Winter 2011
Agriculture Newsletter –January 2011
_________
Published Quarterly by Raymond Thompson with content from Off the Hoof by Dr. Les Anderson, Beef
Extension Specialist, Department of Animal & Food Science, University of Kentucky
What Happened?
Raymond Thompson, University of Kentucky Extension Agent for Agriculture
Long range forecasts could not have been more wrong about the warmer and wetter weather we
missed. At least we are not dealing with muddy lots, but we are feeding a lot of hay and feed and worrying
about water freezing.
I am glad we missed the market rally for calves. It is an exciting time to be growing grain crops or
beef cattle. Nobody can remember paying high feed prices and selling high priced calves, but that is what
should happen when export markets kick in.
Kentucky agriculture production reached another all time high of four billion dollars, and we
expect it to reach five billion by 2012. Poultry is now the leading business edging ahead of the equine
business. Burley tobacco continues to lose ground as fewer contracts are offered. The outlook for
horticulture continues to expand under the “Kentucky Proud” banner.
Agriculture exports are the best thing going to balance trade for the US. Foreign countries are
using some of their new found wealth to offer their citizens an upgraded diet and better menu. More than
40% of most US agriculture commodities are exported. The downside to this is they are also buying more
crude oil. The future for US fuel prices does not look good for farmers or consumers.
Economists report that we climbed out of the recession a year and a half ago. It seemed like the
stock market performed better in the last quarter of 2010 than several quarters previously. The economy
around Russell County seemed to have slowed down six months ago according to some local merchants.
Unemployment is still high and that curbed spending. More jobs would help sales more than anything.
Agriculture Investment Update – Cost-Share
Many farmers have already inquired about cost-share offering for the 2011 programs. All the
paperwork has been filed in Frankfort by the Russell County Agriculture Investment Council and the final
reports have also been filed. We are awaiting the Governor’s Office of Agriculture Policy to mail the
producer application and the grant check so we can begin sign ups.
We have a target date set for January 21, 2011, but that is only a target date. We plan to mail out
applications to all farmers who farm in Russell County. However, specific information on the various
project areas cannot be mailed and will have to be picked up at the office. Your next move is to contact the
Russell County Extension office and verify that your mailing address is absolutely correct. We are getting
a lot of mail back because of small errors on the address labels. Encourage people who are not on our
mailing list to call us with their name and contact information. We have 1,700 names on our master mail
list, but there are many operators that are not included. Your information cannot be shared unless you
release it.
Because of the expense of newspaper and radio advertizing, we plan to contact you by direct
mailing. We plan to use free public service announcements to the extent possible. Therefore, listen to the
local radio stations and read local newspapers for deadlines and other directions. The more money we can
save in advertizing and administration, the more farm projects that can be funded.
There will be some changes in allowable expenses for this year. Trailers will no longer be available
as a cost-share item and fertilizer is being scaled back. Labor will be allowed when filed with proper
documentation with a business letterhead. However, farmers cannot exchange labor and be paid for
working on each other’s project.
Some projects have cost-share limits of $4,000 and most are limited to $2,000. However, if a
farmer chooses to participate in projects that have both limits, the maximum becomes the lower limit of
$2,000. The intent of the $4,000 limit is to assist farmers in feed storage to cover a larger project
investment. Many hay barns and feed/grain storage bins exceed $4,000.
Feed storage also offers one of the best returns on investment of any project because the end result
is lower feed costs. Other investments are more difficult to prove a rapid pay back or some other benefit.
The best projects save the producers enough money that he/she could have paid for entire costs in three
years with the cost savings. We discourage participants from using the funds for regular annual expenses
or capital improvements.
My favorite projects do one or more of the following:
1. Save hay or reduce feed cost.
2. Decrease nitrogen costs.
3. Improve a herd’s genetic base to promote a higher rate of births and survivals.
4. Improve animal performance or marketing.
5. Allows operator to harvest more forage per dollar spent.
6. Improve nutrient make up of feeds/forage.
7. Allow producer to sell larger pens of livestock at once.
8. Provides abundance of high quality water for livestock or crops.
9. Increases crop yields or quality.
10. Allows producer to receive volume discounts on feed ingredients.
11. Improves herd health and animal growth.
12. Improves fiscal management.
Winter Schedule
2011 Master Cattleman Course
1/20/11
Russell Co. Ext.
