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June 27th: Weekly Corn Crop Condition Report
USDA

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June 27th: Commodity Market Comments 
  • “Shootin’ The Bull” -- Christopher B. Swift.
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    Live Cattle: Indecision remains as current demand battles with future supply.  The indecision is great at this time as seen by the limit moves back to back in opposite directions.  The major wave 4 is the breeding ground for this indecision.  My analysis has not changed, and won’t until or unless new lows in this decline are made.  By that time, I won’t be able to clean the mud from my face.  The current volatility is immense, but it has been this way for quite sometime.  No one has control over that.  So, the only thing one can control is themselves in the market.  My control level is to allow time to go by to see if I am correct on my analysis. If I am incorrect and price action begins to dissolve my analysis for a 5th wave new high, then I will take action deemed necessary at that time.  If I am correct, then the wave 4 is anticipated to be in its termination phase with a resumption of the upward trend.

    Feeder Cattle: I am unable to produce the analysis most want.  That is, the price will stop here and rally to there by such and such a date.  My analysis all along has been that the industry is in a transition and that transition is creating significant price fluctuation.  I perceive the industry to still be in transition as we deal with elevated inventory, an increasing domestic and export demand, and not all sectors of the industry benefiting from the price rise the first half of the year.  The perception that supply and demand have begun to equalize, which creates indecision, which leads to the breeding grounds of the wave 4.  Hence, this is where I perceive we sit.

    Corn: At this point, I can only anticipate that the report on Friday will hold some type of information to move corn one way or the other. At this point, not much else is.

    Crude: Crude perked up a little today.  The sharply lower US dollar is most likely a reason.  I am paying attention to this as the move higher today has begun to turn technical indicators.  So, were crude to set a new low from this rally, I would be looking for a bottom in crude.

    US Dollar Index: The US dollar finally produced the thrust lower I have been anticipating.  The US dollar traded and closed at a new low today from the December ’16 high.  This thrust is anticipated to push the US dollar to, or potentially under, the $.9000 area.

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    Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

    An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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    June 27th: The Myth of “Hormone-Free” Beef: Debunked
    Emily Vollbracht -- Fort Hays State University

    As consumers, many people have seen a beef product on the supermarket shelf with a stamp or sticker on it claiming it to be “hormone free.” How is this even possible when beef cattle contain naturally occurring hormones? In reality, “hormone-free” beef is simply beef that is raised without extra hormones given to the animal to promote the growth of the animal during production. But many consumers do not fully understand this concept.

    Sex hormones, especially estrogen, have been used by ranchers to fatten up beef cattle since the Food and Drug Administration approved them for use in 1954. Six hormones are approved for use in beef production in the United States. Naturally occurring hormones include testosterone, estrogen, and progesterone. The other three are synthetic hormones that are genetically similar to the naturally occurring hormones.

    Are these added hormones dangerous to consumers who eat the food? After extensive research, the FDA found that there is no danger in consuming beef with added growth-promoting hormones. Today, the majority of growth hormones are administered via implants placed under the skin in the middle of the backside of the animal’s ear, giving the animal a slow and constant rate of these hormones. The implants are not required to be removed at any time before slaughter. When the cattle are slaughtered, the ear is simply removed and does not enter the human food chain, allowing for a zero-day withdrawal period. This means that FDA has approved that the meat is safe to consume at any time after the animal has been treated because the growth hormones are metabolized by the animal before it goes to slaughter.

    What is most important for a consumer to recognize is that many common foods contain natural estrogen in levels much higher than those found in beef from an animal that has been implanted. In comparison, according to the Michigan State University article “Examining Growth Hormones in Beef,” a four-ounce steak from a steer treated with hormones contains only 1.6 nanograms (an untreated steer contains 1.2 nanograms) of estrogen while four ounces of raw cabbage contains 2,700 nanograms. Soy also has a large amount of estrogen in it. Your average soy latte has approximately 30,000 nanograms of estrogen. If you are worried about your food containing too many hormones, ditch that soy latte.

    If the thought of consuming beef from implanted cattle still concerns you, buy beef that is labeled as organic or natural. Organic and natural beef contains only the naturally occurring hormones but is sold at a much higher price due to having a higher cost of production. But even organic beef is not proven to be any better for you. It just may give you peace of mind to know you will not be consuming these additional 0.4 nanograms of hormones per serving. That peace of mind may not necessarily be worth the premium price that you will have to pay for it.

    It is safe to say that there is absolutely no such thing as what consumers refer to as “hormone-free” beef. The cold, hard truth is that no matter what kind of beef you consume, whether you prefer grain fed, grass fed, natural, or organic, the beef is going to have some hormones. And what many consumers forget to think about is the fact that the amount of hormones found in beef is quite minuscule to many other daily food sources. It only seems reasonable to take these naturally occurring hormones and give them a boost to help keep beef productivity levels high and inputs low in order to meet expectations. Otherwise, there is no way that the beef market could keep up with our constantly growing consumer demands.

    Emily Vollbracht, a 2012 Wheatland High School graduate, graduated this spring with a degree in agricultural business from Fort Hays State University. She is the daughter of Duane and Kris Vollbracht, Grinnell KS.

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    June 27th: U.S. Range & Pasture Conditions

    Pasture and range conditions for the US this spring, on average, have declined slightly more than a typical year. Deteriorating conditions are most evident in the Dakotas and Montana. An accelerated decline in conditions in the Dakotas started in the last week in May. The percentage of pastures rated very poor during that week increased by 5 percent in both South and North Dakota. Over the course of the following two weeks, percentages of pastures rated very poor increased by 12-15%. Ratings stabilized for the third week of June, but in the last week, another sizable increase in very poor pastures was noted. The story for Montana shows similar timing for the weeks of interest, but more moderate condition shifts. In fact, notable reductions in the amount of pasture rated very poor was encouraging for the latest week.

    US pasture and range conditions still look good compared to longer term averages. Texas and Oklahoma pastures are similar to the very favorable ratings of a year ago. The Western Region (New Mexico, Utah, Idaho and west from there) conditions continue to get a boost from the drought-busting rains and elevated snow pack of the winter and early spring. The percentage of pastures rated excellent in this region is the highest that has been seen since the mid-1990s. East of the Mississippi, pastures in the Southeast have improved steadily as the spring has progressed. Ratings for the latest week are the best since June 2013. Conditions in the Midwest are about the same as a year ago.

    Northern Plains pasture conditions are having an impact on feeder cattle prices. Prices for 600 pound feeder steers at South Dakota auctions last week were down $9 per cwt. from a month earlier. Similar feeder steers in Montana were priced $4 per cwt. lower than in mid-May. Weekly feeder cattle receipts at South Dakota auctions as reported by USDA-AMS (Agriculture Marketing Service) during the first week in June were down 12% from a year earlier. The next three weeks have shown increases of 22, 102, and 146% respectively. Pasture conditions in Nebraska, one state south of South Dakota, are much more favorable. Whereas 53% of South Dakota’s pastures are rated poor or very poor, only 8% of Nebraska’s pastures fall into the poor or very poor category. Prices for 600 pound feeder steers in Nebraska in the latest week were up $10 from mid-May. Moving a little further to the south, Oklahoma City 600 pound feeder steers prices moved up $3 per cwt during the last month.

    Feeder cattle market receipts across the nation in June continue to run well above a year ago and conditions in the Dakotas and Montana are probably a factor. Auction receipts this month are up 10% from last June. In May, auction receipts were up 16% from the prior May.

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    June 26th: Bargaining Strength Rolling Over
    Ag Center Cattle Report

    The change in bargaining strength can come quickly and dramatically as the past two weeks have demonstrated. Movement from price leverage on the side of the cattle owner has quickly changed to packer control and processing margins that are at all-time highs. Trades at $137 have been eclipsed and replaced by sales under $120 in two short weeks. While it might be easy to blame the quick decline on weak sellers, the more likely culprit is building supplies.

    Rolling over is as much a state of mind as a statement of the balance between supply and demand. Packer spin about the lack of need for more inventory and filled slaughter slots are common. Some is just spin and some is a changing landscape that involves more supplies and limited slaughter capacity. The facts are supportive of the notion that most of the recent price decline has found a home in the pocketbooks of the processors.

    Two open questions remain. How long will this newly found buy side bargaining strength last and will the same rate of decline continue?  The answer to the first question is it will last so long as the packers manage the kill size to keep the supply side on the defensive. The answer to the second depends on the resolve of the sellers. The sellers can stop the decline anytime just by saying NO. This, of course, risks a backup of numbers and more trouble down the line. 

    Looming in the backdrop of the current situation are some extraordinary influences: the JBS Bribery scandal and the opening of the Chinese markets to U.S. beef. Chinese demand for beef is swelling. In the past four years, imports of beef have increased nine-fold, reaching 601,000 MT in 2016. This may only be the start and an emerging middle class, anxious for more beef in their diets, may be a catalyst for increased demand for U.S. beef and a balance to increasing supplies.

    The future of the world’s largest meatpacker remains unclear. Political wrangling in Brazil has pitted the Batista family against an embattled President whose focus of recent is mainly towards revenge. JBS has stated a desire to concentrate future emphasis on the U.S. operations -- the centerpiece of their meat empire. Meanwhile, they are disgorging almost a million head of feeding capacity and no buyers have been announced. Rumors of U.S. plant closings are fiction. Plants will stay open so long as processors are making $200/head.

