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News
January Placements Way Down
"The stage is clearly set for historically strong
fed-cattle prices in 2007. In fact, for calendar year 2007, fed-cattle
prices could easily exceed the record set in 2005," say the folks at the
Livestock Marketing Information Center (LMIC).
That observation is in response to USDA's National Agricultural
Statistics Service monthly Cattle on Feed report Feb. 24, which
indicates the first year-to-year decline since October 2005 (down 3%
from Feb. 1 last year).
According to LMIC, harsh winter weather in the High Plains
cattle-feeding region in January and surging corn costs limited
placements of cattle into feedlots; January placements were 23% lower
than a year earlier. Year-to-year declines in feedlot placements have
now been posted for five consecutive months. The largest percentage
declines in placements during January were reported in New Mexico, Texas
and Kansas.
"Reported feedlot marketings for January were even lower than expected,
at 2% above a year ago, given U.S. steer and heifer slaughter for
January was nearly 5% above a year ago," explain LMIC analysts. "With
one less slaughter day in January 2007 vs. 2006, and after adjusting for
U.S. imports of Canadian steers and heifers, most market watchers
expected daily average marketings to be about 1% below a year ago. But
that number came in at 3% below 2006. Some of that difference may have
been due to sales of cattle by unreported feedlots (under 1,000-head
capacity), which are mostly in the Midwest states as harsh winter
weather hammered High Plains feedlots."
Meanwhile, Derrell Peel, Oklahoma State University Extension livestock
marketing specialist, says placements will remain limited due to tight
feeder supplies, especially limited supplies of the heavy feeder cattle
that feedlots prefer right now, and high feed costs.
"Demand for grazing cattle will be strong this spring unless severe
drought conditions develop over the next couple of months," Peel says.
"Feeder prices will likely stay strong through the first half of the
year but are subject to shocks due to drought potential and corn market
volatility."
National Stocker Award Competition
Begins
Mark April 1 on your calendar. That's the deadline for
submitting an application for this year's National Stocker Award (NSA)
competition.
If you're unfamiliar with the NSA, it's sponsored by BEEF
magazine and open to any stocker or backgrounding operation that derives
the majority of its cattle-based income from the stocker and
backgrounding businesses. You can nominate yourself, or someone else.
The overall winner wins $10,000 in cash, and two other divisional
winners receive $2,500 in cash. For more info or an application, go to
www.nationalstockeraward.com.
For a hard-copy application, contact Marilyn Anderson at 800-722-5334,
ext. 14710.
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© 2006 Merial Limited. All rights reserved.
Stocker Health
Health Management Barometers
"Any good animal health program is in constant
evolution, with improvement based on the cycle of implementation,
evaluation and change," says Brad White of Kansas State University's
(KSU) College of Veterinary Medicine. "Evaluation is based on good
records including diagnosis evaluations, treatment response rates,
disease rates and necropsy findings."
At the KSU Stocker Conference last fall, White explained that keeping
accurate and complete stocker-health records is the requisite foundation
for gauging how well or how poorly the stocker-health program is
working. Some measures he shared:
- Evaluation of number of animals pulled from the pen is an
important tool for continual improvement of diagnosis techniques. Rectal
temperature can provide a quick, general guide for assessment of pulling
patterns. A good rule of thumb is 5-10% of the pulls with a rectal
temperature of 104º F. or less.
If more than 10% has a lower temperature, there may have been too many
animals pulled or the diagnosis may not be infectious respiratory
disease. If all the pulls have a rectal temperature of 105º F. or
higher, then it's likely there are more animals in the pen that need to
be segregated and treated. If only a handful of the animals pulled for
treatment have a fever, we may have misdiagnosed illness in some of the
animals and pulled too many.
- Pen morbidity and mortality rates are good gauges for level
of illness within the group of calves. These rates can be benchmarked
against other groups of similar type animals on the farm and through the
industry to evaluate health performance.