1/27/11
Russell Co. Ext.
Russell Co. Ext.
2/3/11
Russell Co. Ext.
2/10/11
Russell Co. Ext.
2/17/11
Russell Co. Ext.
2/24/11
Russell Co. Ext.
3/3/11
Russell Co. Ext.
3/10/11
Casey County Locker
3/17/11
Russell Co. Ext.
3/24/11
Understanding Cattle Nutrition and Mineral Requirements
Management Principles & Economic Analysis
Forages to Feed
Understanding Cattle Behavior and Designing Handling Facilities
Using Concepts in Genetics to Improve Performance & Marketing
Industry & Environmental Concerns
Improving Early Conception & Reproduction
Preventative Health Practices
Cattle Harvesting & Processing into Prime Cuts
Marketing Principles and Outlook
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2011 Master Cattlemen Alumni Meeting Agenda
Boardroom at Russell County Extension office
January
1/20:
Ken Burdine; marketing.
February
2/10:
Goats for pasture control. – Dr. David Ditsch
March
3/10:
Animal composting – Dr. Higgins
April
4/14:
Soil Concrete. – Dr. Higgins
May
5/12:
Herding Dogs/ Guard dogs, Llamas, donkeys
June
6/9:
Effects of Forage/Pasture on Conception.
Russell County Cattleman Association
They are planning monthly meeting for members and prospective members. Dates, times and topics
will be sent soon.
Pesticide Certification Training
Meetings have been delayed until February. Contact the Russell County Extension Office at 8664477 to put your name on the pesticide training request sheet. We will need your name, address, contact
phone number, your preferred day of the week (Monday through Friday) for your training and your
preferred time of day. Once we have 25 names on the list, training will be scheduled.
February 1, 2011
Farm Service Agency News
Livestock Indemnity Program (LIP) compensates livestock owners and contract growers for
livestock death losses in excess of normal mortality due to adverse weather, including losses due to
hurricanes, floods, blizzards, disease, wildfires, extreme heat and extreme cold. Eligible losses must have
occurred before Oct. 1, 2011.
Types of documentation:
(a). adequate proof that the eligible livestock deaths occurred as a direct result of an eligible
adverse weather event in the calendar year for which benefits are being requested.
(b). quantity and kind of livestock that died as a direct result of the eligible disaster event may be
documented by: purchase records, veterinarian records, bank or other loan documents, rendering truck
receipts or certificates, Federal Emergency Management Agency records, National Guard records, written
contracts, production records, records assembled for tax purposes, property tax records, private insurance
documents, and similar documents.
If adequate verifiable proof of death records documentation is not available, FSA will accept
reliable records in conjunction with verifiable beginning and ending inventory records as proof of death.
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Reliable records may include, but are not limited to: contemporaneous producer records existing at
the time of the adverse weather event, pictures(s) with a date, brand inspection records, dairy herd
improvement records, and other similar reliable documents. FSA will use data furnished by the applicant
to determine eligibility for program benefits. Furnishing the data is voluntary; however, without all
required data program benefits will not be approved or provided.
EQIP & WHIP
Contact your local Natural Resource Conservation Service for the details of these programs. The
deadline for applications is January 28, 2011. Award notices will go out in March.
Timely Tips
Dr. Roy Burris, University of Kentucky Beef Specialist
Spring-Calving Cow Herd
• Start cows on the high magnesium mineral supplement soon. Consider protein supplementation if hay
is less than 10% crude protein. If cows are thin, begin energy (grain) supplementation now.
• Get ready for calving season! See that all equipment and materials are ready, including obstetrical
equipment, record forms or booklets, ear tags, scales for obtaining birth weights, etc. Prepare a calving
area where assistance can be provided easily if needed. Purchase ear tags for calves and number them
ahead of time if possible. Plan for enough labor to watch/assist during the calving period.
• Keep replacement heifer calves gaining enough to reach their "target" breeding weight (65% mature
weight) by spring.
