View this email as a Web page Please add Cow-Calf Weekly to your Safe Sender list.
A Prism Business Media Property
January 5, 2007


Table of Contents
A Look At The Year's Top Stories
Better Times Ahead For The Feeding Industry?
To The Trepidation Of Some, FDA Rules On Cloning
Hearings and Tariffs -- Korea & U.S. Beef
USDA Canadian Import Rule Takes Next Step
Brookings Meeting Explores "Natural" Cattle Production
Yearling Weights Continue To Climb
Canada Loosens Movements, Okays E. Coli Vaccine
Feed-Level Antibiotics Increases Poultry Growing Costs
Plains Blizzards Hammer Producers
R-CALF Files Appeal Brief On Canada Border Issue
Winter Weather Creates Havoc But Drives A Rally
110th Congress Convenes With Heavier Session Schedule
Northeast and Midwest Stand To Lose Political Clout
Senators Ask For Adequate Funding for Ag
Meet Incoming NCBA President John Queen


ADVERTISEMENT
The POWER of one BRAND can change your future in the beef business.

Certified Angus Beef ®, the oldest, most successful branded beef program in the industry returned more than $50 million in grid premiums in 2003. The demand for CAB® brand products translates into fed cattle premiums of $2-$5/cwt. Source-verified, high-percentage Angus replacement females often top auctions by selling for $50-$100 per head above cash market. Sale barn surveys conducted at nine auction markets indicated premiums are paid, not for black-hided cattle, but for high-percentage-Angus cattle.

One brand, one breed--the power of one can change your future in the beef business.


www.angus.org




Certified Angus Beef® and CAB® are registered trademarks of Certified Angus Beef, LLC

Our Perspective
A Look At The Year's Top Stories
It's a tradition at the end of a year to recount the year's biggest stories and prognosticate on the big issues of the new year. This year, that was an easy exercise. In no particular order, they are:
  • The U.S. attempts, failures and limited success at restoring our export markets. South Korea has not only thumbed its nose at the U.S. but made a mockery of the entire system. We also gave into Japan by accepting its rejection of internationally recognized standards. These will continue to be big issues in 2007.

  • National ID. Though very little happened, premise ID sign-ups are on schedule, the National Cattlemen's Beef Association succeeded in pushing for a voluntary program, and private enterprise is putting the necessary components, albeit slowly, in place.

    The marketplace with age and source verification, and to a lesser degree genetic and process verification, has largely already passed up the whole national ID debate. Virtually all progressive cow-calf producers this fall sold their cattle in a system that would allow for 48-hour traceback.

  • The weather. Widespread drought short-circuited expansion once again. Seemingly nearly every region of the country had a major weather event in 2006.

  • Corn prices unquestionably had the biggest impact on producers financially, not only in the short term but it promises to reshape the very structure of our business. The ethanol subsidies and the corn farmer vs. cattle rancher debate will continue to be at center stage in 2007.

  • The marbling failure. The industry, especially the seedstock and feeding segments, have talked a lot about why -- despite a shift in breed composition to higher marbling breeds, a heightened level of selection pressure for marbling, and a host of other factors such as days on feed, heavier carcass weights, etc. -- marbling actually has been decreasing.
My wish for 2007 is that the new year be about a renewed focus on profitability, on growing demand, and returning to issues we can influence and that will have a long-term effect on our sustainability, both as individual enterprises and as an industry.
-- Troy Marshall


Back to Top

Better Times Ahead For The Feeding Industry?
Headline after headline this week hailed a 2007 that would be a better year for the feeding industry. While that may be the case, it requires a little perspective, given the fact 2006 was the worst year for feedlot profitability in the last 30.

All the optimism stems from the fact domestic beef demand has surprised some people with its strength of late, and exports are expected to increase. As long as the economy continues to percolate along, demand is expected to hold its own.

Futures prices this week are well above the levels fed cattle traded a year ago for the same time frames, and the industry is going into the year extremely current. Still, beef production isn't expected to decline, and available supplies of feeder cattle are expected to be very similar to 2006.

The bottom line is an improved outlook doesn't mean the feeding industry will return to profitability in 2007. Excess capacity is chasing a steady supply, and economic models driven in a big way by capacity utilization mean profits will remain tough to achieve in 2007 without help from the demand or supply front. And that isn't foreseen.

