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News
U.S. Beef Goes Truly Global
It's one thing to export beef out of the U.S. or import
beef products into the country. An entirely new dimension emerges
though, when one of the world's largest beef processors -- a non-U.S.
entity -- enters the U.S. beef-harvesting business through
ownership.
Just like that, on May 29, J&F Participações, S.A. (JFP),
which owns 77% of Brazil's JBS, S.A. (JBS), Latin America's largest beef
processor, became the third-largest beef packer in the U.S. by
purchasing Swift & Company (Swift), the world's third-largest processor
of fresh beef and pork products.
The transaction value of $1.4 billion includes $225 million in cash for
all Swift stock held by HM Capital and Booth Creek Management
Corporation, its investment partner in the September 2002 acquisition of
Swift from ConAgra Foods, Inc., and the assumption by JFP of $1.2
billion in Swift debt plus all transaction-related expenses.
"This is a win-win transaction for everyone involved," says Edward
Herring, an HM Capital partner. "The proceeds from this transaction,
coupled with our earlier leveraged recapitalization of Swift, will
together produce a very attractive return for our investors. For JFP,
the strategic combination of Swift and JBS -- industry leaders with no
market overlap -- will create the world's leading beef processor. The
transaction also will benefit Swift's customers, employees and business
partners by creating a combined Swift-JBS enterprise in which Swift will
retain its organizational identity, customer and supplier relationships
and substantially all of its employees and leadership team while
becoming part of the world's largest beef processor."
Apparently, the new owner intends to leave the current Swift structure
pretty well intact. That and JBS' lengthy history in the business -- JBS
began operations in 1953 -- has left many producers in the U.S. feeling
neutral-to-positive about the transaction.
The sale also means the U.S. may end up with more packer competition.
Smithfield Foods -- long rumored to be a suitor for the Swift assets --
has moved slowly in its announced plan to construct a new beef packing
plant at Texas County, OK, in partnership with ContiGroup Companies,
Inc. (announced last October). Perhaps the move by JFP will speed up the
process.
Melamine found In Cattle-Feed
Ingredient
If things keep going this way, 2007 may long be
remembered as the year of melamine.
First it was the pet-food debacle that began in March. It was then
extended to pork, poultry and fish feed when it was discovered that pet
food contaminated with melamine -- used widely in the plastics industry
-- had been used in manufacturing some of these livestock feeds.
On May 30, FDA and USDA recalled livestock-feed ingredients contaminated
with melamine and melamine-related compounds. Unlike the earlier
pet-food recalls and recalls related to pet-food ingredients that were
linked to exporters in China, this one appears confined to a single
North American manufacturer.
Within the cattle business, the recalled ingredient -- Xtra-bond,
supplied by Tembec BTLSR of Toledo, OH to Uniscope, Inc., of Johnstown,
CO -- was being used as a binding agent in pelletted cattle feed. Though
that ingredient was recalled, the finished feed made with it wasn't --
due to the low amount of melamine and melamine-related compounds found
in Xtra-Bond. Two other ingredients -- AquaBond and Aqua-Tec II
manufactured by Tembec -- used as binding agents for fish feed were
recalled, as well as the finished feed containing these binding agents.
Tembec BTLSR is a subsidiary of Tembec, Inc., an integrated forest
products company based in Montreal, Quebec.
"Uniscope, Inc. recently informed the Food and Drug Administration that
a sample of resin incorporated into a binding agent for animal feed
tested positive for the chemical compound melamine. Uniscope
manufactures a variety of binding additives for use by feed
manufacturers, including the binding agents, Xtra-Bond and Aqua-Tec II,
where resin is used," explain Uniscope officials. "The melamine in the
resin source comes from its suppliers who added it, without Uniscope's
knowledge or consent, into a resin used by Uniscope to make the
products. These types of resin products have been historically used in
animal feeds... Upon learning of the test results, Uniscope immediately
stopped the manufacturing and delivery of Xtra-Bond and Aqua-Tec II and
notified the FDA of the issue. In addition to cooperating with the FDA,
Uniscope is in the process of notifying its distributors and customers
of the issue."
According to the Uniscope folks, they've received no reports of any
illness or deaths associated with these products.
"In addition, the company has seen no publicly available information
that would lead it to believe that its products pose any adverse
consequences to the health of humans or animals," says a Uniscope news
release.