- First-treatment response rate is an important number when
evaluating efficacy of the initial treatment regime. This number is
calculated by dividing the number of animals retreated by the number of
first pulls. This reveals the retreatment rate; conversely
first-treatment response rate is 1 minus the re-treatment rate. Ideally,
the first-treatment response rate should be greater than 80%. The rate
may be below the target due to: ineffective treatment selection,
misdiagnosis of the disease condition, or delayed intervention (failed
to notice until too late).
- Treatment interval is the time between the first and second
treatment (although it may be calculated using any two successive
treatments). The average treatment interval is influenced by the drug
selected at the first treatment and the presence or absence of a
post-treatment moratorium. Excessively long treatment intervals on a pen
basis may indicate disease clearance and re-infection. Long treatment
intervals on individuals may indicate a calf that never fully recovered
from the initial insult and wasn't retreated until disease had
progressed.
- Case fatality rate (CFR) is also a good method to evaluate
both disease identification and treatment regime. CFR is calculated by
dividing the mortality number by the number of animals treated. Ideally,
the CFR is in the 6-8% range depending on the type and risk level of the
animals. A higher CFR could indicate poor treatment selection,
misdiagnosis of disease, or delayed identification of sick animals. A
low CFR could mean that too many calves were pulled and treated and the
health program is economically inefficient.
For more of White's insights visit www.beefstockerusa.org and
look for the "2006 KSU Beef Stocker Proceedings."
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Weather And Crops
Higher Costs Pushing Grazing
Rates
In Texas, rising maintenance costs have prompted
landowners to take advantage of healthy cattle prices and push grazing
rates up more than 6%. Higher steel prices have nearly doubled fencing
costs over the last 18 months, says Richard Conner, a Texas A&M
University economist in College Station.
Heading north into Oklahoma, grazing rates are flat to nominally higher.
Cattlemen are paying an average of 34¢/lb. of gain for young
lightweight stocker cattle on winter wheat pasture during the
mid-November to March season, says Roger Sahs, an Oklahoma State
University economist in Stillwater.
Graze-out wheat pasture, in which cattle remain on fields into May, is
especially scarce. Strong wheat prices are prompting landowners to pull
cattle off wheat fields before the first hollow-stem growth stage to
harvest their wheat for grain. This has helped push graze-out rates up
4¢ to an average of 37¢/lb. of gain.
Leases for native grass in Oklahoma are essentially unchanged at
$9.80/acre. Bermuda grass pasture -- located mostly south of Interstate
40 -- is averaging $15/acre, up $2.
Lease rates are also flat in Missouri. Pasture leases range from
$10-25/acre, depending on forage quality, reports Richard Sullivan, a
Farm Credit Services appraiser in Springfield. Better-quality land
suitable for hay is renting for $35-40/acre.
Mark Harmon, who runs 160 cows on leased pasture east of Joplin, MO,
says fescue pasture is renting for $35-40/acre, also unchanged from a
year ago.
The Bureau of Land Management (BLM) and the Forest Service are cutting
the federal grazing fee for Western pasturelands 13.5% this year to
$1.35/AUM from $1.56/AUM last year. The new fee, which took effect March
1, is the lowest rate allowed under the current formula. BLM says rising
production costs, especially higher fuel prices, outweighed strong
cattle prices and higher private lease rates. The fee applies to more
than 26,000 grazing permits and leases on public land administered by
the two agencies.
At the state level, grazing fees on state-owned trust lands are flat to
modestly higher. In Oregon, 2007 lease rates are up 3.6% to $5.80/AUM
for the 638,000 acres of arid to semi-arid state rangeland in central
and eastern Oregon. Typical privately-owned irrigated pasture in Klamath
County, OR, rents for $22.50/AUM. County Assessor Reg LeQuieu expects
2007 rates will rise to about $24/AUM.
In Colorado, state grazing leases are up 5.5% and range from $7.64/AUM
to $10.22/AUM.
In neighboring Nebraska, grazing rates on state-owned land are generally
flat, despite USDA's reported 6.7% average increase for private leases.