    The future for prices for domestic cattle is not good in the near term. Nonetheless, there remain opportunities and foremost is a place for more processing capacity. More processing capacity would restore a more sharing balance in beef margins between processors and live producers. Taking the mothballs off some of the recently closed plants might make sense. Alternatively, making use of new technologies for processing beef with magnetic imaging and robotic cutting devices might create new opportunities for business disrupters. Increased competition is always possible anytime one sector in beef production gains too much leverage. 

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    June 26th: Analysis of June Cattle on Feed Report
    Daily LIvestock Report

    As of June 1, the total inventory of cattle on feed in feedlots with +1000 head capacity was estimated at 11.096 million head, almost 300,000 head (+2.7%) larger than a year ago. This was the first time since January 2013 that the inventory has surpassed 11 million head and the last comparable June 1 inventory was in 2012. On feed supplies have increased recently as feedlots in the last three months (Mar, Apr & May) have increased placements by 600,000 head vs. the comparable period a year ago. So while the front end supply still looks relatively current, available inventory should start to increase in August. The 120-day inventory on June 1 was down about 9% compared to the previous year. The marketing rate in May was 17.7%, faster than the previous years and in line with the five year. Based on fed cattle slaughter so far in June, we think the marketing rate in June was near 18%, surpassing both last year and the five year average. Robust marketings and the seasonal decline in placements in February have contributed to the right front end supply.

    While there has been a lot of talk about the surge in Mexico cattle imports recently, at this point it looks like larger domestic calf supplies rather than big imports are the main reason for the surge in placements. During the 13 weeks in Mar, Apr and May, imports of feeder cattle from Mexico were 336,983 head, about 34,000 head more than the previous year. However, imports of feeder cattle from Canada during this period were down by a little over 50,000 so overall imports of feeder cattle in the last three months are down compared to the same period a year ago.

    Marketings in July and August remain key although at this time it appears futures are trying to price in a possible slowdown in retail beef features and slower product movement. While this is possible, there are also a number of factors that should continue to support beef demand this summer. Consumer income growth remains good, the unemployment rate is substantially lower and higher equity/housing markets have bolstered both household balance sheets and overall consumer confidence. Retailers were quite adept at promoting beef this year, in part because lower prices last fall and early this year provided an opportunity to do so. Also, beef provides the opportunity to book higher dollar sales while holding the meat margin together. 

    Beef packer margins at this point remain excellent and this has encouraged them to maximize fed cattle slaughter. Total cattle slaughter last week was reported by USDA at 632,000 head, 4% higher than the previous year. One of the issues that some readers have brought up, and its quite valid, is that more recently the first USDA estimate of cattle slaughter has fallen well short of the actual. For those not following the cattle market as closely, USDA provides an estimate of daily slaughter based on numbers reported by larger plants. In two weeks, USDA will issue the actual slaughter numbers (the same report that also includes cattle weights) which tabulates all the slaughter data reported by USDA inspectors from all plants. For the week ending June 10, fed cattle slaughter was 512,000 head, almost 12,000 head (2.4%) higher than the initial estimate. Since March, the short fall in first estimate reporting vs. actual has averaged 6,657 head/week.

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    June 24th: The Worst Is Yet To Come For The Cattle Market
    Rich Nelson -- Allendale Inc.

    The monthly Cattle on Feed fulfilled its bearish promises. USDA counted 12.2% more placements than last year in May. That was over the 10.4% increase the trade was expecting (ALDL +14.0%). At 2.119 million head, it was 230,000 head larger last year. Placements have been running at a good quick for some time, higher than last year in six of the past seven months. Over the past seven months they have added 1.324 million head more than last year. May placed cattle are ready for slaughter from November through February. The bearish fall supply is already set in stone. Now, we are working on extending this problem into the end of the year.

    The number of finished cattle leaving feedlots in May totaled 8.8% over last year. That was just over the average +8.5% guess (ALDL +8.1%). This marketing number was artificially inflated by 4% as there was one extra weekday in May 2017 vs. 2016. With the placement and marketing numbers mentioned, and including the never-mentioned fourth category called other disappearance, the number of cattle on feed as of June 1 totaled 2.7% over last year. That is an increase over the 2.0% higher number posted May 1.

    There are various calculations that we can do to off these numbers. One of them is a calculation of cattle that have been in feedlots for over four months, a measure of marketing currentness. We calculate there are 3.566 million head as of June 1 that have been in feedlots for over 120 days. That is 9% fewer than last year. That sounds bullish, but let’s not forget this same calculation was 16% smaller on March 1 and 15% smaller than last year on April 1. There has been a measurable change in the feedlot population. You can bet this will continue to worsen into fall. Within three months’ time, we will likely be over last year in this metric.

    The charts still show the double-top formation on the August contract. It implies pricing down to 106.00.

    We are not going to get bullish about the recent USDA suspension of Brazilian beef imports. After seeing an 11% rejection rate on recent shipments from Brazil, U.S. authorities enacted a ban on all fresh beef from them. The normal rejection rate is around 1%. USDA officials suggested a high rate of abscesses and unidentified foreign material. Brazil’s ag minister is planning a trip to the U.S. to try to push for a lifting of the suspension. The reason we don’t call this clearly bullish is that imports from Brazil, of all types of beef, total only 5% of our import total.

    Thursday’s Cold Storage report was great to see. End of May beef stocks at 412.87 million tonnes, were lower than the 438.6 average trade guess (ALDL 436.348). We drew down 46 million in stocks last month, the biggest May drawdown ever.

    On Thursday, Chinese authorities announced they accepted the first load of U.S. beef in 14 years. We hope to see this grow in the coming weeks and become a market-moving issue in a few months.

    This market had so many weeks of winning, on the bull side, that current pricing is almost shocking. Cash peaked at $144/$145 seven weeks ago. This week’s low price was $119. That is the lowest since the first week of the year. Given the fact that we have not even started to get into the rough patch waiting for us from late July through the end of the year, it won’t be hard to say we really have not gotten anywhere into the worst of things. This call will come a few months from now. Our $114 to $117 call for the August contract is likely a bit too high. We remain bearish and will hold the $120 to $123 hedges advised in the first seven days after the main market peak on May 4. We will strongly advise producers following this plan to hold those hedges until the cattle are sold.

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    June 23rd: National Feeder & Stocker Cattle Weekly Summary

    RECEIPTS: Auctions   Direct  Video/Internet   Total
    This Week     145,400     26,800        72,700       244,900
    Last Week     146,700     32,500           200         179,400
    Last Year       126,900     32,400         1,400        160,700

    Compared to last week, steers and heifers sold mostly 2.00 to 8.00 lower. Yearlings and heavy weight steers were steady to weak with lower undertones noted. The supply of feeder cattle is fairly tight as there is competition in the marketplace with farmers trying to buy cattle at lower prices, especially farmer feeders with old crop corn to feed. Live and feeder cattle futures started the week by closing moderately lower and continued with a mostly downward trend for much of the week before seeing slight gains on Friday. Compared to last Friday, June live cattle futures ended the week 2.50 lower at 119.20 and August 2.90 lower at 115.27. Feeder cattle futures were 2.92 lower at 144.95 for August and 2.95 lower at 144.40 for September. Although the market lost support from the board throughout the week, there were still positive high-notes out in the field, including the sale of 200 head of home raised steers weighing 770 pounds at 178.00 in Valentine, Nebraska on Thursday. Throughout the week, cash cattle trade has moved lower and at a significantly quick pace. In the Southern Plains live trades were 5.00 to 11.00 lower from 122.00-123.00. In Nebraska live trades were 9.00 to 11.00 lower from 121.00-123.00 and dressed trades were 7.00 to 17.00 lower from 193.00-198.00. In Colorado live purchases were 9.00 to 10.00 lower from 122.00-123.00.  Colorado’s week-to-date volume is 11,236 so far, the third largest head count in over six years. 

    Along with this, it must be noted that in NASS’s Livestock Slaughter Report the average dressed carcass weights of steers and heifers have dropped 25 pounds since last year. Since the previous report covering April, steer carcasses have decreased 13 pounds and heifer carcasses have decreased 20 pounds, indicating feedlots are staying current and “green” cattle being sold for slaughter. The U.S. cattle industry experienced many market moving headlines throughout the week. On Tuesday, an announcement from the largest feedlot operator in the U.S. as they disclosed their divestment plan. The plan included the dispersal of several major feed yards throughout the country. Also, on Thursday it was announced that the U.S. would suspend beef imports from Brazil, mainly due to safety and health concerns. Drought remains persistent in the upper Great Plains, impacting the states of Minnesota, Montana, and the Dakotas. Producers have requested the use of Conservation Reserve Program (CRP) acreage for emergency grazing, as well as haying. Although the area has received recent rain showers, there will be little impact on long-term conditions and after a harsh winter, there is a shortage in the hay supply. If the use of CRP land is not granted or much needed rain is not received, producers will face tough decisions, including the options of decreasing their herd size or driving several hundred miles to purchase hay. The most recent five-day forecast remains dry for the area, which may be hard on livestock and crops. Throughout the north and southeast portions of the Midwest, scattered rain showers are expected, with mild summer temperatures. 

