Cull CowsWritten by Dennis Sun
Published: 08 October 2016
For those in the cattle business, this year has proven to be in a downward trend. Calves have jumped up and down a little, but lately, prices have just been headed south. The feeder futures have been in the red since before the Labor Day weekend.
I try to be somewhat positive in this column, but for the cattle producer, prices just keep falling. Maybe if I write on them, the cattle market will show me wrong and head up. I’m one of the last people you want to ask what the cattle markets are going to do. I rely on the smart ones out there and those who make a living by forecasting the markets.
Most ranchers have their calves sold or plan on taking them to the auction barn. Yearlings are being moved off the ranch, and the Labor Day weekend sales are behind us, so most everything is planned except for the cull cows.
Cull bulls this week are mostly bringing from 90 cents up to around $1.15, and cull cows are bringing from 70 cents up to around 81 cents – no record prices there. Dairy cows can affect the market, but year in and out, they seem to be pretty consistent through the year. We haven’t seen any dairy buyouts for some time, and thank God for that. But this year, with falling milk prices, there could be more selling than usual.
Recently, I read a column on cull cow prices by Jessica Sampson, agricultural economist with the Livestock Marketing Information Center, that I thought was good. She started out by telling us something most of the cattle producers know – the product of cull cow slaughter is hamburger, mostly 90 percent lean, which is then blended with 50 percent lean trimmings from fed steer and heifers to produce varying degrees of lean-to-fat hamburger and ground beef mixes. Again, thank God for hamburger and how poplar it is.
We all know the cull cow market really dropped off in August of 2015, as did all cattle markets, and for the first half of 2016, cull cow slaughter tracked eight percent above the first half of 2015. Sampson went on to say that for 2016, year-over-year increase was generally expected, if nothing else for the fact that older cows held back an extra year will only have a certain number of calves left in them. She said, another way to put it is, so far this year the cattle industry has returned to a more normal “culling rate.”
From 2008-13, the years surrounding the drought and cattle liquidation, the annual cow cull rate was between 10 percent and 12 percent of the Jan. 1 national beef cow count. In 2014, that cull rate was nine percent, and in 2015, it was eight percent. Sampson says that, historically, beef cow slaughter increases about four percent in the second half of the year, so using this simple average, beef cow slaughter in 2016 can be expected to total around 10 percent above 2015, to 2.5 million head. That would calculate to an 8.5 percent culling rate for 2016.
She says, due to the increased supply of cull cows on the market, lower cull cow prices are expected, but good signs appear as Australia isn’t importing beef into America as much and we have lower hay prices at home. There is a strong possibility of higher prices before and after October.
So, shake the dice.
Fires and PricesWritten by Dennis Sun
Published: 06 August 2016
Visiting over the fences and along the county roads the past week, the two topics that always come up are fires and prices for livestock. Those topics could come up during most any summer here in the state though.
The fires we have had lately have just been devastating, with loss of homes, barns, fences and livestock and other related accidents. If the truth is known, it could happen to any of us. Keep the victims in your thoughts and prayers and support them.
Moving on to prices, awhile back I read an article by Don Close, vice president of Rabobank Food and Agribusiness Research and Advisory Group. I always like to read predictions and reasoning of price fluctuations in past and future months by bankers. They’re usually right on.
Sometimes I’m kind of a “roll the dice” guy, a “gut feeling, let’s move on it” person. Bankers are not that way. Come to think of it, I hope my banker doesn’t read this column. I could be doomed. Bankers don’t gamble or take chances, and that’s good. We sure want the financial people in our lives to be rock-solid type of people. People like Close, who study what has happened and what should happen, are usually right, and that’s why they get the big bucks.
In the cattle markets, we’re all wondering what is the bottom? That is the big question.
Close says, over the last six months, faster than expected herd rebuilding and larger than expected supplies have contributed to price erosion in all classes of cattle. Prices in all weight classes of cattle have declined significantly and are currently trading in proximity to 2013 price levels, therefore, cancelling out the gains seen in 2014 and 2015. The result is a notable slowdown in expansion.
He said that there are two exceptions to the price erosion, retail beef prices and cutout values. The increased slaughter rates are not only driven by increased monthly placements since the first of the year, but also reflect cattle feeders taking an extremely aggressive position on marketing cattle. A third influence for the larger than expected beef slaughter has been the increased beef cow slaughter
You know, feeders and others who bought calves when they were really high, suffered some heavy losses. They say some feeders were losing up to $700 a head during one quarter. That can’t keep happening.
Close says there are two primary explanations for the revised outlook for beef cowherd expansion that they expect could peak in a range of 31 to 31.5 million head. The first explanation is that the rate of heifer retention starting in 2014 has been far more aggressive than they imagined. They expect heifer retention to continue in 2016 and 2017 but at a substantially slower pace than the previous two years. As a result, the current expansion is very front-end-loaded.
The second indication of slowdown has been the larger than expected cow slaughter for the year to date. They also thought beef cow slaughter would be down and dairy cow slaughter would be up, but the opposite was true.
As always, supplies of beef, pork and chicken, export numbers, the futures markets and concerns over production are always in the equation. Stay tuned. It could get rocky, but most say there are some positive signs out there.