State leases for sandy soil pasture range from an average $21/AUM in the
western Sand Hills, to $28/AUM in the eastern Sand Hills.
The extended drought has prompted continued cuts in stocking rates,
reports Ron Vance, field supervisor with the Nebraska Board of
Educational Lands and Funds.
Heavy herd liquidations over the last 6-9 months in the south-central
and southern Plains have left some uncertainty in private lease rates.
In mid-February, local observers expected private rates to hold steady
at $18-24/AUM in eastern Wyoming and the western Nebraska Sand Hills,
and $22-30/AUM in the eastern Nebraska Sand Hills.
Still, private rates could soften because fewer cows are competing for
grass, notes Lex Madden, manager of Torrington Livestock Markets in
Torrington, WY. Western Nebraska, western South Dakota and most of
Wyoming remain in a moderate to severe drought.
-- Mike Fritz, Mercator Research LLC, Monona,
WI
Issues
Pasture Lease Rates Continue
Climb
Say this for the widespread nature of the lingering
drought; it likely lowered the ceiling on escalating grazing rates.
As it is, a dearth of forage and historically high cattle prices pushed
private grazing rates up 4.5% this year to $13.80/animal unit month
(AUM) across the Western U.S., according to the latest USDA January
Cattle Survey. That follows a modest 0.8% gain last year.
According to Michael Fritz of Mercator Research LLC in Monona, WI, last
year's dry weather, high corn prices and high energy costs stalled the
rebuilding of the beef herd, which remains 6.3% under the 1996 cyclical
peak of 103.5 million head. The number of beef cows in Texas, Missouri
and Oklahoma, which represent nearly 29% of the U.S. beef cow herd, was
down 4% in January compared to a year ago. Beef cow replacements in
these three states contracted 7%. The result: 216,000 fewer beef cows
and replacement heifers are competing for pasture than a year ago.
Fritz is also editor and publisher of Farmland Investor Letter, a
monthly newsletter providing farmland market insight for farmland
investors and managers (www.farmlandinvestorletter.com).
USDA's survey reflects state averages. Local rental rates vary widely
based on such factors as forage quality, proximity to roads,
availability of stock water, size of the acreage, lease term and
landowner services. Charges for counting, checking health and water,
providing salt and minerals, and maintaining fences vary with each
situation.
With that said, pasture rates climbed the most in South Dakota,
California and Nebraska, where rates are up an average 10.3%, 7.1% and
6.7%, respectively, over last year.
Conversely, the January survey says grazing rates declined in Oregon and
Washington. However, interviews with market participants in Oregon
indicate grazing leases are steady to up 3.5%.
The protracted drought across the Southwest, Plains, Wyoming and
southwest Missouri continued to counter landowner efforts to seek higher
pasture rents, says Fritz. Lease rates were mostly unchanged in these
states.
South Dakota is the exception. Here the strong cattle market and a tight
grass supply due to insufficient rainfall provided much of the momentum
behind a more than 10% increase to $20.30/AUM.
The run-up in corn prices is also believed to be indirectly pushing up
grazing rates in eastern South Dakota. Cattlemen are feeling pressured
to pay up for grass pasture since grass serves as a substitute for
high-priced corn, asserts Matt Diersen, a South Dakota State University
economist in Brookings.
These cost pressures continue to narrow the lease rate gap with
Nebraska, which leads the western states at $24/AUM.
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Events
April 1 -- Applications due for BEEF
magazine's 2007 National Stocker Award -- for more details and an
application, see www.nationalstockeraward.com;
for a hard copy of the application, contact Marilyn Anderson at
BEEF, 800-722-5334.
Markets
Fed-Cattle Prices Jump
"The high price of grain is virtually the only element
holding cattle markets from making huge strides," say analysts with the
Agricultural Marketing Service (AMS). "Last summer's drought, followed
by a harsh fall and winter, has put U.S. cattle numbers at a low point
that hasn't yet been fully realized. But most cattlemen can't help but
think that we'll be short of cattle at every level. We've culled too
many cows and lost too many calves not to make an impact; plus, all of
these cattle are at lighter weights than normal."