Founded in 1975, Uniscope voluntarily recalled its products containing
the melamine and melamine-related compounds.
"Melamine is not an approved additive for animal or fish or shrimp feed,
and the companies have stopped adding melamine to the feed products,"
says David Acheson, FDA assistant commissioner for feed protection. "FDA
is advising feed manufacturers and others who mix their own feed not to
use these products and to contact the manufacturers."
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Weather And Crops
Corn on Track -- Drought Deepens For
West-Southeast
"In the Southeast, despite some much-needed
precipitation, mostly along the Atlantic Coast, drought conditions
continued to persist," say reporters from National Agricultural
Statistics Service (NASS). "Likewise, irrigation demands remain heavy
throughout the Southeast, while pastures and summer crops are under
severe stress... In California, pastures remain in poor conditions...
Farther east, a dry pattern continued across the eastern Corn Belt and
the Ohio Valley. Although not a major concern as of yet, the dry weather
has begun to show some stress on pastures and summer crops."
Abundant and unexpected late-spring moisture in the Southern Plains
helped the winter wheat crop but didn't solve the problem, with early
yield coming in below normal.
"Elevator bids are handsome and in the current harvest area they are
averaging near $4.75/bu., but much of this year's crop has already been
rolled up into large hay bales. Some wheat producers feared low yields,
while others simply wanted to stockpile some cattle feed following last
winter's desperate shortage of hay," say Ag Marketing Service analysts.
For the week ending June 5, according to NASS:- Corn --
94% of the crop had emerged, 1% ahead of last year and 6%
ahead of average. 78% is rated Good or
Excellent, compared to 71% at the same time last year.
- Soybeans --
88% is in the ground, the same as last year but 7% ahead of
normal. 70% has emerged, which is 4%
ahead of last year and 14% ahead of the five-year average. 71% is rated Good or better, which is 1% ahead of
last year.
- Winter Wheat --
88% advanced to the heading stage, the same as last year but
3% ahead of average. 53% is rated Good or
Excellent, compared to 27% a year earlier.
- Spring Wheat --
96% of the crop has emerged, which is 2% ahead of last year
and 7% ahead of the five-year average. 85% is rated
Good or Excellent, compared to 69% a year ago.
- Barley -- 95% has emerged, compared
to 91% at the same time last year and 88% for average. 81% is rated Good or Excellent, compared to 74%
a year ago.
- Sorghum -- 54% of the intended acreage is
sown, which is 9% behind last year and 7% behind
average.
- Oats -- 32% of the crop was at or beyond the
heading stage, which is 2% ahead of last year and 1% ahead of
the five-year average. 74% is rated Good of
Excellent, compared to 51% last year.
- Pasture -- 51% is rated Good or
Excellent, compared to 46% last year. 22%
is rated Poor or Very Poor, compared to 25% a year
ago.
States with the worst pasture conditions -- at least 30% of the acreage
rated poor or worse -- include: Alabama
(74%); Arizona (46%); California (97%);
Florida (85%); Georgia (90%);
Kentucky (36%); Mississippi (41%); Nevada (36%); North Carolina (40%);
Tennessee (52%).
On the wet side of the fence, states with the most lush pasture
conditions -- at least 40% rated good or better -- include: Arkansas
(61%); Colorado (70%); Idaho (56%);
Illinois (60%); Indiana (42%); Iowa
(73%); Kansas (60%); Louisiana
(74%); Maine (87%); Maryland
(46%); Michigan (61%); Minnesota (69%); Missouri (42%); Montana (71%); Nebraska (65%); New Mexico
(67%); New York (71%); North Dakota (70%); Ohio (50%); Oklahoma (73%); Oregon (57%); Pennsylvania
(51%); South Dakota (74%); Texas (72%); Utah (40%); Virginia (41%); Washington (78%); Wisconsin (58%); and Wyoming
(45%).
Management
Monitoring Water Access -- Quality
For Gain
The quality of the water livestock drink can have a
major impact on their water intake and weight gain, according to a North
Dakota State University (NDSU) water-quality expert.
"Canadian studies have shown the quality of water accessible to
livestock is directly tied to the amount of forage they consume," says
Roxanne Johnson, an NDSU Extension service water quality associate.
"Improved water palatability increases water and feed consumption, which
is demonstrated as an increased rate of gain."