    According to this week’s Crop Progress Report, corn and soybeans are rated with 67 percent in the good to excellent categories, with soybean plantings now 96 percent complete. The month of May saw large volumes of feeder cattle run through auction barns. This is credited to the higher futures and cash cattle trade. Cattle on Feed was released this afternoon with numbers that were slightly above the estimates. Cattle on feed June 1 totaled 103 percent, placed on feed during May totaled 112 percent, and fed cattle marketed in May totaled 109 percent. Yesterday NASS’s Cold Storage Report was released, which concluded that total red meat supplies in freezers is down 5 percent from last month and 7 percent from last year. Total pounds of beef in freezers is down 10 percent from last month and down 11 percent from last year. For pork, frozen supplies are slightly lower than last month and down 4 percent from last year, with the stock of pork bellies down 6 percent from last month and 59 percent from last year. The Choice-Select spread began to recede this week, closing today at 23.03, down 7.01 from last Friday. For the week, Choice boxed-beef closed 10.09 lower at 239.75 and Select closed 3.08 lower at 216.72. Auction volume this week included 57 percent weighing over 600 lbs and 42 percent heifers.

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    June 23rd: Shootin' the Bull Weekly Analysis
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    In my opinion, the fat cattle futures have made a 5 wave move down from the contract high per respective contract month that is anticipated to terminate the C wave of major wave 4 at this weeks low.  The current conflicting fundamentals between supply/demand are thought to be the production of the wave 4.  Wave 4 is a pause in the main trend in which the price of a market supersedes the fundamentals at present.  Hence a cooling off time frame to allow fundamentals and price time to sort out their differences.  I've noted this week the extremes cattle prices have taken when moving higher in comparison to when they move lower.  It is hands down the upside price action is much more prominent than the downside price action. My analysis suggests that wave 5's termination will help to be confirmed upon a trade above $114.50 October.  This area, per respective contract month, is the June 14th and 15th's low and the 21st's high which is the minor wave 3 of C low and top of what may be the minute sub-wave 4.  When you look at the charts on these dates, you will see the area of interest. Once through that, there is an intra day gap on the October and a full fledged gap on the August that I anticipate traders to shoot for.  I urge you to not be quick to be a seller were this rally to materialize until the determination can be made whether it is an impulsive move that begins the wave 5 rally, or a 3 wave move that suggests further sideways to lower trading.  My analysis suggests to anticipate the termination of the wave C of major wave 4 with a major wave 5 to a new contract high anticipated.  Were the wave C termination be the $111.15 October low, a wave 5 target is projected to $129.52 .  Via the Moore Research, the August and October contracts are no strangers to moving higher after the 1st of June.  With the extent of recent price movement lower, coupled with the indecisiveness of the fundamentals, I urge extreme caution being short down here.  Lastly, I continue to perceive the industry as a whole is undergoing a change.  This change is anticipated to keep the upward movement going for sometime to come. The increase of domestic demand and anticipated further demand from exports is consuming the supply at a faster rate than most ever anticipated.  While we may still have significant tonnage to chew through, with the help of only 10% of the  3.2 billion Chinese that will soon be eating US beef, this may consume product at an even faster rate. 

    The basis to June has been aggregated.  With a $121.00 cash trade this week, and a $119.40 close of June today, next week will be little more than narrowing the $1.60 spread.  So, did cash come to futures, futures to cash, or meet in the middle?  Looks like they fell literally simultaneously week to week with price visibly falling on the futures and theoretically on the cash until the lower cash trade was established.  I can't recall a more self fulfilling prophecy to have materialized as this time.  The urging of bearish analyst, much more widely followed than me, to sell the futures discount regardless, helped to embolden the packer to lower bids.  Perception and psyche appears to have played a much more important role in this decline than actual numbers.  In my opinion only, the marketing's and kill increases tells us demand is robust.  Potentially much more robust than supply burdensome.  However, the sole focus on supply continues to plague producers. 

    Feeder cattle well out performed the fats this week with most not having to revisit the low made on Tuesday as did the fats.  The abrupt and significant change in basis over the past three weeks has been a stunner for feeder cattle buyers.  What once appeared to be a significant premium for feeders in the future has turned into buying them for $2.00 to $3.00 under the index with the most favored January contract still with a $11.00 positive basis.  I recommend feed yard managers take action with this spread while still this wide.  A trade above the $145.00 area August will be a critical pivot point.  The $145.00 fulcrum is the same dates as the fats.  With it seemingly that cash feeders have sustained their higher trade in sale barns, yard managers may be quicker to want to own cattle on paper than in the flesh for the time being.  Like the fats, it is perceived a 5 wave move down has been made.  This 5 wave structure is believed to be the C wave of a major wave 4 correction. Were the C wave termination be the current $140.77 low, a wave 5 target is projected to $173.55 August. 

    Grain traders have committed to there being no risk of crop failure or demise this year.  Pushing corn to a new low for the year by a half a cent, there is zero weather premium or any other premium to potentially offset something occurring.  It appears to me a lot like putting a bull in the pen and turning your back on him because you think he's tame.  Nonetheless, traders appear willing to increase risks by selling a market with a perceived intrinsic value of $3.50 and unlimited upside potential. 

    Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

    An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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    June 23rd: Cattle on Feed Report
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    United States Cattle on Feed Up 3 Percent
    • Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.1 million head on June 1, 2017. The inventory was 3 percent above June 1, 2016.
    • Placements in feedlots during May totaled 2.12 million head, 12 percent above 2016. Net placements were 2.05 million head. 
      • During May, placements of cattle and calves weighing less than 600 pounds were 400,000 head, 600-699 pounds were 315,000 head, 700-799 pounds were 529,000 head, 800-899 pounds were 550,000 head, 900-999 pounds were 235,000 head, and 1,000 pounds and greater were 90,000 head.
    • Marketings of fed cattle during May totaled 1.95 million head, 9 percent above 2016.
    • Other disappearance totaled 70,000 head during May, 5 percent below 2016.
    Complete June Cattle On Feed Report
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    Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of June 1st
    Millions of Head
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    Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in May
    Millions of Head
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    Number of Cattle Marketed from 1,000+ Capacity Feedlots in May
    Millions of Head
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    Cattle on Feed by State as of June 1st
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    June 23rd: Federal Judge Bars Involuntary Collection of Montana Beef Checkoff Tax
    R-CALF USA

    Great Falls, Mont. -- On June 22, the United States District Court for the District of Montana affirmed a ruling that the U.S. Department of Agriculture’s beef checkoff program, as currently administered, violates the First Amendment. The District Court put in place a preliminary injunction prohibiting the private Montana Beef Council from retaining beef checkoff funds without the payers’ consent.

    The court took action after a magistrate previously recommended the injunction in December 2016, agreeing with plaintiff in the suit - the Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) - that the checkoff was being run unconstitutionally.

    “The Government violates the First Amendment when it compels a citizen to subsidize the private speech of a private entity without first obtaining the citizen’s ‘affirmative consent.’ … What distinguishes unconstitutional subsidies for private speech from constitutional subsidies of government speech is not the content of the speech, but rather that the latter is ‘democratic[ally] accountab[le].’ … The USDA does not control how the Montana Beef Council spends the money that it obtains from the federal beef checkoff program,” the court wrote in its decision.

    The beef checkoff is a federal tax that compels producers to pay $1 per head every time cattle are sold, half of which is used to fund the advertisements of private state beef councils, like the Montana Beef Council. The Montana Beef Council is a private corporation whose members include representatives of the largest multinational beef packers. The council promotes the message that there is no difference between domestic beef produced under U.S. food safety laws and beef produced in foreign countries. It has paid for advertisements for the fast-food chain Wendy’s, for example, to promote hamburgers that use North American beef, meaning beef that can come from anywhere on the continent, but not necessarily Montana or even the United States.

    “For well over a decade R-CALF USA members fought to reform what we considered a terribly mismanaged national beef checkoff program. And, for well over a decade we faced an impenetrable wall of top-ranking USDA officials whose connections to the multinational meatpackers’ lobby caused them to steadfastly oppose every single reform proposal we advanced”, said R-CALF USA CEO Bill Bullard. “Yesterday, after a meaningful, law-based evaluation of our concerns, we won. We hope this will be just the first step of correcting over a decade’s worth of beef checkoff program mismanagement.”

    Senators Cory Booker of New Jersey and Mike Lee of Utah have put forth bipartisan legislationthat would seriously reform the checkoff programs to make them more transparent and accountable to producers.

    David Muraskin of Public Justice, lead counsel for the plaintiff in the case, said that the District Court’s decision will “finally provide Montana ranchers leverage to control how their money is spent and their goods are advertised. Without government accountability and control the checkoffs amount to nothing more than a massive transfer of wealth from farmers and ranchers to multinational corporations, which is against our values and laws.”

    “For too long the big meat packers and the National Cattlemen’s Beef Association have used their allies in Washington to squelch the voices of rural America,” said J. Dudley Butler, of the Farm and Ranch Law Group. “We hope this is a step towards fairer treatment of farmers and ranchers and a more accountable food system.”

