Allen’s Cattle Industry Update
5 Area Weighted Fed Cattle Price – The November 30, 2012, 5-Area Weighted Fed Cattle live price was $125.70, with Dressed cattle at $198-$200. The average steer dressed weight is running 874 lbs.
Wholesale beef prices were slightly lower compared to last week, with USDA Choice beef trading at $195.05. USDA Select traded up very slightly at $174.20, putting the choice-Select spread at $20.83.
The most recent Consumer Price Index (CPI) report indicates that beef prices have continued to rise during 2012 while overall food prices have stabilized somewhat. Retail beef prices increased approximately 6.5% in 2012, but this was actually a slower increase than the 10.2% increase experienced in 2011. For 2013, the CPI now predicts an increase in retail beef prices of 3-4%, with an overall increase in all food of 2.5 to 3.5%. Data also show that consumers have started dining out more as the economy improves.
Feeder and Stocker cattle traded firm to $5 higher, with lightweight calves trading erratically at anywhere from $10 lower to $10 higher. The drought continues to keep the market in check with a surge poised to occur when adequate rainfall is available. Slaughter cows and bulls sold from $1 to $3.
Oklahoma City stocker cattle prices were $4 to $6 lower while feeder cattle prices were steady to $2 higher this week with prices for medium and large frame #1 steers: 400-450# $171-$188, 450-500# $159-$165, 500-550# $152.50-$166, 550-600# $145-$159, 600-650# $142-$156, 650-700# $136-$153.25, 700-750# $138.50-$149.85, 750-800# $142-$147.50, 800-900# $140-$149.35, and 900-1000# $132-$139/cwt.
Cattle feeding margins improved another $20 last week with fed cattle losses now averaging $46.24. One year ago fed cattle sold for $124.15 resulting in losses of $9.62/head.
Average Packer margin decreased $3 per head this week with packers losing an average of $82.37 per head.
Republicans and the White House share similar thoughts on how much to cut the new Farm Bill. Both sides have proposed cuts in the neighborhood of $32 to $35 billion. Both sides agree that there need to be cuts in farm subsidies and conservation but disagree about cuts to food stamps. Treasury Secretary Tim Geithner has stated that the government can save a lot of money through Farm Bill reform. It appears there is a consensus that the direct payment subsidy to farmers is in trouble and that funds for conservation efforts will be significantly reduced. The view of the White House is that crop subsidies, crop insurance, and conservation must be cut, but food stamps should not be touched.
The year after year increase in corn prices, starting in 2006 has significantly affected prices for all other crops as well. Analysts state that the 2012 grain prices are approximately 165% higher than grain prices for 2005. This sharp increase in crop prices has influenced a sharp jump in farmland prices and rent prices. This is having a direct impact on the beef industry and will continue to impact beef production for years to come. The 2007 Natural Resources Inventory (NRI) shows 305 million acres in cropland, 119 million acres in pasture, and 52 million acres in hay or other non-cultivated cropland. There are also 400 million acres of rangeland located in the more arid regions of the western U.S. The problem is that the 119 million acres of pasture and the 52 million acres of hay are arable and can be plowed under to plant row crops. Most of the 400 million acres of rangeland is not considered arable. The 2012 NRI Census data will be released in the next several months and will show how much pastureland and hay ground has been converted to cropland. Expectations are that there will have been a significant conversion of arable land to cropland and that this trend will continue for some time. Evidence of this conversion already exists with the U.S. Beef Cow Herd inventory. From 2007 to 2012, the beef cow herd decreased by 2.76 million head which equates to an 8.5% reduction in inventory. The Midwest and the surrounding row crop regions experienced the largest decrease. For example, the states of Illinois, Indiana, Iowa, Minnesota, Kentucky, and Tennessee saw an average decrease in beef cow numbers from 2007 to 2012 of over 14%. The Great Plains and Rocky Mountain region saw mixed inventory changes, with increases in some states of 5% to decreases of 7.5%, resulting in an average decrease across the region of 2.6%. In addition, Texas and Oklahoma experienced sharp inventory reductions due to severe drought conditions, resulting in overall beef cow decreases of 3.1%. The end result is that cattle numbers are dropping in areas where crop competition is greater. This relegates the beef cow herd to the drier regions of the country. The same phenomenon is occurring in South America as well due to sharp increases in crop production there. However, this increased conversion of arable pasture and hay land for crop production will inevitably result in an increase in forage value which can impact the way that land is managed. Higher forage value should incent more efficient use of our remaining forage resources and even encourage greater use of corn stalk residue through grazing. With fewer acres of pastureland available, livestock producers will have to adopt better forage systems that will allow for increased production per acre and extension of grazing seasons.