In fact, Johnson says the Canadian research indicates cattle weight gain
increased 0.33 lbs./day for cattle receiving water treated by either
coagulation/chlorination or aeration, compared to untreated water
consumed directly from a dugout.
Cattle in the study also spent considerably more time grazing and less
time loafing when they had access to fresh water, compared with drinking
from the dugout.
The treatment groups included:- direct access to the dugout,
- water pumped from the dugout to a trough,
- water aerated and pumped to a trough,
- and water coagulated/chlorinated prior to pumping to a
trough.
When researchers pumped water to a trough, they fenced the dugout to
prevent cattle from accessing it. Each treatment allowed cattle to have
full access to a water source.
Research was conducted at the University of Saskatchewan's Termuende
Research Farm by the Western Beef Development Center, Prairie Farm
Rehabilitation Administration, and the research branch of Agriculture
and Agri-Food Canada.
"If the key is increasing water consumption, then producers should
consider palatability of accessible water, too," Johnson says. She
explains some compounds found in water have characteristics offensive to
humans and may contribute to decreased water intake in livestock.
Examples include geosmin, which imparts an earthy odor;
2-methylisoborneol, which is associated with a musty taste; hydrogen
sulfide, which is associated with a rotten-egg odor; chlorine, which has
an offensive smell; and the metals iron and manganese, which give water
a metallic taste and change the color of the water.
"I urge producers to evaluate their watering methods and see if changes
could be made to improve the quality of water provided their livestock,"
Johnson says. "Not only will the lifespan of the dugout be extended
through exclusion of livestock, cattle performance will improve through
improved water quality."
Especially with the ravages of widespread drought, Karl Hoppe, an NDSU
Extension livestock specialist at the Carrington Research Center,
encourages producers to consider whether water accessibility has
changed.
"The lower water table created by last year's drought has exposed
unstable soil," Hoppe says. "The cows and calves are having difficulty
in accessing water."
Karlyle Erickson, an NDSU Extension animal systems agent from Pierce
County, says mud on grazing cattle's legs, bellies and sides are likely
signs that water in ponds or bogs is low or the animals are having
trouble getting to the water.
Moreover, low water levels can affect water quality, which can impact
cattle performance and health, as noted earlier.
Though spring runoff, combined with thunderstorms, has helped recharge
surface water in many North Dakota pastures, Hoppe and Erickson believe
producers should consider permanent solutions to the water supply and
access problem.
"Options to fix pasture water problems are seldom easy or cheap and have
to be thought of as long-term investments," Erickson says. "The best
water-development options will vary by the planned need and use of the
pasture, availability of power, depth and availability of ground water,
cost and a host of other considerations."
According to Hoppe and Erickson, options worth considering
are:- Periodically clean and re-dig ponds and dugouts to improve
their capacity and longevity because cattle going in and out of a dugout
can cause sediment to get into the water.
- Fence cattle out and pump water to a tank to help conserve water,
protect the dugout and enhance water quality.
- Restrict livestock access to the water to a sloped, graveled
area.
- Lay shallow water lines to move water from a good well to dry
pastures. This allows producers to place water taps at multiple
locations for controlled rotational grazing. Lack of water access in
subdivided pastures is the major obstacle to rotational grazing, which
is a practice that can increase stocking rates by 15-20%.
- Drill wells and install freshwater tanks and watering points.
Hoppe points out the last option requires a heavy commitment
of resources. Besides money, producers must consider access to electric
power, well depth and water quality. Hoppe suggests producers consider
wells powered with propane-driven generators, windmills or solar energy
in locations far from electrical power.
Both specialists also recommend that producers check with their local
soil conservation office and Natural Resources Conservation Service
about the availability of cost-share programs and technical assistance.
"Enhancing pasture utilization and grazing management through water
development both addresses immediate needs and enhances economic
opportunities in the future," Erickson says.
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Markets
Market Turns Bearish
"Losses definitely outweighed gains on last week's calf
and yearling markets as a bearish tone fell over the entire cattle and
beef sector," say analysts for the Agricultural Marketing Service (AMS).
"Losses were posted on the CME cattle futures, boxed beef cut-out
values, and the cash fed-cattle market, which lost $2 for the second
week in a row to close at mostly $91."
The strongest feeder demand came from areas near the Northern Plains
feedlot areas as receipts have become seasonally light, say the AMS
folks. They explain northern feedlot operators typically have to look
harder for cattle this time of year, and area farmer-feeders are also in
the market as they clear space in their personal corn bins for this
year's crop.