It's important to keep in mind that prognosticators also are calling for nearly steady profit levels on the cow-calf and packer sides of the business. It's a little like a rancher who's suffered through one of the worst droughts in history being told next year will be better. The question that needs answering is: "how much better?"

I'm actually very bullish on the beef business and the overall economic picture. But the reality is the explosion in subsidized ethanol production has driven corn significantly higher. Meanwhile, expansion has greatly slowed, and the demand growth that helped us maintain record periods of profitability on the cow-calf side has slowed, and possibly even reversed itself.

The number-one trend occurring in all business segments is that averages are becoming increasingly more meaningless, and price differentials between products based on quality and brand value continue to widen. As a result, aggregate profitability calculations are becoming less meaningful.

Yes, the average cow-calf producer will consider 2007 a prosperous year, and the average feedyard will experience improved returns, etc. But the variation around the mean is what's expanding.

Some cow-calf operations will post record profits in 2007; others will be challenged. That scenario will be repeated in every segment from seedstock to the retailer.

Commodity price assumptions are a valuable tool, but their interpretation becomes far more complicated each passing year. That's the effect of an industry continuing to transition a larger percentage of its product and marketing away from commodity to value-added pricing systems.
-- Troy Marshall


Back to Top

To The Trepidation Of Some, FDA Rules On Cloning
No one who follows the science ever doubted FDA would find cloning safe. Still, many people were silently hoping FDA would delay the inevitable for a while longer. Cloning someday may be a commercially viable production tool, but for the foreseeable future it's expected to see very limited use -- restricted to only the most valuable genetics.

One of the basic tenets of modern ag is to embrace the science, and base production and business decisions on facts, not perception. The animal breeding and genetic community sees cloning as a way to make improvements and ensure the propagation of profit-enhancing genetics.

Nevertheless, the science of cloning and consumer perceptions are so divergent that many fear any significant embrace of the technology offers more risk than benefit to the industry. Surveys show consumers simply aren't comfortable with eating products from cloned genetics. Ever since the scientific methodology was developed, the issue has never been about the science or its value; it's always been about consumer acceptance.

While FDA is responsible for reviewing the scientific literature, it isn't responsible for conducting a public relations campaign to educate consumers. Because the technology will affect so few animals, there's little incentive at this time to educate consumers, largely due to the cost and concern that doing so would unduly raise worries about the overall beef supply.

The industry likely will go about its business, utilizing the technology on a limited basis, unless it's forced to do otherwise by anti-beef activists attempting to mine the disconnect between science and perception in order to raise additional concerns about the safety of beef.
-- Troy Marshall


Back to Top


ADVERTISEMENT
Search, sort, select your seedstock.

The Limousin Exchange is an easy, efficient way to locate and sort bulls and females that fit your specifications:
  • State
  • Breeder
  • Percent Limousin
  • EPDs
  • Color
  • Polled/horned
  • Age
  • More...
Search, sort and select your Limousin and Lim-Flex® seedstock today.

www.nalf.org







Foreign Trade
Hearings and Tariffs -- Korea & U.S. Beef
Sen. Byron Dorgan (D-ND) plans to hold hearings on South Korea's continuing rejection of U.S. beef. Dorgan also plans to push for tariffs on Korean products if Korea "persists in using baseless excuses" to block U.S. beef imports. Dorgan said, "When I talk to ranchers in North Dakota, they ask me why America should continue to accept imports of South Korean automobiles, electronics and other goods if our beef exports are not accepted. I have no good answer for them."
-- P. Scott Shearer, Washington, D.C., correspondent


Back to Top

USDA Canadian Import Rule Takes Next Step
The White House Office of Management and Budget (OMB) has completed its review of a proposed USDA rule that would allow Canadian cattle over 30 months of age to be imported, suggesting no changes.

With OMB approval, USDA has the green light to publish the proposed final rule in the Federal Register and entertain public comment for 60 days. A final decision isn't until perhaps as late as this summer.

USDA withdrew a similar rule last year when a 50-month-old Canadian cow, born after Canada's 1997 ruminant feed ban, tested positive for BSE. After four months of examining Canadian safeguards, USDA returned the proposal for review.
-- Alaina Burt


Back to Top

Beef Marketing
Brookings Meeting Explores "Natural" Cattle Production
"Natural" beef production systems are the focus of a special "Matching Cattle to Markets" program Jan. 17 in the Brookings County Resource Center in Brookings, SD.

