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News and views on stocker segment issues from BEEF magazine.
September 26, 2006 A Prism Business Media Publication
ISSUE CONTENTS
National Stocker Award Winners Named

Senate Approves Mandatory Price Reporting

Added Bulk Extends Wet Distillers Grain Storage

Drought Can Change Parasite Considerations

Global Grain Supplies Decline

K-State Stocker Conference Is This Week

Other Upcoming Events

Sign Up Now For BEEF Quality Summit, Nov. 14-15

Cattle on Feed Smashes Record

Questions & Comments


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News
National Stocker Award Winners Named
Hughes Cattle Co. of Bartlesville, OK -- owned and operated by John and Robert Hughes -- has been named National Stocker Award (NSA) winner for 2006.

When BEEF magazine established the NSA program -- sponsored by Elanco Animal Health -- the idea was fairly simple: identify and recognize the top stocker operators in the nation, and showcase what enables them to thrive in this high-risk business. Easier said than done.

An evaluation committee representing private industry and academics, along with specialists in stocker health, stocker nutrition and stocker economics, sifted through nominees from 15 states.

Competition was divided into three categories: Backgrounding/drylot stocker (feed-based), Fall/winter stockering (forage-based), and Summer stockering (forage-based). A single winner was chosen in each category, and then the overall NSA winner was selected from these finalists.

The Hughes operation -- John bought his first stockers in 1958 -- was named winner of the Summer category en route to the overall title. From the very beginning, this operation has focused on grass production first and foremost to increase carrying capacity. The operation remains grounded in commonsense basics but also continues to innovate, as with a unique pilot study they're conducting with a livestock market owner and feedlot: each entity shares equal ownership in cattle then divvies any profit or loss equally at the end.

Triple Heart Ranch at Wanette, OK, was the finalist in the Backgrounding/drylot category. Besides providing custom backgrounding for others, along with running some of their own cattle, owners, Brock and Shelia Karges have pioneered a service to help cow-calf producers realize added value from providing additional animal health assurance.

Doug Rogers, who owns and operates D&H Cattle Co. at Collins, MS, was named the finalist in the Fall/winter stockering category. He chose the stocker business because he saw more business opportunity in it than with any of the enticing corporate offers that came his way after graduating from West Point and business school. He uses lightweight calves and aggressive health management as a hedge in the marketplace.

As overall winners, Hughes Cattle Company will receive $10,000 cash from Elanco Animal Health, along with an expenses-paid trip to the 2007 National Cattlemen's Association Convention.

Triple Heart and D&H each receive a $2,500 cash prize from Elanco.

You can read about the NSA winners in the October issue of BEEF. As well, the profiles will appear in the next few issues of Stocker Trends.


Senate Approves Mandatory Price Reporting
Pending approval by President Bush, the livestock industry will once again be privy to mandatory livestock price reporting (MLPR). That's due to the Senate's unanimous consent last week to approve a bill (H.R. 3408) to reauthorize the Mandatory Price Reporting Act of 1999.

As you may recall, the price reporting act expired last fall. The House of Representatives approved the bill for reauthorization a year ago, but it has languished in the Senate until now.

"This reporting process is important to U.S. cattle ranchers, and since the mandatory law expired last fall, we have been working diligently to urge its renewal," explains Mike John, National Cattlemen's Beef Association president. "Making price reporting practices mandatory by law assures cattle producers are getting the marketing information they need about their beef products."

Though MLPR has been missing in action for the past 12 months, causing confusion and wonderment in some cases, for many it hasn't been much of an issue.

As an example, last winter, Jeff Stolle, vice president of marketing for Nebraska Cattlemen, noted the vast majority of folks reporting pricing information under the mandatory system had continued to do so on a voluntary basis.

"The data appears to be flowing as it did," Stolle said. "I haven't noticed any shift in volumes given the available supply of cattle. There haven't been any major week-to-week changes on the formula and contract side."

At the time, we reported in BEEF magazine (February 2006) that another reason losing mandatory reporting seemed so benign might be that it never revealed the packer skullduggery many MLPR proponents thought it would.

According to an Economic Research Service report issued last fall, "It appears that, for cattle of similar quality, prices in negotiated spot market transactions closely track prices for cattle sold under contracts. In other words, producers selling under contract do not seem to realize a significant price advantage." That's based on MLPR accounting for more than 90% of all cattle sales by early 2002, compared to an estimated 60% accounted for by the voluntary system just before MLPR was implemented.

