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News
Appeals Court Upholds Tyson
Decision
Score one more for proponents of capitalism. Last week
the 11th Circuit Court of Appeals unanimously upheld a ruling made last
year that cleared Tyson Fresh Meats, Inc. of any wrongdoing in its use
of marketing agreements to purchase fed cattle.
You may remember that plaintiffs in the long-running legal dispute
(Picket, et al v. IBP) accused Tyson -- which purchased IBP after
the suit had begun -- of using marketing agreements to manipulate cattle
prices. Last year, a District Court ruled in favor of Tyson and that
decision was appealed.
"While talk about the independence of cattle farmers has emotional
appeal, the Packers and Stock Yards Act was not enacted to protect the
independence of producers from market forces," says the appellate
ruling. It goes on to explain that all cattle producers are entitled to
market preferences, but they are not entitled to force their preferences
on other producers or on other segments of the marketplace.
"Thousands of producers prefer to sell cattle through marketing
agreements rather than the cash market," says John Tyson, chairman and
CEO of Tyson Foods. "This ruling allows them to continue this practice,
which they believe is more efficient and rewards them for raising cattle
that produce the beef consumers demand."
Bottom line, the ruling means producers can continue to market their
cattle however they see fit, in accordance with market forces or in
opposition to them, rather than having that right taken away.
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Market Outlook
Market Normalcy Returns --
Maybe
"The market has faced a constant barrage of disease and
political issues, coupled with growing demand and drought-extended
cyclical reductions in supply. It seems to me that fed cattle and boxed
beef markets have finally come back to something like a typical
equilibrium this summer," says Derrell Peel, Oklahoma State University
Extension livestock economist.
Perhaps the most telling proof of this has been the almost total lack of
market movement in response to the opening of the Canadian border. Folks
who wanted to keep the border closed had feared a flood of cattle coming
south and drowning prices. But it never materialized.
However, the fears of those who wanted to open the border as soon as it
was safe from a BSE standpoint are coming to pass. Cattle aren't moving
south because Canada has grown its own slaughter capacity and increased
its international beef marketing competitiveness, which places U.S.
packing capacity in jeopardy.
"Opening the border will allow the market to determine if it's more
efficient to bring beef products or cattle from Canada. So adding live
cattle to the mix will not significantly change the net results,"
explained Randy Blach of Cattle-Fax shortly after the border opened.
So far, the market is continuing to choose the importation of Canadian
beef, rather than cattle, and at record levels. Conversely, increased
Canadian harvest capacity, the relative strength of that nation's dollar
compared to U.S. currency, and increased costs to move cattle across the
border are keeping more cattle in Canada than some had predicted.
As Peel explains, the market is back to a more fundamental basis than it
has been in almost two years. That means assessing risk should be more
predictable. But, it also means that stocker operators may face more
risk.
In his market outlook for fall 2005, Peel notes, "Just as cattle feeders
are already caught in a buy-sell squeeze play, stocker producers could
face some of the same dangers."
More specifically, though past their peak, calf prices are expected to
remain historically high, just as feedlots begin padding the losses
starting to take hold in that sector.
"Betting on the come is more dangerous during this period, and stocker
producers should budget carefully and try to maintain good buying
discipline this fall," Peel says.
Weather And Crops
All Eyes On Corn
As is usual this time of year, folks are starting to get
edgy about the corn crop. This year it has to do with deteriorating crop
conditions and reports of drought disasters like the folks in Illinois
are enduring.
By Aug. 13, the National Ag Statistics Service (NASS) rated 22% less of
the corn crop in good or excellent condition than last year, though 65%
is reported in the doughing stage, which is 9% ahead of normal and 10%
ahead of last year's bin-busting crop. Despite concerns, the most recent
USDA report estimated the crop at 10.35 billion bushels and ending
stocks at 1.9 billion bushels compared to 1.7 billion last year.
Crop progress for the week ending Aug. 13, according to NASS:
- 89% of the soybeans are setting pods, 10% ahead of last year and 11%
ahead of the five-year average. Just over half of the crop is reported
to be in good or excellent condition, compared to 69% last year.
- 84% of the oat crop is harvested, 20% ahead of last year and 10%
ahead of average.
- 49% of the barley is in the bin, 24% ahead of 2004; 68% of the
barley crop is rated good or excellent, compared to 70% last year.
- Sorghum heading is at 80% -- 8% ahead of last year and 5% ahead of
normal. 41% of the crop is reported to be in good or excellent
condition, compared to 73% last year.
- Pasture and range continues to decline with 34% rated as good or
excellent, 18% less than last year; 66% is rated fair or better,
compared to 79% last year.
- On the other end, 34% is rated as poor or very poor, compared to 21%
last year.