    R-CALF is also represented by Bill Rossbach of Rossbach Law, P.C. in Missoula, Montana.

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    June 23rd: Drought in North Central States
    Bloomberg News

    Drought conditions have swept the northern reaches of the Great Plains this year, parching grazing pastures and grain fields while demonstrating how quickly severe weather can upend commodity markets. Prices for spring wheat, grown in the area, have soared 16 percent this month as volatility jumped. While the rush of cattle to auctions probably won’t have an immediate impact on U.S. meat supplies, some of the ranchers who are being forced to sell their animals early or pay more for feed may see their incomes suffer.

    “Probably more than 70 percent of the cows that sold would have ended up as hamburger later this year -- the drought sped up the liquidation,” Hellwig said. 

    The dry conditions spurred the National Farmers Union along with groups from Montana, North Dakota, South Dakota and Minnesota to send a letter to U.S. Agriculture Secretary Sonny Perdue this week requesting that land in a federal conservation program be released for emergency grazing or haying. As some ranchers trim herds, others are driving hundred of miles to find hay, the letter said. At the start of the year, the four states held about 10.7 million cattle, or 11 percent of the national cattle and dairy herd, government data show.

    About half of South Dakota, two-thirds of North Dakota and a quarter of Montana are in moderate drought or worse, according to U.S. Drought Monitor data as of June 20. While some recent showers have eased parched conditions in North Dakota, there’s little rain expected in the next few weeks for most of the northern regions, said Brad Rippey, a meteorologist with the U.S. Department of Agriculture in Washington.

    Some cattle have been sold to ranches in Wyoming and Nebraska, where grazing conditions were more favorable, said Tim Petry, a livestock marketing economist at North Dakota State University. Better pastures in the rest of the U.S. will also limit the impact of increased cattle auctions on meat supplies and prices, he said.

    In eastern Montana, more than double the amount of cattle were sold at auctions at Sidney Livestock Market Center when compared with a typical June, according to Tim Larson, the manager. Most farmers in the area have enough grass for the summer, while persistent dryness could cause a shortage of the hay supply that animals rely on in the winter months.

    “Come October or November, that’s where we’re going to see substantial numbers and things change,” Larson said.

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    June 23rd: Analysis of USDA Cold Storage Report
    Daily LIvestock Report

    Total supplies of beef, pork, chicken and turkey in cold storage at the end of May were 2.324 billion pounds, 0.6% less than a year ago but still 3.1% higher than the five year average. Cold storage stocks of all major meat proteins at the end of May were about the same as where they were the previous month. In the past five years cold storage stocks have increased an average 1% from April to May. See page 2 for full details.

    Beef: Sharp price increases, especially for fat beef trimmings, likely caused end users to rely heavily on their freezer inventories. Boneless beef stocks at the end of May were 377.8 million pounds, 11.2% less than a year ago and 8.3% lower than the five year average. The drawdown in stocks in May was 9.1% when in the last five years the average drawdown was 4%. Beef imports continue to track under last year, which also has reduced the supply of lean boneless beef going into cold storage. Sharp spike in middle meat cuts also caused end users to liquidate their stocks of beef cuts, which dropped 18% compared to the previous month. This is not unusual as end users had been accumulating inventories in March and April in anticipation of better demand in May and decided the time was right to unwind those freezer hedges. Total beef inventories at 412.8 million pounds down 10.6% from last year and 10% under the five year average. The lower inventories continue to be supportive for beef pricing in the short term. Beef exports continue to be generally positive although the recent price spike has reduced volumes shipped compared to the torrid pace earlier in the year.

    Pork: While the tight belly stock situation remains positive for the pork market in the short term, inventories of other pork products increased at a faster pace. Total pork in cold storage at the end of May was 592.1 million pounds, 3.9% lower than a year ago and 5.8% less than the five year average. Pork inventories in May were 0.5% less than the previous month when compared to an average 4% drawdown in stocks during the past five years. The trend in cold storage for the next three months will be critical. Pork production is expected to ramp up higher in Q3 and it is necessary to get into that quarter with relatively current pork stocks. If product starts to accumulate in the freezer, be this because of slower exports or because high prices kill some demand in late summer, it could put further downward pressure on fall pork prices. Ham inventories at the end of May were 144.1 million pounds, unchanged from a year ago and 3.5% higher than the five year average.

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    June 23rd: U.S. Halts Brazilian Fresh Beef Imports Due to Safety Concerns

    U.S. Agriculture Secretary Sonny Perdue on Thursday announced the suspension of all fresh beef imports from Brazil because of recurring concerns about the safety of the products. 

    Since March, USDA’s Food Safety and Inspection Service (FSIS) has been inspecting all meat products arriving from Brazil and has refused entry to 106 lots of beef -- about 1.9 million pounds -- due to public health concerns, sanitary conditions and animal health issues, USDA said. The rejection rate of 11 percent of Brazilian fresh beef is substantially higher than the 1 percent rejection rate for shipments from the rest of the world, the agency noted.

    The suspension will remain in place until the Brazilian Ministry of Agriculture takes corrective action that USDA finds satisfactory, USDA said.

    Perdue said the action was necessary to safeguard the nation’s food supply. “Although international trade is an important part of what we do at USDA, and Brazil has long been one of our partners, my first priority is to protect American consumers. That’s what we’ve done by halting the import of Brazilian fresh beef,” Perdue said in a statement.

    USDA said its decision supersedes the Brazilian government’s own suspension of five facilities from shipping beef to the United States.

    Five beef plants in Brazil -- three from Marfrig, one from JBS and one from Minerva -- had their permits to export beef to the United States suspended last week by the Brazilian government after U.S. sanitary officials found non-conformities in reactions to vaccination against foot-and-mouth disease (FMD).

    The vaccine can sometimes cause reactions that provoke abscesses in the meat, the Brazilian association for meat exporting companies, ABIEC, said in a statement to the press.

    JBS said in a statement that its plant in Campo Grande had its authorization suspended. “The company informs that it has already forwarded the clarifications requested through ABIEC and emphasizes that no problems were found regarding plant facilities or product quality,” JBS said.

    Marfrig had plants in Promissão, São Gabriel and Paranatinga suspended. “The company clarifies that it is already taking all necessary steps to meet the requirements of the American market in its production processes ... aiming for the return of these plants to export for this market,” it said.

    Minerva, which had exports from its Palmeiras de Goiás plant suspended, said the non-conformity found in the exported meat was “vaccine marks” in some cuts of beef that do not pose a risk to human health.

    “The company, which follows the most stringent standards of food quality and safety in all countries where it operates, informs that it has intensified controls to resume operations of this plant to (export to) the U.S. as soon as possible,” Minerva said.

    ABIEC said the suspended plants represent “a minimal fraction of the national production of animal protein,” and the Brazilian beef industry “follows the highest standards of sanitary surveillance and quality.”

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    June 22nd: USDA Livestock Slaughter Report

    Record High Total Red Meat and Pork Production for May

    Commercial red meat production for the United States totaled 4.28 billion pounds in May, up 7 percent from the
    4.00 billion pounds produced in May 2016.

    Beef production, at 2.16 billion pounds, was 6 percent above the previous year. Cattle slaughter totaled 2.75 million
    head, up 9 percent from May 2016. The average live weight was down 26 pounds from the previous year, at
    1,307 pounds.

    Veal production totaled 6.3 million pounds, 6 percent above May a year ago. Calf slaughter totaled 39,300 head, up
    11 percent from May 2016. The average live weight was down 11 pounds from last year, at 276 pounds.

    Pork production totaled 2.10 billion pounds, up 8 percent from the previous year. Hog slaughter totaled 9.95 million
    head, up 8 percent from May 2016. The average live weight was down 1 pound from the previous year, at 282 pounds.

    Lamb and mutton production, at 11.8 million pounds, was down 9 percent from May 2016. Sheep slaughter totaled
    180,300 head, 3 percent below last year. The average live weight was 131 pounds, down 9 pounds from May a year ago.

    January to May 2017 commercial red meat production was 21.0 billion pounds, up 4 percent from 2016. 

    Accumulated beef production was up 5 percent from last year, veal was down 2 percent, pork was up 3 percent from last year, and lamb and mutton production was down 5 percent. 

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    June 22nd: USDA Cold Storage Report

    As of May 31st:

    Total red meat supplies in freezers were down 5 percent from the previous month and down 7 percent from last year.

    • Total pounds of beef in freezers were down 10 percent from the previous month and down 11 percent from last year.
    • Frozen pork supplies were down slightly from the previous month and down 4 percent from last year. 
    • Stocks of pork bellies were down 6 percent from last month and down 59 percent from last year
    Total frozen poultry supplies were up 4 percent from the previous month and up 4 percent from a year ago. 
    • Total stocks of chicken were down 1 percent from the previous month and down 3 percent from last year. 
    • Total pounds of turkey in freezers were up 13 percent from last month and up 17 percent from May 31, 2016.
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    June 22nd: Futures Resume Down; Uncertainty Mounts
    Cassie Fish -- cassandrafish.com

    Most of the negotiated trade occurred yesterday, though there are some dribbles of trade continuing today as cheap as $120. Cash prices are $6-10 lower than a week ago and some cattle were left unsold. Even today there are rumors of trades as much as 2 weeks out $2-3 lower than this week. Whether true or not, the sense that the market is moving away from any offers is palpable.