GMO, What’s The Fuss?Written by Dennis Sun
Published: 06 August 2016
GMOs (genetically modified organisms) hit the national news lately as the state of Vermont’s GMO law came into effect on July 1, and it has really created havoc with food producers.
The law will make Vermont the nation’s first state to enact a mandatory GMO labeling law. National food companies are voluntarily applying labels to products with genetically modified ingredients, as they could face fines of up to $1,000 a day for each item that does not have the proper label.
The scare of GMOs is out there, especially for the younger consumers. I, like most people, want to know what is in the food we buy, but for the most part, I don’t see a danger in GMOs. They have been around for a long time, from seedless grapes to vegetables that stay fresh longer.
The public really doesn’t want to accept GMOs. Tomatoes were the first genetically modified crops produced, but the public rejected them because of lack of flavor. GMO potatoes were first produced in 1996, but production was discontinued in 2001 because of consumer rejection. So now, as of 2015 no GMO tomatoes or potatoes are in commercial production.
A number of GMO crops, like corn, soybeans or cotton, have altered genes to prevent damage from harmful bugs and pests. For the future of the human race, being able to feed the exploding populations in the coming years, GMOs done right may be one of the answers to the issue.
Genetically modified organisms can have a positive impact for both producers and consumers. From an economic standpoint, GMOs can increase crop yields, making farmers more efficient. This could also help the small acreage farmer who wants to sell locally to farmers’ markets or restaurants. These increases in yield can be a result of a broad range of genetic advantages bred into the crop. For instance, a variety of lettuce that has heightened resistance to cold and frost could mean that the farmer is able to retain a greater production after an early frost.
Another great example of genetic modification proving worthwhile to both consumers and producers is the use of grape rootstock from America in vineyards during the late 19th century. After shipping rootstock to Europe from America, an outbreak of a highly aggressive aphid called Phylloxera, decimated European vineyards. After noticing that the American vineyards were not nearly as susceptible to the insect, wine makers started grafting their vines onto New World roots. As a result, the European market was able to almost fully recover from the outbreak. I knew you would like that one.
The Food and Drug Administration (FDA) has made it clear that the use of genetic engineering in foods has not presented safety concerns and that the agency does not see a need for GMO disclosure on food packaging. But, some say a lack of definitive scientific data regarding safety concerns is problematic. It has turned into an emotional nightmare for some, and we are never going to change their minds. There are some good in GMOs, but there may be some that are going to make us question them. It is going to take some education, patience and truthful comments for this nation’s consumers to buy in. Studies have shown that the upper classes will read the labels, but for the poor and hungry, food is food. We owe it to those folks to make sure their food doesn’t harm them.
BrexitWritten by Dennis Sun
Published: 30 July 2016
Brexit – what a strange word, a word we’ve not heard of before, but 10 days ago, it was in all the news. And I imagine you were as confused as I was with that news.
We’ve all been aware of dissatisfaction that some countries of Europe have with the European Union. Some countries in Europe are close to bankruptcy, so there is that dark cloud hanging over them. But at one time, it is what they all wanted – globalization, borderless countries and one currency – in essence a trading block of 27 European countries, a movement that even some in the United States are pushing for, a one world power.
Ten days ago, the British voted to leave the European Union (EU), and the world felt the shockwaves, especially the financial markets around the world. Due to the unknown
consequences, the DOW on Wall Street fell 3.39 percent the next day and kept dropping for three more days. There are as many opinions as to what will happen to Britain, Europe and the world as there are people giving their opinion.
London has always been one of the world’s biggest financial centers. Some say England leaving the EU could affect banks and other financial institutions, as they would have to go back to their old currency, and it would be harder to do business with the rest of Europe. England would also have to negotiate new trade agreements with Europe and the rest of the world. That could take some time.
Already there is a lot of remorse over the referendum vote on June 23. By Sunday, more than three million had signed a petition calling for another referendum. Only 72.2 percent of Britain’s voters voted, and the “leave” vote won with just 51.9 percent. Even our President and our Vice President, who was in London at the time of the referendum, scolded the British for voting the way they did. I think it was wrong to tell voters in another country how to vote, but it also shows that our current administration is all for a one world order. To me, that is frightening.
So now Britain has to figure out what they are going to do. Should they hold another referendum, or is that just a knee-jerk reaction? Many voters said their vote was just a protest vote. Will Scotland choose to break away from England and stay with the European Union? Some say Britain will have to renegotiate all new trade agreements with the European Union and the rest of the world, and that will take many years. Also, Britain could choose to ignore the referendum, invoking Article 50, the procedure for actually leaving the European Union altogether, and would instead attempt to negotiate a different, but not entirely separate, relationship with the European Union.
It is easy to see why many voted for the “leave” referendum. Britain has kind of lost its identity in past years and has been hit hard by the immigration issue. They can’t do anything about the immigrants already in Britain who have become citizens, but some efforts could curb future numbers of immigrants and those who want to change Britain.
America needs to watch closely, especially on the trade issues. We need to learn how a borderless country may not be the safest avenue in today’s world. We need to think about the global government concept. One government for this world will not work.