Of course, ever since the system requiring packers to report sales transactions went into effect (2001) the level of captive supplies that folks were so concerned about has declined.

Clem Ward, Oklahoma State University Extension economist and a longtime analyst of concentration, consolidation and captive supplies, put together a comprehensive analysis of the impact of MLPR on captive supplies. In it, he explains annual average captive supplies controlled by the four largest packers ranged from 17.5% to 24.9% between 1988 when the Grain Inspection, Packers and Stockyards Administration (GIPSA) began requiring packers to report captive supplies, and 1998. Using a different and incomparable technique, for 1999 to 2001 GIPSA reported the range at 32.4% to 42.9%.

Based on MLPR during its first three years -- April 2001 to April 2004 -- negotiated pricing averaged 46.1%, followed by formula pricing at 43.3%, packer-owned cattle at 7.1%, and forward-contracting at 3.5%.

While some speculate MLPR actually caused a shift back to more cash transactions, market fundamentals are the more likely cause. About the time the law went into effect, supplies started to dwindle, demand began to climb and prices followed suit. In other words, there has been less incentive for sellers to lock up prices and market access.

Once approved by President Bush, MLPR would be reauthorized until Sept. 10, 2010.



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Stocker Nutrition
Added Bulk Extends Wet Distillers Grain Storage
Anyone utilizing wet distiller's grains (WDG) already knows the challenges of spoilage borne by the high moisture content. What researchers are beginning to demonstrate though, is the added shelf-life that can be had by mixing dry, bulky feeds with the byproduct.

For example, University of Nebraska (UNL) researchers tried mixing in grass hay, alfalfa hay or wheat straw. According to a recent UNL report, mixing in grass hay (15%), alfalfa hay (22.5%) or wheat straw (12.5%) -- all on a dry matter basis -- proved to be the minimum level that allowed for successful bagging at 300 lbs./square inch.

For bunker storage, researchers found 40% of grass hay mixed with WDG was firm enough for packing; 25-32% for wheat straw.

There may be 2-3 in. of spoilage at the top, but everything else appears fine says Galen Erickson, UNL nutritionist.

"Other fiber sources would presumably work but we chose these three because of their availability this time of year," says Erickson, who worked on the project with fellow UNL nutrition researcher, Terry Klopfenstein.

You can find more details of the project, including work with mixing WDG with Dried Distillers Grains, and mixing corn gluten with WDG at: ianrnews.unl.edu/static/0606270.shtml.


Stocker Health
Drought Can Change Parasite Considerations
It may be drier than a teetotaler's liquor chest in some part of the world, but drought conditions can actually increase the challenge of parasites, says Dave Sparks, DVM, Oklahoma Cooperative Extension Service food animal quality and health specialist. In a recent issue of Oklahoma State University's Cow Calf Corner, Sparks says normal late-summer forage height means parasites are often a minimal challenge this time of year. He explains about 80% of parasite larvae reside on the lower 2 in. on a forage plant; most can't crawl higher than 4-5in.

"If your animals are grazing 1- 2 1/2- in.-tall forage, they may be getting large numbers of infective larvae, even though it's dry. You can help to alleviate the problem by watching your animals graze," Sparks says. "Try to avoid this danger zone if possible and/or modify your de-worming program to fit the conditions."



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Weather And Crops
Global Grain Supplies Decline
Corn producers have done it again, producing a near-record corn crop, but that doesn't mean prices won't be inching up.

According to last week's "Livestock, Dairy and Poultry Outlook Report" from the Economic Research Service (ERS), the 2006-2007 corn price is expected to average $2.15/bu. to $2.55/bu., up from $1.99/bu. for 2005-2006; it was $2.06/bu. two years ago.

Besides increasing demand, growing price has something to do with decreased global production. ERS analysts note both global coarse grain production and global coarse grain ending stock estimates have been lowered -- reduced production in the European Union, former Soviet Union, Canada and Australia.

For that matter, last week's report also lowers domestic ending corn stocks to 1.22 billion bu.

Soybean meal production is projected at 42,035 thousand short tons, up 2.5% from last year and up 3% from 2004/05. Soybean meal prices are expected to average $147.50 to $177.50 per short ton, down from $173.50 in 2005/06 and $182.89 in 2004/05.

