Stunning Summer Rally Continues

The live cattle and wholesale beef markets continue their stunning summer rally. A light spot market trade drives daily cutout values sharply higher. Packers in turn buy cattle $4-5 per cwt hihger and dressed than the week before in a moderately active Wednesday trade. Prices average read full article

Market Strength Remains Summer Surprise

The continued strength of live cattle prices remains this summer’s biggest market surprise. An active trade Wednesday sees cash prices advance $1-2 per cwt live on the southern Plains and $2-3 dressed in the Corn Belt. The higher than expected prices are mainly because feedlots remain extremely current in their marketings. Steer and heifer carcass weights also remain, respectively, 13 lbs and 12 lbs below this time last year. Weights are also seasonally increasing slower than normal because of extreme heat on the Great Plains. So packers need more cattle to compensate for the lighter weights.

Meanwhile, wholesale beef demand is better than expected and export sales are well above last year’s levels. Wednesday’s cattle price rally came despite sharp declines in the stock market as cattle were trading. This suggests that cattle supply fundamentals are now solid enough to withstand more of the negative impact of outside markets than a year ago, say analysts. But prices will still be influenced by the U.S. economy’s performance and in particular unemployment levels, they say.

Last week began with prospect of steady money for live cattle. But spot market boxed beef prices advanced sharply Monday and Tuesday, which pushed the August live cattle contract up 60 points. Packers raised their bids Wednesday and an active trade resulted in all regions. Texas had the highest prices, at an average $94.79 per cwt., with Colorado prices at $94.74. Then came Nebraska at $149.86 dressed or $94.46 live and Iowa-southern Minnesota at $148.88 dressed or $93.76 live. Kansas prices averaged $93.63.

Market-ready supplies of cattle might be tighter than expected into September because of premiums in the deferred futures, say analysts. Some cattle will be moved back to capture the additional premiums, says Andrew Gottschalk, HedgersEdge.com. This will tighten available offerings of fed cattle in the latter part of August, and cash cattle could trade as high as $98, he says. Meanwhile, the Choice cutout advanced $3.59 per cwt Friday through last Thursday. This was its highest daily value since July 28. Packers appeared to ration the amount of beef available on the spot market and were able to force buyers who hadn’t covered all their Labor Day needs to pay higher prices, say analysts.

Live cattle by-product values also advanced last week to their highest weekly level since the first week of May. The values looked like averaging $10.78 per cwt or higher after they rose to $10.87 Thursday. This weekly average would make them 19.4% higher than the same week last year. Values the week before last were 23.8% higher than the same week last year. (Source Cattle Buyers Weekly)

 

Down Go the Cattle Numbers - Again –

Chris Hurt, Extension Economist, Purdue University

The nation's beef herd continues to decline. After several years of financial difficulty, producers show no interest in rebuilding the herd. As a result, beef supplies will continue to decline and prices will remain strong for several years to come. On the down side, however, beef consumption per person will lag and other animal species will gain larger market share in coming years, especially chicken.

The USDA estimates that beef cow numbers as of July 1, 2010 dropped to 31.7 million head, a decline of two percent from a year ago. Milk cow numbers read full article

 

Europe  

MEPs want to ban foods from cloned animals

 

Members of the European Parliament (MEPs) voted July 7 to ban food products derived from cloned animals. The vote at the second reading of the new novel foods legislation came during a plenary session of the European Parliament in Strasbourg, France. "A clear majority in the European Parliament supports ethical objections to the industrial production of cloned meat for food," said Dutch MEP Kartika Liotard.  "Cloned animals suffer disproportionately highly from illnesses, malformations and premature death.  MEPs have been calling for proper regulation for years.  It's high time the commission listened to the European Parliament and citizens on this issue," Liotard, who was responsible for steering the vote through Parliament, added.  SOURCE:- US FEEDSTUFFS MAGAZINE, JULY 12, 2010

 

 

 

North America

Cattle inventory in the US is the lowest on record for July 1

Total cattle and calves in the US for July 1 were estimated by USDA at 100.80 million head, 1.2% lower than one year ago and the lowest on record for July. The number was the level that analysts, on average, expected. Beef cows and heifers that have calved numbered 31.7 million head on July 1. The Daily Livestock Report says that this number, too, is the smallest July 1 number on record and smaller than any January 1 inventory since 1963. It is in line with beef cow slaughter that is up 12.7% thus far in 2010. The calf crop, of 35.4 million head read full article

Japan - More concerns over Foot and Mouth
Saturday, 10 July 2010

Prized for its tender, marbled texture and succulent flavor, Kobe beef is a delicacy that can cost 19,000 yen ($200) for a slab of steak at some Japanese restaurants.