    The frustration that cash market sellers are experiencing is high. It is obvious packers are getting their needs met easily outside the negotiated pool of cattle and with boxed beef values finally in decline with plenty more to come, there is incentive only to buy a few and back up if a packer.

    Margins are well over $200 per head this week and it appears that packers may be able to keep cattle costs declining faster than boxed prices- or that is the plan anyway. Once the choice cutout has sunk back into the $230s, it will be key to see whether cheaper prices bring in a round of buying. Do cheaper prices not trump the hot, slow days of July or does the cutout decline back to $220?

    This week’s kill is expected to edge up over 630k with a shift on Saturday scheduled at a few more plants. A repeat of that slaughter level is expected to continue next week too, ahead of the holiday-shortened kill week after next.

    Futures have concluded their short-term rally which began Tuesday late session and continued most of yesterday. But $6 was too close for comfort for Aug LC yesterday, and as cash prices eroded, the rally began to fail. Today’s gap-lower opening was all the evidence needed that, despite being oversold, futures are in trouble. Tuesday’s lows have been taken out, the charts look bearish and there is absolutely no reason to pick a bottom here.

    Aug LC open interest dropped 2k yesterday, but that is a drop in the ocean of huge long fund ownership of Aug LC. Until traders get a look at the next Commitment of Trader’s report, it’s only a guess as to how much the funds have liquidated. Today’s action doesn’t ‘feel’ like a fund selling deluge at all, which if correct, does not bode well.

    It’s more of the same and same is bearish.

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    "Click Here to view a Slide Show of Drought Monitor maps for the last 12 weeks
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    June 20th: Brazil's JBS Plans to Sell Five Rivers & Other Assets

    Brazil's JBS S.A. announced on Tuesday it has submitted an asset divestment program to its board of directors, in which it plans to sell Moy Park, Five Rivers Cattle Feeding and a 19.2 percent stake in Brazilian dairy company Vigor Alimentos to raise BRL6 billion ($1.82 billion). 

    “The divestment program will reduce the company's net debt and, consequently, its financial leverage, strengthening JBS' financial structure,” the company said in a statement to investors. 

    The world's largest beef processor added that its divestment plan considers “non-core and less strategic assets.” The $1.82 billion that JBS plans to raise by selling the assets would be in addition to $300 million from the sale of the company's beef operations in Argentina, Paraguay and Uruguay to Minerva, announced on June 6. The divestment plan still has to be approved by the board and by shareholder BNDESPar, the investment arm of Brazil's national economic development bank BNDES. 

    The holding company controlling JBS, J&F, signed a leniency agreement on June 5 to pay a BRL10.3 billion ($3.3 billion) fine to settle charges related to corruption and payment of bribes by its controlling shareholders to Brazilian politicians. Since then, the company's controllers have been looking for ways to raise funds in order to reduce the group's debt. 

    JBS bought Irish poultry producer Moy Park from Marfrig Global Foods in June 2015 for $1.5 billion, as part of JBS' plans to expand business in Europe and improve geographic diversification. 

    Five Rivers Cattle Feeding is a wholly-owned subsidiary of JBS, with combined feeding capacity of more than 980,000 head of cattle, and farms located in Colorado, Kansas, Oklahoma, Texas, Arizona, and Idaho. The company also manages a 75,000 head capacity feed yard in Canada, according to information on its website. 

    Vigor Alimentos is one of Brazil's largest dairy companies, controlled by J&F.

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    June 20th: Impact of China on U.S. Cattle & Beef Markets
    Glenn Selk, Oklahoma State University Extension

    Step one of U.S. beef exports to China is completed. The first step of opening any international market is the political process of negotiating access and agreeing on the conditions and stipulations of that access. Step one establishes the game and the rules of the game.

    Let the game begin.  Step two follows with the economic process of markets determining the value, size and timing of trade. The restrictions and requirements for U.S. beef to enter China mean that initially only a small portion of U.S. beef production will qualify for export to China.  Increasing the qualified supply will necessarily involve additional costs for the industry. The pace of export growth will depend on the value of U.S. beef in China and that, in turn, will depend on which products (cuts and quality) are demanded.  Exporters will likely move rather cautiously initially until the market values and export procedures become more certain. The additional costs to qualify for export are typically incurred for entire animals (carcasses) even though only certain products are exported, meaning that the export value must be sufficient to cover the additional costs for non-exported portions of the carcass.

    In general, not much is known about the composition of Chinese demand for U.S. beef. What mix of middle versus end meats; Choice versus Select; and offals will make up Chinese demand for U.S. beef?  However, given that unofficial flows of U.S. beef have been entering China in recent years, some beef packers may have insight, at least initially, into beef product demand in China.  It will likely be a moving target for many months.

    These unofficial product flows pose additional questions about the timing and volume of beef exports for the first few weeks or months. It is possible that unofficial flows will convert quickly into official exports in which case apparent initial volumes of exports to China may simply displace export volume currently being transshipped through other countries. It is possible that the unofficial flows will continue and be augmented by new official exports. It will be important to look comprehensively at export volumes across countries to understand the net effect. It is even possible that China will move quickly and aggressively to stop unofficial flows which could happen before official flows have developed and could actually result in a temporary reduction in net beef exports. The next few weeks/months will no doubt be very dynamic.

    There are many unknowns but it seems unlikely that beef exports to China will have a large noticeable effect on cattle and beef prices and beef production in the U.S. initially. Over time, with growing market share, prices for particular products might be affected depending on the quantity, quality and specific products demanded in China. More general price effects on beef and perhaps cattle will depend on the dynamics of demand relative to supply for U.S. beef products in the Chinese market. The U.S. industry will benefit over time from some combination of higher prices and/or increased export volumes as the Chinese market grows. Beef exports to China could be a very big deal in the future but will likely start fairly slowly. 

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    June 20th: Ranchers Sue to Return Country-Of-Origin Labeling
    Associated Press

    SPOKANE, Wash. (AP) — Ranchers on Monday sued the U.S. Department of Agriculture, seeking to force meat to again be labeled if it's produced in other countries and imported to the United States.

    The lawsuit, filed in federal court in Spokane, seeks to overturn a March 2016 decision by the Department of Agriculture to revoke regulations requiring imported meat products to be labeled with their country of origin. That change allowed imported meat to be sold as U.S. products, the lawsuit said.

    "Consumers understandably want to know where their food comes from," said David Muraskin of Washington, D.C., an attorney for Public Justice, which filed the lawsuit. "With this suit, we're fighting policies that put multinational corporations ahead of domestic producers and shroud the origins of our food supply in secrecy."

    Between 2009 and 2016, the USDA required country-of-origin labeling on meat.

    The lawsuit said the change violated the nation's Meat Inspection Act, which required that slaughtered meat from other countries be clearly marked.

    The Department of Agriculture on Monday declined to comment on a matter that is in litigation.

    The lawsuit was brought by the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, the nation's largest group of independent cattle producers, and the Cattle Producers of Washington.

    Bill Bullard of United Stockgrowers said the labeling is essential to allow Americans to support U.S. ranchers. "Empowering consumers to buy American beef with country of origin labels will strengthen America's economy," Bullard said.

    Multinational corporations use the lack of clear labels "to import more beef from more foreign countries, including countries with questionable food safety practices," he said.

    The lawsuit asks the court to vacate USDA's current regulations, which allow corporations that import beef and pork and other products into the United States to label that meat "Product of USA."

    Beth Terrell, another attorney for Public Justice, which is a nonprofit legal group, noted that President Donald Trump initially expressed support for country-of-origin labeling, but he has since backed off. "Both consumer advocates and domestic producers were disheartened by President Trump's reversal," Terrell said.

    More than 800 million pounds of foreign beef is imported into the United States each year, Public Justice said.

    Without country-of-origin labeling, "domestic ranchers and farmers tend to receive lower prices for their meat because multinational companies can import meat and misleadingly present it as homegrown," Public Justice said in a news release.

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    June 19th: Amazon -- The Disrupter
    Ag Center Cattle Report

    Kroger, the nation’s largest food chain, reported earnings last week that failed to meet expectations and crashed the stock 20%. Kroger cited increased competition and variable food prices as reasons for the declines. They also forecast lower earnings for the coming year. This was only the start of their problems. On Friday, the internet giant Amazon announced the purchase of Whole Foods, the organic high end grocer with 450 stores, in an all cash transaction of $14 billion dollars.

    Amazon has disrupted retailing in our country and brought online purchasing and quick delivery to every household and business. Amazon delivers both convenience and price efficiencies to the marketplace and the growth has been astronomical. The market viewed the purchase of Whole Foods favorably and the stock price increase Friday caused the increase in the market cap Friday to be equal to the purchase price of Whole Foods -- meaning one might view the purchase as being free. 

    Amazon is no stranger to the food business having struggled with a food delivery service called Amazon Fresh for several years with a renewed effort this past two years. Pilot projects in Seattle, Amazon’s home town, accompanied with forays into L.A., New York and other cities showed a seriousness of intent and now they have demonstrated a full commitment. It poses an irony that the company that upended bricks and mortal retailing is now purchasing bricks and mortar. Recent moves experimenting with bricks and mortar stores are aimed at both distribution centers and as retail stores. Amazon Book stores have popped up across the country and model grocery stores are being tested for new technologies involving food distribution, inventory and marketing.