• Consider vaccinating the cows to help prevent calf scours.
• Move early-calving heifers and cows to pastures that are relatively small and easily accessible to
facilities in case calving assistance is needed. Keep them in good condition but don't over feed them at
this time. Increase their nutrient intake after they calve.
• Study the performance of last year's calf crop and plan for improvement. Plan your breeding program
and consider a better herd sire(s). Select herd sires which will allow you to meet your goals and be
willing to pay for superior animals.
Fall Calving Cow Herd
• Breeding season continues. Keep them on accumulated pasture as long as possible, and then start
feeding hay/grain. Don’t let these cows get too thin.
• Remove bulls by the end of the month. That means that your 2011 fall calving season will end in early
November.
• Provide clean windbreaks and shelter for young calves.
• Catch up on castrating, dehorning and implanting.
General
• Increase feed as the temperature drops, especially when the weather is extremely cold and damp. When
temperature drops to 15°F, cattle need access to windbreaks.
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• Provide water at all times. Cattle need 5 to 11 gallons per head daily even in the coldest weather. Be
aware of frozen pond hazards. Keep the ice "broken" so that cattle won't walk out on the pond trying to
get water.
• Feed hay in areas where mud is less of a problem. Consider preparing a feeding area with gravel over
geotextile fabric.
• Consider renovating and improving pastures with legumes, especially if they have poor stands of grass
or if they contain high levels of the fescue endophyte. Purchase seed and get equipment ready this
month.
• Be sure to estimate the feed needed for your cow herd this winter. We started feeding hay much earlier
than usual this year so we may run out during the spring calving season. Make planned feed purchases
now.
Mid-South Stocker Conference
Dr. Jeff Lehmkuhler, Beef Extension Specialist, University of Kentucky
The sixth annual Mid-South Stocker Conference has been set for Feb. 21 and 22 at the Holiday Inn
University Plaza & Sloan Convention Center in Bowling Green, Kentucky. This year’s conference
promises to provide new and exciting additions to the conference.
Sponsored by the Cooperative Extension Services of the Universities of Kentucky and Tennessee
and each state's Cattlemen’s Association, in partnership with Bayer Animal Health and BEEF magazine,
this year’s conference aims to provide information relative to a changing industry.
The conference will begin at 1:00 pm Central Time with a new feature on Monday Feb. 21, with a
virtual tour of area cattle operations. A meat cutting demonstration show casing new beef cuts which add
additional value to cattle will be performed in the afternoon by Dr. Gregg Rentfrow. The evening will
wrap-up with a trade-show.
On Tues., Feb. 22, the formal program will get underway at 9 a.m. covering stocker cattle health,
managing forages for stocker cattle, and strategies to meet environmental regulations including a
discussion on properly composting livestock mortalities. The afternoon program will wrap-up with an
update and outlook of the beef cattle industry by Cattle-Fax and a research update by UT and UK.
Rooms at the Holiday Inn University Plaza are available at the special rate of $89.99 per night. The
preregistration fee for the conference is $95 per person or $150 per couple. You may register online
http://www.midsouthstocker.org or contact John Bartee, with UT Extension's Montgomery County office
at 931-648-5725, jbartee1@utk.edu.
If you have any questions about the conference, please call Jim Neel, 865-974-7294; Roy Burris,
270-365-7541, ext. 208 or Jeff Lehmkuhler, 859-257-2853. Additional details are available online at
http://www.midsouthstocker.org.
What is an “Expected Level of Protection”?
Dr. Michelle Arnold, Ruminant Extension Veterinarian, University of Kentucky
Vaccine labels are strictly regulated by the USDA when it comes to describing what kind of
immunity to expect after administering a product according to the printed directions. Before any label
claim can be granted, a company must first prove its product is safe, pure, potent, and effective. Beyond
this, there are 5 possible levels of protection the USDA can grant based on research data that must 1) fully
support what the label says it is made to do (“the label indications”) and 2) accurately reflect the expected
performance of the product. The decision as to which type of label claim will be granted is based on
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evaluation by the Center for Veterinary Biologicals (CVB), which is part of the Animal and Plant Health
Inspections Service (APHIS) of the USDA. The CVB is the government agency responsible for the
reviewing and granting of veterinary vaccine licenses. They also determine what can appear in advertising
and promotional materials.