On one hand, grass pasture conditions are unusually lush across the vast
Plains from Texas up through the Dakotas and Montana, AMS says. On the
other, many parts of the normally wet Southeast continue to suffer
through drought with wildfires burning on what is typically swampland.
The summary below reflects the week ended June 8 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 | 34,000
| $124.56 |
$107.24 | $109.94 | $110.51 | $105.16
| $102.68 |
| MO | 30,900 | $126.66 | $116.04 |
$103.94 | $114.34 | $104.71 | $105.00 |
| KY* | 28,600 | $107-117 | $103-113 |
$98-1085 |
$96-106 | $93-1033 | $86-965 |
| TX | 25,500 | $116.64 | $114.12 | $108.24 | $112.86 |
$106.61 | $101.45 |
| AL | 19,600 | $113-117 | $104-113 | $104-1124 | $100-110 | $93-103 | $88-964 |
| TN* | 16,900 | $113.73 | $107.34 | $98.65 | $102.27 | $98.19 | $89.44 |
| Dakotas | 14,600
South Dakota
North
Dakota |
$134.77
** |
$124.07
** |
$119.84
** |
$121.75
** |
$117.42
** |
$111.27
** |
| GA*(***) |
11,700 | $102-117 |
$95-110 | $85-104 | $94-109 | $88-106 | $84-92 |
| Carolinas* |
10,100 | $100-117 |
$92-113 | $85-102.50 | $87-110 | $86-99.50 | $78-94 |
| MS* | 8,800 | $105-1051 | $95-1053 | $90-955 | $95-105 | $80-903 | ** |
| AR | 8,000 | $116.13 | $108.92 | $99.35 | $105.90 | $100.43 | $96.00 |
| FL* | 6,900 | $97.50-114 | $92-103 |
$89-1004
| $90-111 |
$89-99 | ** |
| KS | 5,100 | $123.70 | $116.10 | $111.77 | $113.42 | $108.30 | $103.64 |
| LA(ND) | 4,500 | $104-120 | $104-1162 | ** | $95-112 | $88-1082 | ** |
| NM | 4,300
| ** |
** |
$101.056 | $101.952 | ** | ** |
| WY | 2,900
| ** |
** | ** | ** | $110.42 | $106.794 |
| IA | 2,800
| $130.39 |
** | $110.25 | $113.91 | $114.78 |
$104.74 |
| VA | 2,200
| $115.072 | $110.45 | $105.33 | $95.09 | $96.05 | $98.86 |
| NE | 2,000 | ** | $126.20 |
$123.95 | $111.322 |
$106.834 | $105.916 |
| MT | 1,900
| ** |
$114.504 |
** | ** | ** | $101.846 |
| WA* | 1,800 | ** | ** | ** |
$103.932 |
** | ** |
| CO | 1,600
| $127.30
| $118.78 | $106.386 | $117.95 | ** | ** |
* 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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Calendar of Events
June 14 -- Kentucky Forage & Grassland Council
Summer Field Day; Mt. Hermon; www.uky.edu/Ag/Forage.
June 14 -- Tennessee beef and forage field day, Blount Unit of
East Tennessee Research and Education Center; 865-974-7201 or knoxville.tennessee.edu/events.
June 20 -- Range monitoring workshop, 10 a.m., Freemont County
Courthouse, Lander, WY; 307-332-1044.
June 20 -- Summer Grazing Field Day, CRP Research and
Demonstration Farm, Corning, IA; 641-322-3184 or 641-322-3116.
June 24-26 -- American Forage and Grassland's Council's annual
meeting, Penn Stater Conference Center and Hotel, State College, PA;
info@afgc.org or
1-800-944-2342 or www.afgc.org.
July 16-20 -- Cattle Industry Summer Conference, Adam's Mark
Hotel, Denver, CO; 303-694-0305 or www.beefusa.org.
Aug. 29 -- 8th Annual University of Nebraska-Lincoln Gudmundsen
Sandhills Laboratory Open House, Whitman; 308-696-6701.
Nov. 7-8 -- BEEF Quality Summit, Holiday Inn Centre,
Omaha, NE; 1-800-722-5334, ext. 14606; or www.beefconference.com.
Dec. 13 -- Alabama Forage Conference, Troy, AL, contact Eddie
Jolley at 334-887-4564, or Don Ball at 334-844-5491.
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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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