States ranking at least 40% of their pastures and rangelands as poor or
very poor include: Arizona (54%); Arkansas (75%); California (55%);
Colorado (41%); Illinois (83%); Indiana (47%); Kentucky (57%); Missouri
(83%); Ohio (40%); Pennsylvania (66%), Wisconsin (45%).
On the other end of the spectrum, states reporting half or more of their
pasture and range in good or excellent condition: Alabama (70%); Florida
(65%); Georgia (82%); Idaho (66%); Maine (71%); Nevada (89%); North
Carolina (70%); North Dakota (60%); South Carolina (80%)' Utah (78%);
Washington (50%); Wyoming (51%).
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Management
Doctoring Reality Rather Than
Perception
"Every year it's the same. We're going to ramp up our
high-risk calf program (in the feedlot). We start buying them around
Labor Day, we pull calves and the average death loss occurs 30 days
after we start treating them, so we believe our treatments are working
properly for the first 30 days, so we order more calves." says Dan
Thomson, the section head of ag programs for Kansas State University's
(KSU) College of Veterinary Medicine. Before signing on at KSU earlier
this year, Thomson spent five years riding herd over health programs for
some of the nation's largest feedlots.
"Then at 60 days into the season, we see our death loss increase and we
blame it on the drugs not working, the weather breaking or a new bug,"
Thomson says. "We quit buying calves but the death loss is going to
continue for another 60 days. It's the normal temporal pattern for death
loss."
Thomson was addressing the situation in the feedlot specifically, but
the same notion applies to stockers bring in calves.
According to feedlot data from the National Animal and Health Monitoring
Service, feedlot mortality increased from 1.4% to 1.8% between 1997 and
2003. Most of this increase is attributed to respiratory disease.
Thomson believes the increased mortality rate has to do with a number of
factors. These include more cattle entering the feedlot at lighter
weights, possibly more cattle trading through sale barns, and the number
of people qualified and willing to provide health management in
feedlots. Distance is a factor, too: eight hours used to be considered a
long haul; now its 20 hours, Thomson says.
Data is lacking but, since increased death loss is typically preceded by
increased morbidity, the trend in increased death loss points to
increases sickness as well, according to Thomson.
"What we do know is that anything breaking with disease within the first
week or two after purchase, you've bought the problem," Thomson says.
That's based on experience and research at Oklahoma State University,
which indicates the average calf that subsequently dies is pulled for
BRD at around 30 days on feed. The death of these calves occurs, on
average, 30 days after treatment. Therefore, the average respiratory
death loss occurs at approximately 60 days on feed.
(For more on this subject, read "More Than Money" in the upcoming
September issue of BEEF magazine).
Events
Kansas State University Stocker
Conference
Sept. 15
Manhattan, KS
Holiday Inn/Holidome
On tap this year:
- "Traceability and the Brand Premise: Making Stocker Operations Fit
in the Equation," Leann Saunders, IMI Global.
- "Tomorrow's Stocker Program: Will Pre-Conditioning Fit?" John
Butler, Merial, Ltd.
- "Legal Issues Facing Stocker Operations," Allie Devine, Kansas
Livestock Association.
- "Dealing with Weight Variation -- The Swine Industry Perspective,"
Mike Tokach, Kansas State University (KSU).
- "Strategic Use of Antibiotics in Stocker Operations," Mike Apley,
DVM, KSU.
The conference, sponsored this year by Merial, begins with registration
at 9:30 a.m., Sept. 15, and concludes with a tour of KSU's new Beef
Stocker Unit facilities, followed by a barbeque.
Registration is $20 before Sept. 5, and $30 at the door. To register, or
for more info, call 785-532-1267.
Triennial Stocker Conference
Aug. 26-27
Auburn, AL
Auburn University Hotel and Dixon Conference Center
The program includes:
- "What's Important for the Stocker Industry," presented by Don Gill,
Oklahoma State University professor emeritus.
- "BVD and Stocker Calves," presented by Bob Larson, DVM, University
of Missouri Extension veterinarian.
- "Forage Options for Southeastern Stockers," presented by Carl
Hoveland, University of Georgia professor emeritus.
* "Factors Affecting Shrink," Ken Coffey, University of Arkansas.
- "Priced to Profit," presented by Walt Prevatt, Auburn University
(AU) Extension economist.
- "By-product Feeding," presented by Darrell Rankins, AU Extension
nutritionist.
The conference begins with registration at 7:30 a.m., Aug. 26 and
concludes with hands-on demonstrations Aug. 27. Registration is $50. For
more info, or to register, contact Darrell Rankins at 334-844-1546 or
rankidl@auburn.edu; or download the registration
form at www.auburn.edu/~rankidl/.