"Targeting Natural beef production offers economic incentives for cattlemen and cattle feeders but does not come without a cost," says Miner County Extension Educator Jim Krantz. "Excluding ionophores, implants and antibiotics included in typical production systems results in reduced gains, increased feed costs, and the need for a regimented health program. All these issues will be part of the program discussions."

Included are presentations by:
  • Brett Stuart, Cattle-Fax, on the current U.S. beef industry picture, value differences and market opportunities.
  • Dana Stahl, USDA, definition of "natural" and an overview of the third-party verification system for documentation of production practices.
  • Erik Loe, South Dakota State University (SDSU) Extension feedlot specialist, on calf procurement, natural management and expected performance.
  • Tyler Melroe, Marshall County Extension livestock educator, on program participation and cattle types.
  • Russell Daly, SDSU Extension veterinarian, on the health aspects of raising natural cattle.
  • Matt Bode, Creekstone Farms Premium Beef cattle procurement manager, on the packer perspective.
Registration is $20, and includes lunch, breaks and handouts. Pre-register by Jan. 15 by contacting Kingsbury County Extension at 605-854-3851 or tracey.renelt@ces.sdstate.edu; Marshall County Extension at 605-448-5171 or tyler.melroe@ces.sdstate.edu; or Miner County Extension at 605-772-4661 or jim.krantz@ces.sdstate.edu.
-- Joe Roybal


Back to Top


ADVERTISEMENT
Broad-spectrum rotavirus coverage
Not only does Scour Bos® 9 from Novartis Animal Health US, Inc. incorporate three unique strains of rotavirus, it also includes four E. coli K99 isolates, coronavirus and Clostridium perfringens Type C. Its broad-spectrum protection and initial dose flexibility fit right in at preg-check. Begin protecting heifers up to 16 weeks pre-calving and give the annual booster up to 10 weeks pre-calving. Click on the Scour Bos logo for more information.



Marketing
Yearling Weights Continue To Climb
Omaha corn is now more than $3.50/bu., feedlot gain costs are the highest in 10 years, and lighter cattle have flowed into feedlots the last few months. Normally such factors would mean lower fed slaughter weights, but feedlot weights are at record levels, says Dillon Feuz, Utah State University economist.

Writing on the Livestock Marketing Information Center Web site (www.lmic.info), Feuz says last week's 882 lbs. is the largest weekly average on record.

"This past year, the 5-market steer weight averaged 851 lbs., which was 16 lbs. above 2005, and 25 lbs. greater than the 2001-2005 average," Feuz says. "Late this fall, when weights typically decline, they did not. The December average for 2006 was 877 lbs., 36 lbs. heavier than the December average of the last five years.

Feuz attributes the continuing increase to several factors.

"Even with higher costs of gain, it may still be profitable to feed to these heavier weights, especially for those selling on a carcass weight basis," he says.

In addition, with fed cattle marketing at a loss most of the year, heavier finish weights allow feeders to spread the cost of high feeder-calf prices, or hold on in hopes of a rise in the cash market.

The added weight, however, puts more beef into the marketplace. "This year, for every 34 head sold there was the equivalent carcass weight of 35 head," he says.

Feuz is unsure of the effect of continued higher corn prices on the weights trend, or if recent severe weather will lower weights in the short term.

"But unless packers change the acceptable carcass weight range, I'm inclined to believe we must be nearing the upper end of where the average carcass weight can be to avoid major packer discounts for too heavy of a carcass," he says.

With an average steer weight of 882 lbs., more than a few of them had to exceed 1,000 lbs. of carcass weight, and many exceeded 950.