    Amazon has stated the possibility of new grocery stores allowing the customer to pull items off Smart shelves, place them in Smart baskets and totally eliminate the check out line. This approach not only brings total inventory control to the grocer but an important check out convenience to the customer saving large costs in the process.

    There may even be larger disrupter influence of the Amazon purchase of Whole Foods. It may cause a rethinking of the entire process of food distribution. There is little reason to believe in today’s connected world that shortening up the delivery speed and distance from food production to consumer is not possible. Today almost all major grocers ship to distribution houses where food is aggregated, priced and delivered to the stores. There may be delivery mechanisms for further processing of items like meats at the plant and shipping directly to the consumer’s home.

    One can see a beef plant where primal cuts are sent to further processing for portion control cuts ready for consumer consumption. Those cuts could be marketed over the web and delivered to homes, fresh or frozen and ready for consumption. The selection could also include cooked or pre-seasoned offerings designed to match consumer taste. This might revive an ago old practice of daily milk delivery. The path forward in retail marketing of food means more choices and cheaper prices for consumers and all of that is positive for beef producers.

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    June 19th: An Offal Lot of Potential
    Katelyn McCullock -- Farm Bureau Economist

    On June 12, 2017, the final protocols were released for shipping U.S. beef to China. Of the requirements listed, a few highlights include:

    • Beef and beef products must be derived from cattle that were born, raised, and slaughtered in the U.S., cattle that were imported from Canada or Mexico and subsequently raised and slaughtered in the U.S., or cattle that were imported from Canada or Mexico for direct slaughter;
    • Cattle must be traceable to the U.S. birth farm using a unique identifier, or if imported to the first place of residence or port of entry;
    • Beef and beef products must be derived from cattle less than 30 months of age;
    China also bans the use of growth promotants, feed additives, and chemical compounds; and will conduct residue testing at port of entry on shipments of beef. This is one more important step forward to market access that could have a lot of potential for U.S. beef producers. 

    The Market:
    China has about 1.4 billion people and over the last five years, beef consumption has been climbing along with imports.   Up until 2011 beef imports to China struggled to reach more than 50,000 tons, but in 2012 imports doubled. Over the next four years, imports would increase nine-fold, reaching 601,000 tons in 2016.  U.S. market access was eliminated in 2003 as a result of BSE and over the last 14 years, Australia has taken the lion’s share of the business in this growing market, followed by Uruguay.  Figure 1 shows the historic rise in beef imports over the last 20 years.

    China is expected to become the largest beef destination in the world and has the potential to be a major destination for U.S. product.  The market in China has changed substantially in those 14 years. Back in 2003, the U.S. supplied 80 percent of Chinese beef imports according to Global Trade Atlas.  Of those 80 percent, more than 20 percent was offal, items such as tongues, kidneys, livers etc.  As the demand for beef has grown in China, the amount of offal imports has grown as well but has been vastly outpaced by the rise in muscle cuts.  In 2011 offal accounted for 25 percent of total beef imports to China, and by 2016 that number dropped to 4 percent, even though offal imports have increased three-fold since 2011. Figure 2 shows the change in meats versus offal imports.

    Offal Market in the U.S.
    In 2003 China was the seventh largest destination for U.S. frozen offal, and the sixth largest destination for tongues. Today, Mexico and Japan are the top two destinations for offal.  The U.S. ships almost all offal produced overseas.  It is a critically important piece of the carcass value to find a home for these by-products that would not be used by the domestic market.  One important thing to note is that as carcass weights have gotten heavier and dressing yields improved, indicating more meat has become available on a per carcass basis.  However, it does not change the volume of organs.  Cattle still have one tongue, one liver, two kidneys etc.  The numberof offals available is directly tied to number of head moving through the system.  The U.S. has rather consistently exported between 250 to 300 thousand metric tons of offal over the last 14 years.

    Production System Changes
    The ban on the use of growth promotants, feed additives, and chemical compounds greatly affects how much potential the Chinese market has.  Because these production tools are accepted in the U.S. as a science based production practices, producing for the Chinese market will likely need to carry a premium to drive producers to adopt a production system to fit that market.  The question then becomes at what price and volume will Chinese consumers pay, and how sensitive are they to price fluctuations. These are questions that the market will determine, but should be interesting to watch it unfold. 

    Economically speaking, this will further segment the market, driving farmers and ranchers to producea specific product for a specific customer. The number of producers are interested in satisfying that market may depend on the cost of changing and adopting new on farm traceability protocols  as well as new management programs to achieve results without the use of banned substances. In the end, the premium attached to the Chinese market must warrant those changes.

    The Chinese requirements will not be something that U.S. meat packers can sort in the cooler.  Product will need to be grown to meet these specifications, starting at the cow-calf level to move through the system.  This will slow the potential ramp up of any additional exports to China.  Only a small proportion of commercial beef production would fit the current parameters surrounding this protocol. 

    This also could have some interesting implications in the offal market.  As mentioned earlier, offal production is determined by the number of head slaughtered.  A rapid increase in the demand for these products would require large numbers of cattle to fit the parameters in a different way than a rise in the demand for muscle cuts.  These production requirements will need to be addressed at the whole animal level, but there could be short-term price adjustments as the U.S. supply chain tests the market.

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    June 19th: Chinese Beef Buyers Race to Get American Steak
    Agriculture.com

    Chinese meat importers are racing to get their hands on the first shipments of beef from the United States in 14 years, as strong demand for premium steaks continues to grow in the $2.6 billion beef import market.

    China and the United States last week settled the conditions for American beef exports after the two sides agreed in May to resume the trade. Pent-up demand for U.S. meat could erode sales of Australian beef, China's current top supplier of premium steaks.

    "We have ordered 56 to 58 tonnes of whole carcasses, which are expected to arrive by the end of July," said Chen Fugang, owner of Aoyang International, a Shanghai-based trading company.

    Chen said he expects the product to be a hit in the Chinese market, where total beef sales grew around 4 percent last year to reach 5.9 million tonnes, according to Euromonitor.  "We're especially interested in several barbecue products, like rib eye and fillet steak, which we believe Chinese customers would like," added Chen.

    American beef is known for its quality in China, but was banned in 2003 after a mad cow disease scare. Since then, other beef imports have surged, as domestic production has struggled to keep up with demand from the expanding middle class.

    Total beef arrivals rose 22 percent to 579,836 tonnes last year and foreign suppliers will meet about 20 percent of demand by 2020, forecasts Rabobank.

    "The number of enquiries to our exporters number in the hundreds, if not low thousands, since the announcement of the agreement," said Joel Haggard, senior vice president for the U.S. Meat Export Federation in Asia-Pacific.

    Increased competition for the lucrative premium market will stir concerns in Australia, where a drought has cut the herd size.

    Similar quality cuts of U.S. beef are expected to be cheaper than Australian meat because of low U.S. grain prices, a large component of the cost of raising cattle.

    Chen, who sells Australian and New Zealand beef to five-star hotels and high-end restaurants, declined to reveal the price for his U.S. cargoes, adding that customs and handling fees still needed to be factored in.

    But the product would be cheaper than Australian beef, he added. "Price is a key (selling) point, as U.S. beef is cheaper than Australian beef of the same quality," he said.

    Despite the high interest, strict Chinese import conditions will limit shipments of American beef initially. And U.S. prices are also high currently, warned the Meat Export Federation's Haggard. "This isn't going to be a wave of product coming in. It's going to roll in slowly," he said.

    Australian beef will still see strong demand, said Michael Finucan, general manager of international markets at industry body Meat & Livestock Australia.

    Australia's grass-fed beef is seen as "more green" than American in some markets, he said. And, unlike the U.S., the country can export refrigerated beef to China, tapping into demand from high-end retailers.

    However, for some, U.S. beef has the edge.  "I have been in this industry for a long time. In my view, U.S. beef tastes more tender," said Aoyang's Chen. 

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    June 19th: Maintain The Forward Momentum
    John Nalivka -- Sterling Marketing

    Although severe winter weather and wildfires wore heavily on many ranchers this year, the prices across the market have generally been a reason to smile. That said, I believe it is time to follow up on my previous comments about profits across the industry.   I preface these thoughts with - this is not intended as a doom and gloom outlook for the industry.  Rather, just a few of thoughts on maintaining the beef industry’s forward momentum.

    The cattle market’s strength was not happenchance.  It was the result of feedlots that are very current, carcass weights well below a year ago, strong exports, and solid U.S. consumer demand.  Each of these market conditions can easily change and when coupled with increasing cattle numbers, I don’t think I have to describe the likely impact on the overall beef market.   Therefore, the goal would be to sustain the conditions that the industry has best control. 

    The four that I have identified are important.  There are other factors but today, maintaining forward momentum rather than simply letting the market takes its course will at least require that 1) feedlots remain current, 2) carcass weights remain below a year ago, 3) U.S. beef exports remain strong, and 4) consumer demand remains relatively solid.