The five possible levels of protection the USDA can grant are as follows:
 “Prevention of Infection” is the first or highest level of protection that can be granted to a product.
This claim can only be made if a product prevents all colonization or replication of a
microorganism in a vaccinated animal (in simpler terms-the vaccine completely prevents the
certain microorganism from living and growing within an animal). It is difficult to obtain this level
and very few products in the livestock industry have this claim.
 “Prevention of Disease” is the next step down on the level of protection scale. A vaccine with this
label claim is highly effective in preventing clinical disease (sickness) in vaccinated animals.
Again this is difficult to attain so few vaccines are on the market with this description.
 “Aid in Disease Prevention” is the most common label claim. These products prevent disease in
vaccinated animals by a significant amount (approximately 75% efficacy) but less than that
required for prevention of disease.
 “Aid in Disease Control” is a claim for a vaccine product that makes a disease less severe and/or of
shorter duration or it may delay the onset of disease. This correlates with approximately 60%
efficacy.
 “Other Claims” is a miscellaneous category for products with beneficial effects other than direct
disease control. An example of this is “control of infectiousness through the reduction of pathogen
shedding” which means there is less spread of disease because the vaccine helps lower the number
of organisms released into the environment. These claims can only be made if the size of the effect
is clinically significant and well supported by the data.
The best way to find out what level of protection statement applies to a particular vaccine is simply to
read the label closely. Bear in mind that manufacturers may voluntarily choose a lesser label indication
but they cannot increase the level of claims above what the filed USDA data supports. In other words,
don’t expect a vaccine to perform above or beyond the scope of its label claim. Your local veterinarian is a
tremendous resource to help you select the right products for your specific herd needs.
The Value of Genetics
Dr. Les Anderson, Beef Extension Specialist, University of Kentucky
Few beef producers would disagree that the genetic potential available for use in their herds via
artificial insemination is greater than that of most natural service sires. The advantage of using AI stems
from the improvement in the predictability of the bulls; their EPD’s are simply more accurate and reliable.
However, less than 10% of the beef cows in the United States are artificially inseminated each year
(NAHMS, 2008). Many reasons exist for the low rate of implementation of estrus synchronization and AI
(ESAI) into beef cow-calf operations. One factor that limits the use of ESAI in commercial cow-calf herds
is the hassle factor. It is simply too much effort to gather the herd and work them 2-3 times in a 10-day
period. However, the major reason, in my opinion, is that most producers cannot capture the added value
of their AI-sired calves and the enterprise is not profitable.
Two real questions arise when thinking about using ESAI. First, are calves sired via AI more
valuable? Second, how can a commercial cow-calf producer capture some of this value? These two
questions have been investigated in an Advanced Master Cattleman program sponsored by the Kentucky
Beef Network and the Agriculture Development Board. The goal of this program was to determine if
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steers sired by AI bulls proven in feedlot and carcass performance could actually perform better in the
finishing phase and if these steers generated more revenue and were more profitable.
This project started in the fall of 2007 with 7 producers in Washington, Marion, and Nelson
counties and has continued through this last breeding season. More than 900 head from 15 producers
across KY were bred this fall alone. Each breeding season, estrus is synchronized and females in these
herds are time-inseminated to an Angus, Polled Hereford, Simmental, or Charolais sire. The sires used are
proven trait leaders in their respective breeds in feedlot and carcass performance. After weaning, the
calves are vaccinated and backgrounded about 60 days. These producers retain ownership on their steers
and they are sent to a feedlot in Kansas for finishing and harvest. Feedlot and carcass data have been
collected on 139 head of steers sired either by an AI sire or a natural service sire.
Steers sired by proven AI bulls were more efficient in the feedlot. They outgained (.22 lbs per day)
and required less feed per pound of gain (.31 lbs less feed per lb of gain) than steers sired by the herd bulls.
Steers sired via AI were on feed 13 fewer days than steers sired by the herd bulls.