For the week ending Sept. 17, according to National Agricultural Statistics Service (NASS):
  • Corn -- 96% is at or beyond the Dent Stage, compared to 97% last year and 90% for the five-year average. Maturation is at 52%, 2% behind last year, but 3% ahead of normal. 9% is harvested, which is 1% behind last year and the five-year average. 61% is rated Good or better, compared to 52% last year.

  • Soybeans -- 48% of the acreage was at or beyond dropping leaves, 12% behind last year and 1% behind the average. Growers have harvested 6% of the crop, compared to 7% at this time last year and 5% for the average. 61% is rated Good or better; 53% was at the same time last year.

  • Winter wheat -- 19% of the crop is sown, 5% less than the same time last year and 4% less than average. Planting was behind in most states, delayed by either soggy field conditions or lack of soil moisture.

  • Sorghum -- 81% was at or beyond turning color, the same as last year and the norm. 45% is mature, compared to 42% last year and 47% for average. 33% is rated Good or better, compared to 48% last year.

  • Pasture -- 27% is rated Good or Excellent, compared to 30% last year. 23% is rated Poor and 22% is ranked Very Poor, compared to 23% and 14% respectively at the same time last year.


States with the worst pasture conditions -- at least 40% of the acreage rated poor or worse -- include: Alabama (66%); Arizona (53%); Arkansas (46%); California (72%); Kansas (42%); Mississippi (60%); Missouri (59%); Montana (48%); Nebraska (53%); Nevada (60%); North Dakota (62%); Oklahoma (65%); Oregon (54%); South Dakota (50%); Texas (75%); and Wyoming (68%).

States with the lushest pasture conditions -- at least 40% rated good or better -- include: Florida (65%); Illinois (52%); Indiana (65%); Iowa (68%); Kentucky (66%); Maine (83%); Michigan (55%); New Mexico (67%); New York (62%); North Carolina (58%); Ohio (64%); Pennsylvania (50%); South Carolina (52%); Virginia (41%); Washington (41%); West Virginia (59%); and Wisconsin (56%).


Events
K-State Stocker Conference Is This Week
You've still got time to make it to Manhattan, KS, for the Kansas State University (KSU) Beef Stocker Field Day on Thursday, Sept. 28. Scheduled to begin at 9:30 a.m. at the KSU Beef Stocker Unit, this year's program features a broad range of topics from industry experts, including:
  • Forces Shaping Change in the U.S. Beef Sector -- Jim Mintert, KSU.

  • Impact of Added-Value Programs on Beef Stocker Producers -- Leann Saunders, IMI Global, Inc.

  • Utilization of Individual Stocker Info for Value -- Brad White, KSU.

  • Are Stocker Implants Still Relevant for Targeted Quality Grade Programs? -- Chris Reinhardt, KSU.

  • Animal ID Technology Performance - Realistic Expectations -- Dale Blasi, KSU

  • Variation in Forage Quality as it Relates to Stocker Performance -- KC Olson, KSU; and Pablo Guiroy, Cargill Animal Nutrition.
For more info, call 785-532-1267.


Other Upcoming Events
Oct. 11-13 -- Texas Cattle Feeders Association Annual Convention, Amarillo Civic Center, Amarillo, TX. For info, log on to www.tcfa.org, e-mail info@tcfa.org, or call 806-358-3681.

Feb. 13-14 -- Mid-South Stocker Conference, Cave City, KY, presented by the University of Kentucky and the University of Tennessee. For more info, visit www.midsouthstocker.org. You can also contact Jim Neel at 865-974-7294 or jneel@utk.edu; John Bartee at 931-648-5725 or jbartee1@utk.edu; or John T. Johns at 859-257-2853 or jtjohns@uky.edu.


Sign Up Now For BEEF Quality Summit, Nov. 14-15
Sign up now at www.beef-mag.com for BEEF magazine's 2006 BEEF Quality Summit. The Nov. 14-15 workshop in Oklahoma City's Clarion Hotel aims to provide attendees with the background, tools and the environment to make the connections for involvement, and the potential rewards offered, in the new beef-value chain.

The first day's program is devoted to outlining the opportunity available in the new beef-value chain, the second to how to link your production into that chain. Among the topics to be discussed are:
  • How U.S. beef consumers define quality.

  • Quality, profit and the cattle cycle.

  • International competition and opportunities for U.S. quality beef.

  • Current international beef trade opportunities.