But cattle farmers near the central city of Kobe are worried an outbreak of foot-and-mouth disease in the southern prefecture of Miyazaki, another key beef-raising region that often supplies calves to Kobe breeders, could spread to them as well read full article

 

Fiasco Might Damage Australian Beef Industry

AUSTRALIA’S beef industry faces a public relations nightmare that might damage domestic beef consumption and hurt its exports. The fiasco is over the Australian government’s decision to start accepting beef from countries that have had BSE cases. The decision, which took effect March 1, became known last November and set off protests from fringe producer groups. They solicited support from state politicians and even a shock-jock DJ to whip up the issue. The result has been read full article

CATTLE BUYERS WEEKLY

CAB And GeneNet Offer Added Premiums

MORE Angus genetics in the national herd have helped boost the number of carcasses that grade USDA Choice. This, as previously reported, has reduced quality premiums for producers. But there are other ways those with Angus-based cattle can get premiums for their cattle. One way is to market them to the Certified Angus Beef (CAB) program. Packers first started paying premiums for CAB-qualified cattle in 1997-98. Cumulative grid premiums by the end of 2009 totaled nearly $300M and they keep growing at a rate of about $25M per year, says CAB.

That’s the five-year average, according to a January 2010 CAB survey of leading CAB-licensed packers. The average payout of $98,000 per working day for the last three years shows the continuing relevance of CAB as a producer target, says CAB’s Brent Eichar. Although average CAB premiums through all grid and formula selling have declined a bit, some price grids pay $5 per cwt in premiums, it says.

CAB’s survey included Tyson, Cargill, JBS USA and National Beef. The CAB premiums do not include those for yield grade, Choice over Select, Prime over Choice, source and age-verified or cash live bonuses often paid for expected CAB acceptance. Licensed packers through the years have also been the source of CAB’s funding, based on fees that average two cents per lb of CAB product sold. That’s a cumulative $167M in commissions on 8.3 billion lbs sold in the life of the program, says CAB.

The fact that cattle keep earning premiums says the industry’s herds continue to improve, says Clem Ward, professor emeritus at Oklahoma State University. If packers are paying premiums above the average cash price, it suggests premiums are exceeding discounts. One might argue it means the industry is moving toward desired quality cattle, or moving away from those discounted by the marketplace, he says.

GeneNet, based in Hays, Kan., has paid producers more than $17M or $17.17 per head in premiums on 1M-plus cattle since the late 1990s. GeneNet founder-operator Ken Conway has worked with more than 2000 producers and feeders of high-quality cattle. GeneNet started with Angus-based cattle and negotiated a progressive pricing system that helped seedstock producers channel genetics from their customers into a premium market while getting feedback on harvest results.

All GeneNet cattle go through JBS USA plants in Greeley, Colo., Grand Island, Neb., or Dumas, Texas. Like all marketing grids, this one awards premiums and discounts from a base price. Premium Choice and Prime cattle earn rewards, as do Yield Grade (YG) 1 and 2. Select grade animals are discounted by the Choice-Select spread. More discounts are calculated for YG 4s and 5s, Standard and Commercial grade cattle or other outliers. Apart from the premiums, producers also have the information they need to add still more value in the future, says Conway.

Fiasco Might Damage Australian Beef Industry

AUSTRALIA’S beef industry faces a public relations nightmare that might damage domestic beef consumption and hurt its exports. The fiasco is over the Australian government’s decision to start accepting beef from countries that have had BSE cases. The decision, which took effect March 1, became known last November and set off protests from fringe producer groups. They solicited support from state politicians and even a shock-jock DJ to whip up the issue. The result has been a national media frenzy the past two weeks.

The hysteria about the issue might seriously hurt beef sales in Australia for the next six months, says top industry writer Jon Condon of the Queensland Country Life. The main industry groups unfortunately did not handle the issue very well when it first emerged. The issue got out of control when groups such as the Australian Beef Assn began to exploit it, he says. ABA has been the most vocal in making it a national issue, at the same time as beef producers are frustrated about low cattle prices and the impact on beef exports of the high Australian dollar. The tragedy is that none of the opposition to the import decision is based on any facts but it will erode confidence in Australian beef. Opponents of the BSE decision have not put forward a single argument based on science, he says.

After imposing a ban in 2001, Australia agreed to start accepting beef from countries with “BSE minimum risk” status conferred by the World Organization of Animal Health. Under the new rules, only imports of muscle meat or products of muscle meat will be allowed in. Australia will also require exporters to meet or exceed its traceability standards. Virtually all the outrage over the decision has focused on possible imports of U.S. beef. Japanese beef is scarcely mentioned although Japan has had many more BSE cases than the U.S.

That’s because there are claims the U.S. might export large quantities of beef, says Condon. ABA claimed the U.S. might send 50,000 MT per year. That’s absurd and was a fabricated number, he says. The U.S. in all the years before 2003 never sent more than 40 metric tons of beef to Australia per year and usually far less than that, he says. Another twist is that nearby New Zealand started accepting U.S. beef three years ago. Exports have totaled just 29 MT over the three years. The irony is that Australia and New Zealand share a common foods standards body.

The issue might hurt the reputation of Australian beef at home and abroad, say Condon and others in Australia. A Feb 27 meeting in Armidale, New South Wales, exemplified how the issue has been whipped up. The meeting of 800 producers was promoted as a new direction for Australian beef. But it quickly dissolved into a downward spiral of grievances, says The Land newspaper. Producers blamed dwindling returns, poor prices, retail margins, bureaucracy and the federal government for plunging their industry into crisis. The chief organizer demanded the sacking of the top representatives of Australia’s main red meat industry bodies. Meat and Livestock Australia managing director David Palmer, who attended the meeting and spoke on a panel, called the meeting a disgrace, says The Land.