speeds with an estimated weekly cattle harvest of 707,000, which was 49,000 head larger than the same week a year ago."

In other words, any short-term bloom left on the market surge last month appears all but faded.

The lowest fed-cattle prices usually come mid-summer, though so far this year the market has run against seasonal and cyclical norms. Packers remain aggressive in their harvest, but growing cold storage stocks and burgeoning supply leave little doubt they're gaining bargaining leverage.

Longer term, both the drought and corn prices continue to be the major wild cards. As for the drought, cow-auction receipts in Texas have run beyond average for weeks as some producers have begun dipping below their oldest cows to conserve feed. The same goes in other ultra-dry areas. As for corn, feeder-cattle and calf sellers could do worse than hope for a record crop.

Last week, USDA's monthly World Ag Supply and Demand Estimates lowered total poultry and red-meat production forecasts a touch, in part because of a marginal reduction in beef production. But production across the board is still projected to be higher than a year ago.

The summary below reflects the week ended June 9 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 40,800 $125.16 $117.27 $112.46 $114.84 $110.64 $104.83
TX 34,800 $120.36 $115.66 $110.74 $115.89 $104.78 $99.56
MO 26,400 $132.59 $124.73 $112.32 $123.10 $114.77 $106.00
KY* 15,200 $118-128 $109-119 $95-1055 $109-119 $98-1083 $87-975
AL 13,100 $117-128 $107-115 $100-106 $110-118 $100-110 $90-98
GA*(***) 11,300 $106-134.50 $96-118.50 $92-102 $100-118 $90-109 $90-1004
NE 9,200 $137.72 $127.04 $116.47 $123.36 $116.86 $104.52
SD 8,800 $132.182 $125.73 $117.29 $114.102 $112.964 $107.93
Carolinas* 8,500 $103-122 $90-1143 $83-1025 $100-118 $85-106 $75-995
TN* 8,200 $121.06 $111.26 $103.37 $111.78 $100.56 $92.81
AR 8,000 $121.37 $113.35 $106.79 $112.22 $105.41 $97.64
KS 6,400 ** ** $112.52 ** $114.73 $108.23
CO 5,800 $119.262 ** ** $113.592 $108.684 $95.09
FL 5,600 $104-119 $100-1152 ** $95-110 $97-1182 **
MS* 5,600 $110-1201 $100-110 $85-955 $100-1101 $90-1003 $86-905
NM 4,800 $116.81* $114.68* ** $112.32 $106.72 **
LA*ND 4,000 $108-122 $101-1202 ** $102-118 $100-1152 **
VA 3,400 $117.96 $114.78 $104.45 $109.66 $101.11 **
IA 2,200 ** ** $111.83 ** $109.82 $104.90
MT 1,500 $131.972 ** ** ** ** **
WA* 1,400 $117.332 $114.555 ** ** ** **

* 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.

Questions & Comments
Please send questions to:

Wes Ishmael, Contributing Editor, BEEF Stocker Trends, at

Joe Roybal, Editor, BEEF magazine, at


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