    What will likely change the conditions listed?  Together, a feedlot’s supply-marketing balance (how current they are), fed cattle prices, feeder cattle prices, breakeven prices, and weights go hand-in-hand.  It doesn’t take much to turn the tide of stability into problems.  Prices go down, feedlots begin holding cattle and weights start increasing in short order.  Compound that situation with high break-evens driven by high feeder cattle prices.  Short term decisions and reaction quickly turns into a downward price spiral.

    High break-evens may not be the catalyst but they definitely compound the downward spiral.   Breakeven prices are best managed by managing the first-cost of the feeder cattle going on feed rather than adding pounds to cattle already on feed.   Furthermore, consumer demand for smaller cuts only further supports the case for smaller carcasses.  And yes, I understand the economics of yield in beef production.

    Weights and industry break-evens are the key to forward momentum.  In raising the yellow flag for both, I would submit that maintaining the current situation of the past five months will be necessary for sustaining profitability as the industry enters the second half of 2017.

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    June 16th: Boxed Beef Value & Trade Volume

    Demand for Choice beef over the last four weeks has been impressive, possibly the best this decade for the weeks surrounding Memorial Day. The Choice Beef Cutout reached its highest value for the year-to-date early this week at $252.52 per cwt. on Monday. This was up $4 from the weekly average for the third week in May. Going back to 2010, the beef cutout value declined five years out of seven from mid-May to mid-June. The biggest price appreciation for that set of weeks during the last 7 years was an $8 gain in 2014.

    Looking at weekly price changes in the Choice Beef Cutout from mid-May to mid-June during the last seven years shows last year was the most similar to this year. Last year, the cutout in the week prior to Memorial Day declined $2 followed by a $1 drop during the holiday week and then a $3 increase in the first full week of June. This year, during those same weeks, the cutout declined $2, then $1 and finally climbed $5 last week (rounding error gets you to the $4 change referred to above). For sake of comparison, the price changes in 2014 for these weeks was up $3, down $2 and unchanged.

    Slaughter cattle price trends in both the cash and futures markets have been “spooked” this week, even as the Choice Beef Cutout has been resilient. The August Live Cattle contract closed last Friday at $123.85, but after three days of trading this week had slumped to below $118.00. USDA-AMS (Agriculture Marketing Service) reported negotiated cash trade last Friday at close to $136, but this week’s mid-week trade was at $129. Given this disconnect between finished product and on-the-hoof values, the issue of expectations is definitely in play relative to prospects for finished product values.

    Refocusing back on weekly prices trends in the Choice Beef Cutout for the next few weeks provides a better sense for understanding this week’s slaughter cattle price action. With last year’s cutout value mapping closely with this year’s, the concerns about what cutout values did in the second half of June appear to be coming to the fore. Last year, the Choice Beef Cutout was down slightly (close to unchanged) for the current week. This was followed by a $9 decline in the next week and an $8 decline for the last week in June. Laying this price template onto this year’s market still puts the Choice Beef Cutout slightly above $230, which is still a very high price from a historical perspective (see graph above).

    Underlying these expectations is the assumption about beef demand. Running these price changes off the current situation as a base period of some of the highest values in history makes some fairly rosy assumptions about product demand. Choice beef product negotiated cash trade volumes reported to USDA-AMS in the week following Memorial Day were the highest since early April, suggesting that holiday product clearances were favorable. Cutout values were 10% higher than in April, so speculative bargaining hunting is not a likely component of current demand. Choice beef trade volumes were running above a year earlier during the first few days of June, but since then have lagged, an indication that packer demand for cattle may also be receding.

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    June 15th: Utah Rancher Files Lawsuit Against Beef Checkoff
    Tri-State Livestock News

    A Utah rancher has filed suit against the U.S. Secretary of Agriculture and the U.S. Department of Agriculture, the Utah Ag Commissioner and the state of Utah over the one dollar federal and fifty cent Utah state beef checkoff.

    According to the class action complaint, filed May 5 in the third judicial district court in and for Salt Lake City.

    State beef commissions or councils exist in nearly every state in the U.S., to collect the one dollar federal beef checkoff every time a beef animal is sold. Each state submits fifty cents of each dollar to the Cattlemen's Beef Board (CBB), and retains the other fifty cents for use as they choose. Often times, an additional portion of the remaining fifty cents is also sent to the Federation of State Beef Councils – a division of the National Cattlemen's Beef Association (NCBA). The NCBA is also the largest contractor with the CBB.

    In the complaint, the plantiffs said they do not take objection to the fifty cents that is submitted to the CBB, their concern is with the remaining fifty cents, and the additional state checkoff – another fifty cents – that is managed by the Utah Beef Council.

    Because the CBB is under federal oversight and their activities have already been deemed "government speech" by the Supreme Court, Evergreen Ranch doesn't take issue with the fifty cents of the federal checkoff that is forwarded there.

    The plaintiff said that the Utah Beef Council is a "private entity" and they believe that, for Utah's producers to be compelled to finance the "private speech" of this "private entity" is unconstituational.

    "In compelling plaintiffs to associate with, support, and subsidize the private speech of the Utah Beef Council, the defendants are violating plaintiffs' rights under the First Amendment to the United States Constitution and Article I § 1 of the Utah Constitution," says the complaint.

    Brent Tanner, who has served as executive director of the Utah Beef Council for 25 years, said that because his group isn't named as a party in the lawsuit, he doesn't feel comfortable commenting on the specifics of the lawsuit until the defendants have done so.

    "As beef industry leaders in Utah we feel that we are promoting our product to the benefit of all of our producers. We work hard to be sure that oversight requirements are being followed by the council," he said.

    Evergreen Ranch seeks damages in the amount of the last four years worth of checkoff funds it has paid and reimbursement of court costs. They are also hoping to see a declaration that the state beef council's use of mandatory checkoff funds is unconstitutional,

    Attorney Robert Fuller said the plaintiff filed the suit as a class action because there are many others in the state of Utah who have also paid the checkoff involuntarily, and if he and his client win the suit, it will then apply to every other Utah individual who has paid the state and federal checkoff over the last four years, who objects to paying or who did not consent to paying it.

    Fuller, himself a sixth generation rancher, said Evergreen has two main complaints.

    • The Utah Beef Council is a private entity, not under the jurisdiction of the government, and Evergreen ranch is being forced to support the private entity.
    • The checkoff violates Evergreen Ranch's constitutional freedom of speech.
    Fuller grants that the fifty cent state checkoff is refundable within 60 days, but he said his client believes that the process is complicated and that the beef council does not provide sufficient information about the refund process.

    The Utah Beef Council refused to show him a copy of the annual budget when he asked, said Fuller.

    Fuller pointed out that some dairy producers are selling baby calves right now that are hardly worth the fuel it takes to drive them to town. "$1.50 is a pretty big percentage of the value of that calf," he said. He added that profit margins for all cattle producers in his state are slim, and that every dollar makes a difference to their bottom line.

    In May of 2016, national cattle organization R-CALF USA, based in Billings, Mont., filed a similar lawsuit alleging that it is unconstitutional for the government to allow private beef councils, like the Montana State Beef Council, to keep and spend one-half of all checkoff dollars to pay for the beef council's private speech. Specifically, the group alleged it was unconstitutional for the government to compel its members to fund the private speech of state beef councils.

    On Dec. 12, the U.S. magistrate judge issued his findings and recommendations in the R-CALF case. The magistrate judge recommended that the U.S. District Court for the District of Montana grant their request for a preliminary injunction. The preliminary injunction would stop the government from continuing to allow the Montana State Beef Council to use checkoff dollars to fund its advertising campaigns unless a cattle producer provides prior affirmative consent that his/her checkoff dollars may be retained by the council for that purpose. R-CALF USA continues to wait for the ruling from the district court.

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    June Seasonal Drought Outlook
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    June 9th: USDA World Agricultural Supply & Demand Estimates

    LIVESTOCK & POULTRY: The forecast for total meat production is lowered from last month per 2017 but is raised for 2018. Beef production for 2017 is lowered primarily on lighter carcass weights which more than offsets higher expected slaughter in the later part of 2017. Higher expected placements support a higher 2018 beef forecast. Pork production for 2017 is lowered on the current pace of second-quarter slaughter and lighter carcass weights.

    No changes are made to the 2018 production forecast. USDA’s Quarterly Hogs and Pigs report will be released June 29 and will provide an indication of producer farrowing intentions for the remainder of 2017. Broiler production for 2017 is lowered on the pace of secondquarter slaughter. No changes are made to outlying quarters or the 2018 forecast. Turkey production in the second quarter of 2017 is reduced on the current pace of slaughter, and third-quarter production is lowered as weak demand is expected to limit the rate of expansion. No changes are made to the 2018 turkey forecast. 

    Beef trade forecasts for 2017 and 2018 are unchanged from last month. The pork export forecast for 2017 is unchanged from last month, but the import forecast is raised. No changes are made to the 2018 pork trade forecasts. The second-quarter broiler import forecast is lowered on recent trade data but no changes are made to outlying quarters. No changes were made to the 2017 broiler export forecast, but the turkey export forecast was lowered on continued demand weakness. Poultry trade forecasts are unchanged for 2018.

