Allen’s Update: April 18, 2013

MARKET UPDATE:

5 Area Weighted Fed Cattle Price – Last week’s 5-Area Weighted Fed Cattle live price was $127.16, with Dressed cattle at $202.  The average steer dressed weight was 851 pounds, up 15 pounds from this time last year. 

Wholesale (Boxed Beef) prices were down from last week with USDA Choice beef trading at $189.87, down $1.42 from the week prior.  USDA Select beef traded at $184.12, down $4.17.  The Choice/Select spread was $5.75. 

U.S. Beef Exports trended down in February 2013, down 2.5% compared to the same period in 2012.  The primary reason for the decrease in exports appears to be the stronger dollar. 

The national beef cow inventory was 29.3 million head on January 1, 2013.  That is down 2.9% from January 2012 and down more than 10% from 2006.  Beef cow numbers have now declined 15 of the last 17 years.  Beef cow slaughter was down 12% in the first six weeks of 2013, but has now picked up significantly. 

Feeder and Stocker cattle traded sharply lower last week, continuing the up and down ride that the industry has experienced over the past several weeks.  Calves and Stockers traded $4 to $8 lower with Feeders trading mostly $5 lower.  Factors include the rebounding corn market, continued losses in Fed cattle, and lower futures contracts. 

Oklahoma City feeder cattle prices were steady to $3 lower this week with prices for medium and large frame #1 steers: 400-450# $174-$186, 450-500# $175-$179, 500-550# $166-$175.50, 550-600# $146-$180, 600-650# $141-$169, 650-700# $138.50-$154.50, 700-750# $139.50-$146.75, 750-800# $136.50-$140, 800-900# $121.50-$137, and 900-1000# $117.75-$125/cwt. 

Cattle feeding margins declined last week with losses averaging $7 per head more than the week prior.  Average feedyard losses were $81.35 per head.   A year ago, fed cattle sold for $121.47 with losses of $78.62 per head.    

Average Packer margin declined $22 per head last week with packers losing an average of $66.79 per head.    

Industry Updates:

A recently released United Nations report stated that coal-fired power plants in Asia and cattle ranches in South America were the most damaging businesses for the global environment.  The report indicated that the hidden costs of these activities exceeded the value of their production.  The report is titled “Natural Capital at Risk – The Top 100 Externalities of Business”.  The report claims that global production of cement and steel, to agriculture, forestry, fisheries, mining, and oil & gas exploration combined to create environmental damage totaling $7.3 trillion annually.  The study was conducted by the Economics of Ecosystems and Biodiversity (TEEB) coalition and was funded by the United Nations, World Bank, and various businesses and conservation groups.  The estimated damage due to cattle ranching in South America was mainly attributed to ranching in cleared portions of the Amazonian rainforest.  The study determined that damages to water supplies and the deforestation cost $353 billion.  The authors stated that this created opportunity for “greener” ranching, power generation, etc.  

A new documentary titled, “American Meat”, opened in select New York Theaters last weekend.  The documentary claims to present a “pro-farmer” look at livestock protein production in the U.S.  The film had previously aired at University and Future Farmers of America chapter screenings.  The director, Graham Meriwether, states that his aim was to take an “even-handed look at animal husbandry, contrasting feedlots and confinement operations with grass-based farms, with the caveat that the local food movement has grown significantly nationwide, but asking the question if local food production could feed us all”.  The New York Times stated in a review that the film was better suited for a class than a cinema.  The director says that the documentary was inspired by Michael Pollan’s “The Omnivore’s Dilemma” and by a visit to Polyface Farms. 

This may come as a surprise, but even though per pound retail beef prices are spiraling upward, volume beef sales in foodservice rose 1.8% in 2012.  This outpaced sales growth for the entire which stood at 1.5%.  The study was conducted by the Foodservice Volumetric Study and reported by the Cattlemen’s Beef Board.  The Foodservice study annually surveys 1,000 foodservice purchasing executives.  The study points out that ground beef demand at foodservice has been strong and has been accompanied by steady growth in steaks and roasts.  The 2007 to 2009 recession hit overall beef foodservice sales hard with $3 billion in lost sales.  However, since 2010, beef wholesale sales have increased by $8.5 billion.  According to the report, beef wholesale purchases were nearly $33 billion in 2012. 

According to Professor Per Pinstrup-Andersen at Cornell University, we are producing more than enough food globally to feed the world’s growing population, but global food policies and politics are creating significant impediments to actually getting people fed properly.  Pinstrup-Andersen is the 2001 World Food Prize Laureate and recipient of numerous awards for teaching, research, and education.   The United Nations Food and Agriculture Organization (FAO) estimates that global food demand will increase some 70% over the next 40-50 years.  Pinstrup-Andersen believes that growth in food production is doable and that global food prices will be relatively stable, even though there will be periods of price volatility.  He noted that food prices have been quite volatile since 2007, but that inexpensive food is still available.  He stated that a major problem is the loss of 2.9 quadrillion pounds of food annually through the distribution system.  That amount alone would easily feed another 2 billion people.  This loss could be minimized through better political policies and management.  Issues that can impact global food prices and availability include ongoing climate challenges, governmental policy, market speculation, reduction of global grain stores, and use of food grains in biofuels. 

A recent article in the E-Version of the Corn & Soybean Digest illustrates the impact of cover crops, reduced tillage and no-till practices on soil erosion.  After what was described as a “gentle rain” of ¾ inches fell overnight, Darin Williams, Waverly, Kansas, collected samples of runoff from row crop field ditches.  All the samples were collected from a radius of less than a mile and from the same soil types.  The picture below shows the results of his collections.  The jar on the left hand side contains a collection from a full tillage field that had no fall tillage and corn residue was left and grazed for 60 days by cattle.  No cover crops were planted.  The middle jar represents collection from a field that has been in no-till for many years, but no cover crops were planted and the 2012 corn was baled.  The right hand jar came from Darin William’s field that was managed for the last three years with no-till corn, soybeans, and wheat and planted with cocktail cover crop mixes.  His cattle were grazed on the cover crop for 60 days last fall.  The cover crop cocktail included purple top turnip, tillage radish, cereal rye, crimson clover, common vetch, flax, spring barley, and oats.  Williams stated that his no-till/cover crop practices have significantly improved his soils’ water management, including improvements in water infiltration and retention. 

http://cornandsoybeandigest.com/conservation/tillage-increases-soil-erosion-see-yourself