Wheatland Stocker Conference
Aug. 26
Enid, OK
Cherokee Strip Conference Center
Hosted by Oklahoma State University, this year's program includes:
- "Keeping Your Stocker Enterprise Profitable," presented by Jay
O'Brien, managing partner of O'Brien Ranches and J.A. Cattle Co., TX.
- "Evidence-based Approach to Stocker Health Issues," presented by Dan
Thomson, Mike Apley and Brad White, Kansas State University.
- "Cattle Price Outlook and Issues Impacting the Beef Industry,"
presented by Derrell Peel, Oklahoma State University (OSU).
- "OSU Wheat Pasture Research," presented by Gerald Horn, Oklahoma
State University.
The conference begins with registration at 8:30 a.m., and is provided as
a free educational opportunity, including a complimentary lunch. For
more info or to register, contact Greg Highfill at 580-237-7677 or ghighfi@okstate.edu. Pre-registrations are due by
Aug. 23.
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Markets
Market Steady -- Carcass Weights
Climb
Depending on whether you view the snuff can as half
empty or half full, last week was either a fed-cattle marketing victory
or the harbinger of tougher times. Feedlots were able to hold their
ground at $79-$79.50 (with a few $80 price tags in the Southern Plains),
and show lists were windrowed following a couple of slow marketing
weeks. On the other hand, slaughter weights are at their highest since
late last fall, and beef demand remains less steamy.
For perspective on carcass weight, the Livestock Marketing Information
Center says average dressed weights for the firsts six months of 2005
are 11 lbs. higher, at 801 lbs., than last year.
Moreover, the market isn't offering much incentive to move them quicker
-- USDA pegs last week's feedlot losses as $25-$75/head.
Despite that and the $100/head losses feedlot managers are buying at
current prices for incoming feeder cattle, according to Agricultural
Marketing Service reporters, calves and feeders held fairly steady for
the week. Moreover, the Cattle On Feed report was neutral to friendly
with on-feed numbers Aug. 1 at 102%, July placements down 2% from last
year, and marketings even.
The summary below reflects the week ended Aug. 19 for Medium
and Large 1 -- 500- to 550-lb., 600- to 650-lb., and 700- to 750-lb.
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. |
| TX | 26,400 | $116.31
| $109.14 |
$113.34 |
$113.77 |
$105.72 | $104.224 |
| MO | 24,800 | $126.46 | $120.98 | $112.06 | $119.02 | $114.24 | $107.61 |
| OK | 23,500
| $130.63
| $118.93 | $113.13 | $114.68 | $114.24 | $106.04 |
| KY* | 21,500 | $113-124 |
$110-120 | $95-1045 | $106-116 | $95-1063 | $90-995 |
| AL | 15,600
| $115-1221 | $105-1133 |
$100-106 |
$107-116 |
$96-1043 |
$90-985 |
| KS | 12,000 | $129.85 | $124.21
| $116.74 | $124.45 | $114.74 | $109.25 |
| AR | 11,800
| $118.44
| $111.43 | $104.43 | $110.80 |
$104.15 | $98.49 |
| TN* | 9,800 | $114.10 | $109.87 | $106.00 | $107.24 | $102.10 | $94.99 |
| GA* | 9,400 | $105-112 |
$97-111.50 | $90-106 | $100-118 | $93-117 | $85-1024 |
| NE | 8,900 | $138.66 | $127.01 | $117.50 | $127.57 | $112.99 | $113.13 |
| FL* | 8,200 | $106-121 |
$100-110 | $95-102 | $103-119 | $98-101 | ** |
| MS* | 7,700 | $110-1201 | $100-1103 | $98-100 5 | $90-1001 |
** | ** |
| LA* | 5,600 | $111-121 |
$106-1162 |
** | $108-114 |
$100-1102 | ** |
| Dakotas | 5,600 | ** | * $124.354 | $117.38 |
** | $110-$116.554 | $111.04 |
| Carolinas* |
5,100 | $101-116 |
$95-113.903 | $89-109.855 | $97-110 | $88-1023 | $80-92 5 |
| WA* | 1,600 | **
| $110.104
| $107.94 | **
| $105.25 |
$102.174 |
| VA | 1,300
| ** | $113.84 | $110.274 |
$108.27 |
** | ** |
| CO | 1,000
| $130.21
| ** |
** | $117.06 | ** | ** |
| NM | 900 |
**
| ** | ** |
** |
** | $102.216 |
* Plus 2
** None reported at this weight or near weight
*** Steers and bulls
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 beef@primediabusiness.com
Joe Roybal, Editor, BEEF magazine, at jroybal@primediabusiness.com
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®MERIAL and RELIANT are registered trademarks and
™TETRADURE and TANDEM are trademarks of Merial. ©2004 Merial
Limited. All rights reserved.
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