Using AI also improved the carcass performance of steers. Steers sired by proven AI bulls had a
higher quality grade and a heavier carcass than steers sired by the herd bulls. The added feedlot and
carcass performance improved the value of the steers. Steers sired by AI bulls were $146.60 more
valuable at harvest than steers from natural service. After considering the feedlot costs, steers sired by
proven AI bulls returned $163.18 more to farmers than steers sired by their herd bulls.
These data certainly demonstrate that using ESAI can improve the value of steers and the profit
potential of beef cow-calf producers. Unfortunately, the only marketing method currently available to
capture this added value is retaining ownership through harvest and many of the commercial cattlemen in
Kentucky are skeptical of this marketing method. One alternative would be to establish local CPH-45
sales that feature steers and heifers sired by proven AI bulls. The calves in these sales would be source-,
age- and “genetically”- verified for improved feedlot and carcass performance. The long-term goal of this
Advanced Master Cattleman project is eventually to generate enough calves sired by proven AI sires that
we can conduct CPH-45 “genetically-verified” sales.
For more information on this Advanced Master Cattleman Program contact either Dr. Les
Anderson (859-257-2856) or Mr. Land Dale (859-278-0899).
Feed or Filler?
Dr. Jeff Lehmkuhler, Beef Extension Specialist, University of Kentucky
As the winter rolls on, we continue to see corn prices escalate having cattlemen wandering when
will it come down. On the flipside, it has many folks, as I was reminded over the holidays while visiting
with the in-laws, cussing the decision to sell corn at $4.25 per bushel early this fall. Certainly the markets
are different today than they were 5, 10, 20 years ago. Record high feeder and fat cattle prices are being
seen. High grain prices have resulted in increased prices for many feedstuffs utilized to supplement and
feed cattle. This has folks looking for less expensive alternatives, but be cautious as cheap is not allows
better. Remember, you will often get what you pay for.
The blending of several co-product feedstuffs into a supplement or complete feed continues to be
common and actually is growing in the region. Unfortunately, the amount or combination of these various
feedstuffs is not known making it a challenge to estimate their value in comparison to other feeds. Further,
the levels or combinations may be altered as the price of the various feedstuffs fluctuates. It is important
to talk to your feed representative to find out what feeds are used, proportions and does the mixture change
based on their ingredient purchase prices.
The utilization of rice co-product feedstuffs has made their way into some diets that are attractive
from a price per ton basis. Most of this is in the form of rice mill feed. What is rice mill feed? Gadberry
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and coworkers published a review in 2007 on rice milling feed co-product feedstuffs. Rice mill feed is a
blend of rice bran and rice hulls. The blend may vary, but often is 50:50 to 67:33 rice bran to rice hulls.
Based on the above review, raw rice bran was reported by various sources to contain on average 14-19%
crude protein, 15-22% fat, 9-20% acid detergent fiber and 8-13% ash. It is important to note the fat
content of rice bran as excessive fat intake can hamper ruminal fiber digestion lowering its feeding value.
Numerous trials have demonstrated the feeding value to be lower than other grains such as corn and
sorghum.
Rice bran is the high quality component of rice mill feed as rice hulls have little feeding value.
Rice hulls, as reported in the Third Revision of the Nutritional Data for United States and Canadian Feeds,
contains 12% TDN while rice bran is listed at 70%. Streeter and Horn reported in 1983 the dry matter
digestibility of cottonseed hulls, rice mill feed, soybean hulls, and beet pulp in lambs to be 41%, 31%,
75%, and 84%, respectively. Weight gains for lambs were reported to be 1.6 pounds over the 14 day
digestibility trial for rice hulls while soyhulls supported 11.5 pounds and beet pulp 13.7 pounds. Schulz
and Collar in 1983 compared the 24 hour in situ ruminal digestibility of various feedstuffs including rice
hulls and rice bran as well as corn, beet pulp, citrus pulp and recycled paper. The 24 hr digestibility values
for these feedstuffs were 0%, 80%, 92%, 79% and 41%, respectively. Yes, in this work recycled paper
was more digestible than rice hulls, of course the staples pose a problem.