The Cattlemen’s Beef Board, the group that manages the Beef Checkoff dollars, now has their first grass-fed beef producer as an appointed member. Secretary of Agriculture Vilsack has appointed Dr. Tom Parks, a Colorado Veterinarian, and grass-fed beef rancher, to the board. Dr. Parks will serve a three-year term on the board. He is the owner of Sun Prairie Natural Beef.
The ongoing drought has resulted in a loss of more than $400 million in Oklahoma. These losses include agricultural crops, livestock, and wildlife property loss. This comes on the heels of a more than $1.6 billion loss in 2011 due to the severe drought that year. That makes the combined two-year loss greater than $2 billion. It is estimated that crop losses exceeded $230 million, livestock losses were approximately $157 million, and wildlife property losses were $27 million. The data were supplied from the USDA NASS. Livestock losses were actually less in 2012 due to smaller inventory size as a result of livestock dispersals during the 2011 drought, and because 2011-2012 winter rainfall helped early spring season pasture conditions in 2012.
In The News:
The National Restaurant Association (NRA) recently completed their “What’s Hot for 2013” food trends survey. The survey is sent out to more than 1800 professional chefs, all members of the American Culinary Federation (ACF) with the intent of discovering the most recent and “hottest” trends in the restaurant sector. The survey identified the Top 10 Food Menu Trends of 2013 as:
Locally sourced meats and seafood will continue to grow in popularity.
Locally grown produce will also continue to grow as a menu item, with “hyper-local” food sourcing becoming more prevalent. Hyper-local is defined as foods grown within just a few miles of the restaurant and includes restaurant gardens grown on the restaurant location.
Healthful kid’s meals. Chefs are concentrating on providing better, more healthy, menu options for kids.
Children’s nutrition as a culinary theme.
More whole grain items in kid’s meals.
Environmental sustainability as a culinary theme.
New cuts of meat (i.e., Denver steak, Teres Major, Pork Flat Iron, …)
Gluten and allergen-free menu items.
Hyper-Local Sourcing (i.e, restaurant gardens).
indicated that the researchers have found evidence that urine taken from the soil of farms where animals have been treated with cephalosporin antibiotics can contribute to antibiotic resistance in humans. Since antibiotic resistance isn’t likely to develop in the gut of an animal, researchers have started focusing on the soil as a possible source of resistance, stating that even short term persistence in the soil provides an advantage to resistant bacterial populations. Their research found that in warm weather, bacteria in the soil may be able to develop some antibiotic resistance within 24 hours. Cephalosporins are widely used in both the livestock sector and in human medicine.
An Iowa farmer claims he lost the family farm due to feeding his livestock GMO corn. The farmer states that he first started using GMO corn back in 1997 and did not experience any issues. However, when he switched to a new GMO variety in 2000, he started noticing issues with depressed fertility in his livestock. He claims that his boars experienced low sperm count and his sows showed false pregnancies. The sows that did produce litters had smaller than normal litter sizes. He states that he narrowed the culprit down to a particular GMO corn variety that had a specific modified trait. A 2006 ISAAA report shows that more than 65 million metric tons of GMO grains are fed to livestock annually. Countering the farmer’s claim is a study conducted by the University of Nebraska that claims to have found no difference between cattle grazing GMO corn versus those grazing non-GMO corn.
In a related item, a study published in the journal Food and Chemical Toxicology claims that GMO corn fed to laboratory rats causes tumors. The French-based study involved the use of Roundup-Ready corn and Roundup herbicide. However, the European Food Safety Authority (EFSA) has stated that the study has serious defects in experimental design and methodology and does not meet acceptable scientific standards. This in spite of the fact that the study was published in a peer-reviewed journal. Several hundred scientists have signed a petition that calls for the release of the complete set of data from the original study. As a side note, Chinese researchers published a paper in the same journal where rats were fed the GM Corn, BT-38, and concluded that the BT-38 corn was as safe as the non-GMO corn.
An NBC News report states that there have been cases of animal poisoning in areas where drilling and hydrofracking chemicals have been used for oil and gas drilling operations. Cattle from several ranches have experienced acute weight loss, neurological, reproductive and gastrointestinal issues when exposed to chemicals used in fracking operations through the water or air. A number of ranchers have reported cattle deaths from the exposure. The oil and gas industry has challenged the report stating that the ranchers in question were not identified. According to an Ithaca, NY food animal veterinarian, there is reason for concern that if animals exposed to fracking chemicals enter the food supply, could those chemicals serve as a contaminant in the meat or milk.