"Most packers use one of these two weights to start applying steep discounts to prices. When feedlots experience those sharp discounts, it is no longer economical to push to higher weights," he says.
-- Dillon Feuz, Livestock Marketing Information Center


Back to Top


ADVERTISEMENT

This year Camp Cooley Ranch celebrates 20 years of ultrasound performance in our Brangus herd. From this work results some of the most powerful, performance proven Brangus, Angus and Charolais bulls to ever sell at Camp Cooley. Your search for Quality in Volume begins and ends at Camp Cooley Ranch. Give us a call or stop by for a visit!
www.campcooley.com
1-800-251-0305

Industry News
Canada Loosens Movements, Okays E. Coli Vaccine
The Canadian Food Inspection Agency (CFIA) removed movement restrictions on 7,700 cattle located on 83 farms in Ontario and four farms in Quebec this week after determining they were not exposed to potentially contaminated feed. An estimated 2,450 cattle on 26 farms in Quebec remain under movement restrictions, most of which are said to be mature dairy cattle.

CFIA imposed the restrictions Nov. 18 after a load of cattle feed ingredient suspected of containing meat and bone meal reportedly was distributed to two feed mills in Ontario and Quebec. Feed was then distributed to 113 farms.

As a precaution, all potentially exposed animals were placed under movement control. An investigation showed the feed ingredient delivered to the mill in Ontario did not contain any of the potentially contaminated material. Further analysis is ongoing, CFIA says.

In addition, Meatnews.com reports CFIA has given conditional approval to an E. coli O157:H7 cattle vaccine to be distributed to Canadian veterinarians. Developed by Ontario-based Bioniche Life Sciences (BLS) Inc., the firm says it's the first vaccine technology for E. coli O157:H7 control to be authorized for field use by a regulator globally.

To garner a full license, BLS must provide additional confirmatory data, which it believes it can meet in 2007.
-- Joe Roybal


Back to Top

Feed-Level Antibiotics Increases Poultry Growing Costs
Use of growth-promoting antibiotics in chicken feed is a financial loser for poultry growers, says a Johns Hopkins University economics study. Using data from poultry giant Perdue, the study concluded the benefits of accelerated chicken growth with such use of antibiotics were offset by the products' cost, with the total cost rising by about 1¢/chicken.

In a news release, the Keep Antibiotics Working coalition (KAW) admits Perdue, Tyson, Gold Kist and Foster Farms eschew use of growth-promoting antibiotics but says the claims are unverified as the government doesn't collect drug use data. The organization supports federal legislation, "The Preservation of Antibiotics for Medical Treatment Act, (H.R. 2562/ S. 742), sponsored by Edward Kennedy (D-MA), incoming chairman of the Senate Health Committee. The bill would phase out the use of antibiotics that are important in human medicine as animal feed additives within two years.

The National Cattlemen's Beef Association (NCBA) opposes such Congressional action, however. On its Web site, NCBA says its members are "strongly opposed to Congressional action in determining the safety and efficacy of antibiotics. This is the role of the Food and Drug Administration, and we ask Congress to empower the agency to do their job effectively, based on science, in an open, transparent process."
-- Joe Roybal


Back to Top

Plains Blizzards Hammer Producers
Cattlemen in the Plains will be dreaming about a white Christmas for quite some time it appears. Back-to-back blizzards during the Christmas holidays stranded thousands of cattle in the Central Plains with snow 3-ft. deep and drifts 10- to 15-ft. high in places. And forecasters are predicting more snow this weekend.

Affected areas include Southeast Colorado, Northeast New Mexico, the Oklahoma and Texas Panhandles, and parts of Nebraska and Kansas.

In Colorado, helicopters airlifted 70-80 tons of hay to stranded cattle, but high winds forced a halt to relief efforts Thursday afternoon. The Colorado Division of Emergency Management estimates there are around 340,000 cattle in the seven Southeastern Colorado counties hardest-hit by the storms, but an accurate count of the losses won't be known until the snow melts enough to allow access to pastures.

Similar conditions exist in Northeast New Mexico and the Oklahoma Panhandle, with heavy snow and high drifts thwarting efforts to get feed and water to cattle, some in large and remote pastures.

In Nebraska, ice was a bigger problem than snow in many parts of the state, while the western feedyard area got snow and wind. Mike Fitzgerald with Nebraska Cattlemen tells BEEF Cow-Calf Weekly there wasn't a problem with stranded cattle, but the winter conditions made it very difficult for producers to get to their cattle with feed and water.

"One guy told me the (corn) stalks his cattle were on was like a frozen lake," Fitzgerald says. The cattle had a hard time standing up, the cattleman had a hard time standing up and the ice made the stalks inaccessible to the cattle.