In 1990, Brazle and Coffey reported on a trial investigating the feeding of rice mill feed at 65% of
the diet compared to grain sorghum. Average daily gains for rice mill feed diet were 0.9 pounds while the
sorghum diet supported 1.6 pounds or 45% lower rates of gain. Additionally, the feed conversions
(pounds of feed dry matter per pound of live weight gain) were reported to be 18.7 and 7.97 for the rice
mill feed and the grain sorghum diets. The 48 hour in vitro dry matter digestibility of rice mill feed was
49% for rice mill feed compared to 94% for grain sorghum. Rice mill feed can be utilized as a supplement
for beef cattle, but be aware of the reduced feeding value compared to other feedstuffs.
High feed costs need to be put in context with feeder prices. Calculate breakeven prices and work
with your nutritionist or county Extension agent to seek out viable alternative feeding programs.
Sometimes, cheaper is not always better. Yet, current corn prices make alternative feedstuffs, especially
soy hulls and corn gluten feed, attractive supplements for beef cattle. Stay warm and best wishes for 2011.
New Year's Resolutions and Planning for a Good Calving Season
Dr. Francis L. Fluharty, Ruminant Nutritionist, Department of Animal Sciences, The Ohio State
University
While most people are thinking of holiday plans and family get-togethers, many beef producers are
concerned with the rising price of feed ingredients and how winter storms are impacting their cow herds.
As a result, this is the time of year when calls come in from producers who are shocked by corn and
byproduct prices where they are. With nearly 90% of fetal growth occurring in the last three months of the
cow's pregnancy, we look at body condition score as one of the best measures of how the cow will perform
during calving, but late-gestation cow nutrition is important for the health of the newborn calf, too,
because the nutrition of the cow impacts the eventual calf's immune status and survivability.
In cattle, the survival of the calf is dependent on its receiving high-quality colostrum within the
first 24 hours of life, because the structure of the placenta prevents the fetus from receiving
immunoglobulins (IgG) in utero. This is very different from most species, such as humans, which receive
IgG across the placenta, and are born with the ability to mount an immune response to pathogens. As a
result, newborn calves can't fight a bacterial or viral challenge until they have acquired passive immunity
through the IgG in colostrum. The IgG are a specialized form of antibodies, gamma globulin proteins that
fight bacterial and viral infections by binding to pathogens and neutralizing them. With cattle, the newborn
calf's small intestine can only absorb IgG during the first 24 hours of life. Furthermore, within the first 24
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hours of life, the timing of the calf receiving colostrum is critical as the ability to absorb IgG from the
small intestine starts to decline after the first 6 hours, and is essentially stopped after 24 hours (Rogers and
Capucille, 2000). Therefore, for optimum immunity, the calf needs to nurse well within the first 6 hours.
With first-calf heifers, this timing is an important management issue, as heifers that don't let their newborn
calves nurse immediately are in a much greater danger of losing them, or having them get sick.
The effects of poor immunity in newborn calves have real economic impacts. Calves with
inadequate serum immunoglobulin at 24 hours of age were found to be up to nine times more likely to
become sick, and five times more likely to die before weaning, compared with calves that received
adequate immunity, and calves that became sick within the first 28 days, after calving, were 35 pounds
lighter at weaning than calves that were healthy (Wittum and Perino, 1995). As this research showed,
colostrum quality and quantity can have a major impact on profitability. In a recent study, 6% of calves
between 2 and 8 days of age had inadequate immunity, 10% of calves had a marginal immunity, and onethird of the calves were below the adequate immunity level based on a blood serum IgG level of 24g/L
(Waldner and Rosengren, 2009). For producers who need to know how much colostrum a calf needs,
research has found that an adequately nourished beef cow should be able to provide an adequate supply of
IgG in about 3 liters of colostrum, which means that a calf should consume one pint of colostrum for every
20 pounds of calf weight (Rogers and Capucille, 2000).
As cattle go through the winter, they will lose body condition due to the nutrient demands of the
growing fetus, plus dealing with winter weather, unless nutrition is excellent. From an energy standpoint,
body condition scoring is an excellent way to assess the cow herd. In areas where forages are protein
deficient, protein supplementation during late gestation has been shown to have several positive effects on
reproduction (Martin et al., 2007). In all cases, the health of the newborn calf is impacted by the quality of
colostrum consumed, based on the levels of IgG in the colostrum, and the quantity of colostrum consumed.