  • Producers will discuss how they're paid for quality.

  • Selecting a marketing partner.

  • Evaluating costs, trade-offs and risks of various markets.

  • Linking up with a marketing partner -- an opportunity to meet with participating marketing channel reps.
For more detail, visit www.beef-mag.com and click on the "BEEF Quality Summit" box in the top right corner of the opening page.



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Markets
Cattle on Feed Smashes Record
As many market analysts predicted, Friday's Cattle on Feed Report was a whopper: 11 million head as of Sept. 1. That's 10% larger than the same time in 2004 and 2005. It's the largest Sept. 1 inventory since the series began in 1996.

Also unsurprisingly, August placements were huge: 15% more than a year ago and 9% more than in 2004. In fact, 67% more cattle lighter than 600 lbs. were placed compared to a year ago.

Last week's monthly "World Agricultural Supply and Demand Estimates" raised the estimated average annual Choice fed-steer price slightly from a month earlier: $85-$86 compared to $82-$84 in the August report. The estimated average price for the fourth quarter is $85-$89.

"The cattle price forecast is raised from last month as the slower pace of fed cattle marketings is supporting prices at higher than expected levels," explains the report.

Shorter term, last week the USDA's Economic Research Service reported, "Recent rains in the Southern Plains have improved prospects for winter pastures, which could mean reduced beef cow slaughter. Seasonal increases in cow slaughter will likely be reduced as much culling has already occurred, along with early weaning, due to drought. Improving grazing prospects, particularly for small grain pasture, will provide increased competition for relatively low feeder cattle supplies, at least in the near term.

Reduced cow slaughter should provide support for cow prices, and increased competition should provide support for feeder cattle prices."

Overall, the futures market for cattle suffered significantly last week, while feeder cattle sold $5 lower compared to the prior week -- steer and heifer calves were $3-$6 lower. Yet, by Friday afternoon, fed cattle sales gained 50 cents at $88.50 to $89.50.

The summary below reflects the week ended Sept. 22 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.
MO 36,400 $134.06 $124.64 $121.14 $119.95 $116.08 $110.90
OK 35,300 $129.37 $124.50 $122.794 $118.06 $114.36 $109.75
TX 32,500 $120.53 $112.35 $108.90 $113.13 $107.01 $102.56
KY* 26,900 $118-128 $107-117 $104-1145 $106-116 $99-1093 $93-1045
AL 17,800 $117-126 $108-117 $107-1144 $108-115 $100-107 $93-1005
Dakotas 16,300
South Dakota
North Dakota

$140.88
$131.53

$134.742
$127.89

$118.33
$118.50

$130.43
$122.05

$125.042
$115.042

$115.426
$106.294
TN* 14,400 $118.49 $110.53 $104.18 $107.73 $101.41 $97.25
NE 13,500 $138.34 $127.62 $123.07 $125.22 $120.73 $117.47
AR 12,400 $118.45 $112.16 $107.77 $109.93 103.85 $105.194
GA*(***) 10,800 $103-124 $98-115 $91-106 $100-116 $89-110.50 $88-994
FL* 10,500 $96-17 $94-106 $89-196 $95-109 $86-99 $80-964
MS* 9,400 $110-1201 $100-110 $97-1004 $100-1101 $90-100 $85-904
WY* 9,100 $131.58 $117.924 $121.47 $119.27 $117.73 $113.92
KS 6,700 $133.72 $120.50 $116.07 $121.73 $109.79 $110.12
IA 6,500 $136.34 $132.52 $128.754 $127.62 $1218.28 $112.19
CO 6,300 $131.23 $120.86 $115.854 $119.43 $110.85 $112.564
LAND 6,300 $107-124 $102-1172 ** $100-123 $98-1162 **
Carolinas* 5,500 $107-124.50 $99-116.503 $92-108.505 $99-114 $88-1083 $85-102.505
VA 5,400 $122.15 $115.42 $108.40 $106.68 $104.84 $98.61
NM 2,800 $118.92 $109.92 ** $114.96 $100.97 **
WA* 2,400 $122.37 $111.43 $106.816 $110.99 $103.60 $103.424

* 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.


Contact
Questions & Comments
Please send questions to:

Wes Ishmael, Contributing Editor, BEEF Stocker Trends, at wesleysink@aol.com

Joe Roybal, Editor, BEEF magazine, at jroybal@beef-mag.com



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