Conditions in Kansas are similar, with the National Guard using military vehicles to deliver feed to cattle. Warm weather the past several days has melted some of the snow. Like Nebraska, Kansas cattlemen aren't experiencing cattle-isolation problems like producers elsewhere in the region, but with nearly 3 ft. of snow in parts of the state, access to pastures has been difficult.

Several relief efforts have been established. The National Cattlemen's Beef Association has activated its relief program. Those wishing to donate hay, trucking, equipment use, or money to the affected cattlemen can call 866-BEEF-USA (233-3872).

The Oklahoma Cattlemen's Association (OCA) has established the Panhandle Ranch Rescue Fund to help purchase feed. Cash donations can be sent to OCA at 2500 Exchange Avenue, Oklahoma City, OK, 73108.

The Colorado Veterinary Medical Association is accepting cash, checks and credit card donations for relief efforts. Contact the group at 789 Sherman Street, Suite 200, Denver, CO, 80203 or call 303- 318-0447.

The Nebraska Cattlemen organization has established a hay exchange hot line. Call 308-762-3005 for more info.
-- Burt Rutherford


Back to Top

R-CALF Files Appeal Brief On Canada Border Issue
R-CALF filed a brief last week urging the 9th U.S. Circuit Court of Appeals to remand the group's litigation against USDA back to the District Court of Montana. The brief claims the District Court ruled last August against R-CALF's request for a permanent injunction on Canadian cattle and beef trade into the U.S. only because the District Court incorrectly concluded the 9th Circuit already had resolved the merits of R-CALF's entire case.

The brief says hundreds of pages of additional material was not considered by the 9th Circuit in overturning the preliminary injunction. In addition, that information wasn't considered by the District Court before it ultimately ruled in USDA's favor in August 2006, R-CALF contends.

Among that additional evidence, the brief says, "is the reference to other statements of Congressional intent, official statements from USDA that contradict previous statements made by the agency in support of the Final Rule, as well as empirical evidence (the discovery of BSE in younger Canadian cattle) that flatly contradicts USDA's assumption that any remaining BSE-infected cattle in Canada would be few and would have been exposed to BSE prior to Canada's 1997 ruminant-to ruminant feed ban."

The U.S. Department of Justice will file a responsive brief on behalf of USDA by Jan. 25, with supporting amicus briefs due a week later.
-- Joe Roybal


Back to Top

Winter Weather Creates Havoc But Drives A Rally
Eastern, and especially Southeastern, Colorado may have been the epicenter of the last two storms that roared through the Central Plains, but most of the major cattle-feeding areas (Colorado, Kansas, Nebraska, Oklahoma and Texas) also were hit hard. Feedlots are still too busy digging out and trying to get feed, water and mills up and running to attempt to market many cattle. Not to mention the stress the animals have been under.

Tighter showlists and reduced hours at the packing level also helped the beef complex rally this week, as fed cattle are expected to trade over $90. The feeder and calf markets also are showing strength -- runs typically would just be picking up in preparation for a couple of huge weeks ahead. But calves will be slow to come to town in January, as buyer demand will remain soft until they have a chance to recover from the storm.

In Colorado, the storm dumped up to 3 ft. of snow, driven by winds of 30-40 mph that made roads impassable for more than a week in some areas. The National Guard finished up searching and rescuing stranded travelers early this week and turned its efforts to helping ranchers locate and get feed to their cattle. Air drops of hay are being conducted to cattle in the hardest hit areas.

Meanwhile, governors of the hardest-hit states are declaring disasters to pave the way for possible federal assistance. Colorado experts say the damage could be worse than the 1997 blizzard where cattle deaths approached 30,000 head and the economic loss totaled $28 million.

There are reports of feedyards losing 1,000 head in the storm. Meanwhile, many ranchers in the affected areas who have battled eight years of drought and promised to never complain about moisture in any form, will be devastated.

It's always amazing how people turn out to help in times of natural disaster. Local snowmobile clubs from Denver are in southeastern Colorado helping locate cattle and get feed to them. But that willingness to help is only trumped by people's resilience. One cattleman interviewed by a local radio station about his inability to reach his cattle, and uncertainty about even where they might be, said: "At least, we'll have a lot of green grass this spring."
-- Troy Marshall


Back to Top


ADVERTISEMENT


What they don't teach you in AniSci 101.