The nutrition of the cow in late gestation determines these, with the production of colostrum beginning
approximately 5 weeks before calving (Field et al., 1989). While energy and protein status have received
the most attention in colostrum research, both selenium and vitamin E have been shown to affect the
quality, and quantity, of colostrum, and in one study by Swecker et al., (1995), higher concentrations of
IgG were seen in the colostrum of cows grazing selenium-deficient pastures, and supplemented with a
trace mineral salt containing selenium compared with those receiving a selenium injection prepartum, or
control cows not receiving selenium. This winter's educational programs will focus on cow nutrition
during late gestation through rebreeding, including the importance of mineral nutrition.
Five Cattle Market Factors to Watch in 2011
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
Cattle prices across the board are expected to post year over year increases in 2011. Cattle prices
are approaching record levels in several markets at the end of 2010 and will likely take cattle prices into
uncharted waters in the coming year. Any number of external factors could impact cattle markets in the
coming year but the following market factors are expected to have the biggest impact on market prices.
* Beef Demand: Projected decreases in beef production in 2011 will pressure wholesale and retail
beef prices higher. The ability to pass on the impacts of reduced beef supplies will depend on continued
recovery in beef demand. Recessionary weakness continues to limit middle meat demand though signs of
recovery are evident at the end of 2010. Increased competing meat supplies, mostly increased poultry
production, may temper retail beef prices somewhat.
* Herd Expansion . . . or Not? Limited cattle numbers are expected to result in reduced cattle
slaughter in 2011. The magnitude of feeder supply squeezing will depend on the extent of heifer retention
in the coming year. Though not yet confirmed by data, there are indications at the end of 2010 of limited
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heifer retention. The question of herd rebuilding will determine just how tight cattle supplies are in 2011
and also the timetable for potential increases in beef production in coming years.
* 2011 Crop Conditions: A 2010 corn crop that fell just short of record levels was enough to push
corn prices sharply higher. Projected crop year ending stocks are at levels that make the feed grain markets
extremely sensitive to anticipated grain supplies. Crop markets will likely be especially focused on
evolving crop conditions that will have a large impact on overall feed grain price levels as well as
increased volatility from the pre-planting period through harvest. Crop prices and volatility will continue
to have a big impact on livestock industries in general and in cattle, especially on the feedlot sector.
* International Trade: Strong beef exports provided critical support for cattle markets in 2010. Beef
exports are expected to increase again in 2011, albeit at a more modest rate of gain. Global demand for
beef is expected to continue growing though country specific economic conditions and currency exchange
rates will have a large impact on specific trade flows. Beef exports and imports both help the beef industry
to improve domestic beef demand by changing the mix of products to better meet the preferences of U.S.
beef consumers and increase total value to the industry.
* Forage Conditions: Beef industry responses to the twin forces of limited cattle numbers and high
feed grain prices depend on forage use. There are continued strong incentives for increased cow-calf
production and for forage based stocker production. The quantity and quality of forage will have a big
impact on both the level of production and the timing of feeder cattle flows in the coming year. Currently,
the La Nina weather pattern is producing dry conditions across much of the Southern Plains and Southeast
regions that may impact winter grazing systems. Should dry conditions continue to develop and extend
into the growing season, the impact on cow-calf production and summer grazing programs could be very
significant. Widespread drought in major cattle regions could offset producer intentions with respect to
possible herd rebuilding.
Kentucky Beef Cattle Market Update
Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
$ / cwt.
In a few weeks, USDA will release their annual inventory report that will give us a clearer picture
of beef cattle numbers for 2011. There was much speculation about expansion possibilities this fall as calf
prices were much stronger than was seen during 2009 (see chart below). However, drought in the
southeast likely kept much of that at bay. It will be very interesting to see the state-by-state numbers as
some of my colleagues to the west have indicated that they thought expansion was ongoing last year.