Certainly, the markets are starting to reflect this notion. Feeder and
stocker cattle sold firm to $3 higher last week. If they follow the
late-week rally in fed-cattle prices, they'll move higher again this
week. Direct-fed cattle jumped $3-4 to $93-94 with a few in the Southern
Plains bringing $95. Dressed sales in the North were $5 higher at mostly
$150.
Plus, AMS reporters explain, "Packers are reportedly operating at a good
margin and the onset of spring normally sees an improvement in consumer
beef demand as warmer weather promotes grilling. This year could be
especially good for beef as Daylight Savings Time has been moved up
three weeks, giving folks an extra hour in the evening to cook a steak
or go out for one before dark."
The summary below reflects the week ended March 2 for Medium and Large 1
-- 500- to 550-lb., 600- to 650-lb. (calves), 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 | 43,700
| $120.80
| $111.02 | $101.77 | $107.09 | $98.54
| $93.97 |
| MO | 42,800 | $124.13 | $110.48 | $100.29 | $107.33 | $97.11 | $91.95 |
| KY* | 28,700 | $103-113 |
$93-103 | $86-945 | $86-96 | $81-913 | $76-865 |
| TX | 24,200 | $117.03 | $106.15 | $101.34 | $105.06 |
$97.41 | $94.02 |
| Dakotas | 18,000 | $121.72
$119.182 |
$110.53
$107.40 | $100.72
$99.10 |
$110.07
$111.84
| $102.76
$96.25 | $93.45
$93.43 |
| NE | 14,400 | $127.62 | $111.47 |
$103.14 | $108.97 |
$99.76 | $94.49 |
| AL | 13,300 | $111-119 | $98-106 | $96-1024 | $100-110 | $87-95 | $83-88 |
| TN* | 11,800 | $111.00 | $96.45 | $90.57 | $95.24 | $86.03 | $83.35 |
| KS | 11,400 | $125.71 | $117.19 | $103.61 | $105.59 | $99.36 | $94.99 |
| GA*(***) |
8,700 | $96-117 |
$85-104 | $78-95 | $86-109.50 | $80-94.50 | $78-85 |
| AR | 8,500 | $117.22 | $107.24 | $98.02 | $101.49 | $92.32 | $90.29
|
| Carolinas* |
8,400 | $92-114 |
$82-101 | $75-90 | $80-104 | $78-88 | $74-83 |
| IA | 6,300
| $119.37
| $112.842 | $92.907 |
$105.13 |
$100.452 | ** |
| NM | 6,100
| $121.05
| $103.95 | 97.494 | $99.962 |
$94.50 | ** |
| CO | 5,700
| $125.27
| $118.082 | $99.69 | $107.41 | $98.78 | $91.48 |
| FL* | 5,700 | $92-114 | $82-100 | $82-864 |
$85-100 |
$78-86 | $80-824 |
| WY | 4,500
| $133.08
| $114.02 | $104.33 | $110.30 | $102.92 | $96.79 |
| MS* | 4,500 | $105-115 | $90-1003 | $80-905 | $90-1001 |
$80-903 | ** |
| MT | 4,200
| $125.42
| $111.91 | $96.57 | $102.82 | $95.84 | $91.91 |
| LA(ND) | 3,200 | $105-119 | $100-1152 | ** |
$95-112 | $90-1092 | ** |
| VA | 1,500
| $111.612 | $98.334 |
$90.99 |
$91.612
| ** | ** |
| WA* | 1,300 | ** | ** | ** |
$104.27 | ** | ** |
* Plus 2
** None reported at this weight or near weight
(***) Steers and bulls
(?) As reported, but questionable
NDNo Description
1500-600 lbs.
2550-600 lbs.
3600-700 lbs.
4650-700 lbs.
5700-800 lbs.
6750-800 lbs.
7800-850 lbs.
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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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