The Charolais-influence in your crossbreeding program adds an exceptional boost of heterosis, economic value and cowherd predictability. Charolais-influence adds value in virtually every segment in the U.S. beef industry.

You choose your end-use target. Use Charolais genetics to get there!

Click here for more information.

Government
110th Congress Convenes With Heavier Session Schedule
The 110th Congress was sworn in this week with Democrats in control of both the Senate and the House of Representatives. The 110th Congress began its work on Thursday, with plans to meet five days a week for the next six weeks. This will be a change from last year when members arrived Tuesday afternoon and would leave on Thursday.

Nancy Pelosi (D-CA) made history as the first female Speaker of the House. Other House leaders include Reps. Steny Hoyer (D-MD), majority leader; John Boehner (R-OH), minority leader; and Roy Blunt (R-MO), minority whip. Senate leadership includes Sens. Harry Reid (D-NV), majority leader; Dick Durbin (D-IL), majority whip; Mitch McConnell (R-KY), minority leader; and Trent Lott (R-MS), minority whip.

The House Democratic leadership has announced that among measures to be considered in January are tightening ethics rules for members, raising the minimum wage, allowing more research on stem cells, implementation of various recommendations of the Sept. 11 Commission and port security, end subsidies for big oil and invest in renewable energy, and cutting interest rates on student loans.
-- P. Scott Shearer, Washington, D.C., correspondent


Back to Top

Northeast and Midwest Stand To Lose Political Clout
Reapportionment isn't due until after the 2010 census, but analysis of the 2006 population indicates the West and South would continue to gain Congressional seats, while the Northeast and Midwest would lose seats. If the 2006 population trends continue through 2010, Arizona, Florida, Georgia, Nevada and Utah would each gain one Congressional seat and Texas would gain two. States losing one seat include Iowa, Louisiana, Massachusetts, Missouri, New York, Ohio and Pennsylvania.
-- P. Scott Shearer, Washington, D.C., correspondent


Back to Top

Senators Ask For Adequate Funding for Ag
Sens. Norm Coleman (R-MN) and Blanche Lincoln (D-AR) plan to send a letter to the President urging him to "refrain from proposing harmful cuts" to ag when preparing the Administration's fiscal year '08 budget. The letter states, "Instead, we urge you to propose a robust, new investment in renewable fuels that will add to the budget savings already realized or forecast under current farm policy and make room for the Administration to propose additional funding in order to meet new priorities and policy objectives, including many identified by the Administration, without making harmful cuts to existing priorities." The administration will present its budget to Congress the first week of February.
-- P. Scott Shearer, Washington, D.C., correspondent


Back to Top

Tips for Profit
Meet Incoming NCBA President John Queen
Waynesville, NC, backgrounder and cattle marketer John Queen assumes the reins of the National Cattlemen's Beef Assocaition in early February. Read a profile on the incoming president in the January issue of BEEF, now available online at www.beef-mag.com.

In the same issue, you'll find articles on how 13 Kentucky producers are pooling their genetics and calf crops to garner bigger paydays in "The Positives Of Pooling." There are also in-depth pieces on the effect of ethanol production on beef production -- "Ethanol Fallout" -- and lots more industry management and news.
-- Joe Roybal


Back to Top


ADVERTISEMENT
Thank You To Our Cow Calf Weekly Sponsors!
Click on sponsors logo for more information.


About this Newsletter

You are subscribed to this newsletter as #email#

To unsubscribe from this newsletter go to: Unsubscribe

To subscribe to this newsletter, go to: Subscribe

For information on advertising in this newsletter, please contact: Bret Kealy at bkealy@prismb2b.com

Do you have comments or suggestions about BEEF Cow-Calf Weekly or its content? Write to:
Troy Marshall, troy@seedstockdigest.com
Joe Roybal, jroybal@beef-mag.com
Burt Rutherford, brutherford@beef-mag.com

 

To get this newsletter in a different format (Text or HTML), or to change your e-mail address, please visit your profile page to change your delivery preferences.

For questions concerning delivery of this newsletter, please contact our Customer Service Department at:
Customer Service Department
Beef Magazine
A Prism Business Media publication
US Toll Free: 866-505-7173 International: 847-763-9504
Email:">beef-mag@pbinews.com