At this point, monthly slaughter data is
available through November of 2010 and we
Medium / Large Frame #1 Steers
can use this to make some projections about
500 to 600 lbs
what the report will look like. Heifer slaughter
is always a key indicator and was up by 2.7%
140
during the first 11 months of 2010. The year
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2010 was also a very strong year for cull cow
100
prices, which was likely behind a 4.3%
increase in cow slaughter over the same time
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period. Clearly, these are not signs of an
60
expanding cowherd.
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Based on these estimates, I am
expecting about a 1% decrease in beef cow
numbers to start 2011. However, with calf
prices at their current levels, it is very possible
2009
2010
2005-2009
that expansion could begin this year if weather
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is cooperative. It is important to remember those cattle cycle basics that have seemed so distant over the
last several years. Heifers born in 2011 will not be bred until 2012 and won’t wean their first calves until
2013. So, if expansion begins in 2011, and I want to stress the IF, we are still a couple years away from
seeing larger calf crops.
Roberts Agricultural Commodity Market Report
Mike Roberts, Commodity Marketing Agent, Virginia Tech University
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished up on Monday. The
DEC'10LC contract closed up $0.600/cwt at $102.775/cwt and $0.825/cwt over last report. The APR'11LC
contract closed at $108.800/cwt, up $0.650/cwt and $0.700/cwt higher than a week ago. AUG'11LC
futures closed at $107.300; up $0.750/cwt and $1.300/cwt higher than last Monday. Live cattle futures set
a two-week high on Monday with fund buying a major factor. When February futures broke through
$105.20/cwt automated technical fund buying picked up on set buy-orders. Hedgers actively covered short
positions. Several floor sources said April/February spreading was a standard play and is likely to pick up
in January as long positions are moved from the February contract to further deferreds. Traders are bullish
on live cattle seeing decreasing U.S. herd numbers even as USDA shows a 3% increase in feedlot
headcounts as of December 1, 2010. Two local traders said most traders think feedlot numbers will shrink
once calves of the smaller breeding herd come in next year. However, several other sources said the market
makes little sense since rising corn prices, a stronger U.S. dollar, and slight weakness in equities markets
often influence cattle futures lower. Additionally, they said end-of-year balance squaring and extended
holidays often cause markets to go lower this time of year. Cash cattle traded $1/cwt lower in Kansas last
week and at $101/cwt in Texas. USDA put the 5-area price at $99.13/cwt for Monday, December 20,
2010; $1.80/cwt lower than this time last week. USDA put the choice beef price at $160.54/cwt, down
$1.17/cwt from Friday and $5.51/cwt lower than last week at this time. Restaurant data show people ARE
buying prepared beef, but only in fast food establishments. It is a very good idea to price only short-term
feed needs (unless you take a short position in futures) and forward price production at this time.
According to HedgersEdge.com, the average packer margin rose $7.60/head to a positive $4.60/head based
on the average buy of $100.50/cwt vs. the average breakeven of $100.86/cwt. Buying an out-of-the money
PUT option on the next three months production would not be a bad idea.
FEEDER CATTLE at the CME finished up on Monday. The JAN'11FC contract finished at
$120.725/cwt; up $1.700/cwt and $1.525/cwt over last report. APR'11FC futures finished at $122.500/cwt;
up $2.025/cwt and $2.325/cwt higher than last week at this time. The AUG'11FC contract settled at
$123.500/cwt, up $1.600/cwt and $2.375/cwt higher than a week ago. January feeders registered the
highest price ever for a lead contract. Following live cattle, fund buyers were key factors in higher feeder
prices. All contracts set fresh highs. Fundamentals show that there will be fewer feeders available for
fattening next year. The U.S. cattle herd has been shrinking for some time now and is the smallest it's been
in 50 years. The decline is due to years of poor net profits on cattle due to high feed costs and older
producers retiring out of the business. USDA figures show 93.7 mi head on U.S. farms and ranches, the
lowest since 1959. The data also show there were 35.82 mi calves born in 2009, the lowest since 1949.
Tight supplies are expected for another 18-24 months. The Oklahoma National Stockyards was closed on
Monday and will resume on January 3, 2011. The CME feeder index was placed at 119.29 cents/lb; up
0.06 cents/lb from last Friday and 1.2 cents/lb over last report.
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