    Cattle and hog prices for 2017 are raised from last month on price strength to date and continued price strength in the third quarter. Cattle prices are unchanged for 2018, while hog prices are raised on expected strong packer demand next year. Broiler prices are raised for 2017 and first quarter 2018 on expectations of continued strong demand. Turkey prices are reduced for 2017 and 2018 on weaker-than-expected demand. 

    WHEAT: Projected U.S. wheat supplies for 2017/18 are higher this month on increased beginning stocks, production, and imports. Projected 2017/18 U.S. wheat production is slightly increased by 3.8 million bushels to 1,824 million. The NASS June Crop Production report indicates higher Hard Red Winter and Soft Red Winter wheat production forecasts, which more than offset a reduced White Winter wheat crop. All of the wheat use categories are unchanged this month. The net supply increase raises projected 2017/18 ending stocks by 10.8 million bushels to 924.3 million. Carryout remains 20 percent below last year. The 2017/18 season-average farm price is projected at $3.90 to $4.70 per bushel, up 5 cents on both ends of the range. The mid-point of this range is up $0.40 from 2016/17. High-protein wheat supplies are expected to remain constrained in 2017/18, resulting in relatively higher prices for this wheat.

    Global wheat supplies for 2017/18 are raised 2.8 million tons, primarily on higher forecast wheat production for Russia, which is up 2.0 million tons to 69.0 million. Conditions continue to be favorable for winter wheat in most areas since the crop emerged from dormancy. Turkey’s wheat production is also forecast higher, up 0.5 million tons to 18.0 million on improved crop conditions this spring. India’s wheat production forecast is reduced 1.0 million tons to 96.0 million but is still record large and 9.0 million tons above 2016/17. European Union wheat production is forecast modestly lower at 150.8 million tons on a smaller expected crop in Germany but still 4 percent above last year.

    Foreign exports for 2017/18 are fractionally higher this month with increases in Argentina and Iran more than offsetting a reduction for the EU. Imports are projected higher for Brazil, Chile, and South Africa but down for Iran. Total world consumption is marginally lower, as a 1.0-million-ton reduction in India is only partially offset by increases in Russia, Brazil, and Chile. Global ending stocks are projected at a record 261.2 million tons, up 2.9 million from last month.

    COARSE GRAINS: The 2017/18 outlook for U.S. feed grain supplies is virtually unchanged this month as an increase in sorghum beginning stocks is largely offset by reductions for barley and oats. Projected corn production for 2017/18 is unchanged at 14,065 million bushels. USDA will release the Acreage report on June 30, providing a survey-based estimate of corn area planted and a forecast of area harvested for grain. The seasonaverage corn price received by producers is unchanged from last month at $3.00 to $3.80 per bushel.

    The increase for 2017/18 sorghum beginning stocks reflects a 5 million bushel reduction for 2016/17 food, seed, and industrial use based on reported sorghum used for ethanol production through April in the Grain Crushings and Co-Products Production report. With other use categories unchanged, sorghum ending stocks for 2016/17 are raised 5 million bushels.

    This month’s 2017/18 foreign coarse grain outlook is for lower production, increased trade and reduced stocks relative to last month. EU corn production is down based on government data indicating lower-than-expected area in France and Germany. Canada corn production is lowered on reductions to both area and yield, as wetter-than-normal conditions in Ontario and Quebec during May delayed plantings and are expected to reduce yield prospects. Ukraine corn production is raised based on reported planting progress to date indicating a level of planted area above previous expectations. Turkey’s barley production is raised as the impact of April dryness was not as severe as previously anticipated. For 2016/17, Brazil corn production is raised as above-normal rainfall in the Center-West during May boosts yield prospects. South Africa corn production is higher reflecting the latest production estimate from the government.

    Major global trade changes for 2017/18 include higher projected corn exports for Ukraine and Russia, with increased corn imports for the EU. Foreign corn ending stocks are lowered from last month, with reductions for Canada, the EU and Russia more than offsetting increases for South Africa and Ukraine. 

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    April 19th: 2016 Livestock Slaughter Summary

    Record High Total Red Meat and Pork Production in 2016

    Total red meat production for the United States totaled 50.5 billion pounds in 2016, 4 percent higher than the previous year. Red meat includes beef, veal, pork, and lamb and mutton. Red meat production in commercial plants totaled 50.4 billion pounds. On-farm slaughter totaled 93.2 million pounds.

    • Beef production totaled 25.3 billion pounds, up 6 percent from the previous year. 
    • Veal production totaled 81.0 million pounds, down 8 percent from last year. 
    • Pork production, at 25.0 billion pounds, was 2 percent above the previous year.
    • Lamb and mutton production totaled 155.4 million pounds, down slightly from 2015.
    Commercial cattle slaughter during 2016 totaled 30.6 million head, up 6 percent from 2015, with federal inspection comprising 98.5 percent of the total. The average live weight was 1,363 pounds, up 3 pounds from a year ago. Steerscomprised 54.8 percent of the total federally inspected cattle slaughter, heifers 25.6 percent, dairy cows 9.6 percent, other cows 8.4 percent, and bulls 1.6 percent.

    Commercial calf slaughter totaled 487,700 head, 8 percent higher than a year ago with 98.4 percent under federal inspection. The average live weight was 266 pounds, down 44 pounds from a year earlier.

    Commercial hog slaughter totaled 118.2 million head, 2 percent higher than 2015 with 99.3 percent of the hogs slaughtered under federal inspection. The average live weight was down 1 pound from last year, at 282 pounds. Barrows and gilts comprised 97.3 percent of the total federally inspected hog slaughter.

    Commercial sheep and lamb slaughter, at 2.24 million head, was up 1 percent from the previous year with 89.8 percent by federal inspection. The average live weight was down 2 pounds from 2015 at 134 pounds. Lambs and yearlings comprised 94.6 percent of the total federally inspected sheep slaughter.

    There were 814 plants slaughtering under federal inspection on January 1, 2017 compared with 808 last year. Of these, 650 plants slaughtered at least one head of cattle during 2016 with the 13 largest plants slaughtering 58 percent of the total cattle killed. 

    Hogs were slaughtered at 621 plants, with the 13 largest plants accounting for 60 percent of the total. 

    For calves, 3 of the 200 plants accounted for 46 percent of the total and 3 of the 531 plants that slaughtered sheep or lambs in 2016 comprised 54 percent of the total head.

    Iowa, Kansas, Nebraska and Texas accounted for 49 percent of the United States commercial red meat production in 2016, unchanged from 2015

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    March 22nd: Post-Wildfire Reality Sinks in for High Plains Ranchers
    Sherry Bunting -- Progressive Cattleman

    “The overwhelming reality of it all is sinking in,” said Greg Gardiner of Ashland, Kansas, in a phone interview 10 days after the Starbuck fire – which had consumed over 300,000 acres in Oklahoma and nearly 500,000 acres in southwest Kansas – claimed 43,000 of the 48,000 acres at Gardiner Angus Ranch.

    Officials are calling the Starbuck fire the largest single fire in Kansas state history. Additional wildfires on the same day brought the state total to 650,000 acres burned.

    All told, multiple windswept wildfires on March 6 burned close to 2 million acres of grasslands and left a deadly trail of crippling losses in four states.

    Preliminary livestock loss estimates for Kansas, Oklahoma, Texas and Colorado are approaching 7,000 to 9,000 adult cows and untold numbers of calves, horses and wildlife. These numbers are expected to increase in the weeks ahead as more cattle are located and those with less severe injuries are monitored and may not recover.

    Tragically, some of the affected ranching families suffered the ultimate loss of loved ones. Seven people lost their lives, at least five while trying to herd cattle to safety before becoming trapped in the rapidly moving fire when the high winds changed direction.

    It was the perfect storm when the red flag day dawned in the High Plains. The 60 to 70 mph winds drove multiple fast-moving fires that found abundant fuel in the grasslands that had previously benefited from two years of good moisture before turning tinder-dry over the past 60 days.

    In fact, the Starbuck fire was so fast and intense that even where fence appears to be standing, the wood at ground level is disintegrated. In Kansas, alone, an estimated 12,000 miles of fence will eventually need to be replaced. The priority is perimeter fencing, so materials and fencing crews are needed.

    With severe losses of grazing land and stockpiled hay, another immediate concern is feeding the estimated 25,000 to 30,000 surviving cattle in the affected areas of the four states for the next 30 to 60 days while ranchers deal with the recovery while finishing out the calving season before they can take stock of their positions and make decisions about their futures.

    The toll of survival

    While Gardiner Angus Ranch lost 500 adult cows – mainly donor cows for fall breeding and spring calving females on grass – the 1,500 cattle on wheat pasture and those gathered for their April 1 production sale were not affected. Gardiner estimates they have lost 300 calves. All of their stored hay is gone – 5,000 round bales and 3,000 bales of horse hay – despite scattered locations. Of the cattle in the line of the fire, 150 survivors are being monitored in corrals, and 30 of them have calved within days of the fire.

    “Those cows didn’t deserve this,” said Gardiner of the devastation. “We found many with their calves flat beside them – having just calved as the fire raced through. The fire happened so fast, but everything that day seemed to be happening in slow motion.”

    “Everywhere you looked, it was like the world was on fire with fire lines on every horizon,” Gardiner said, explaining how fast the fires were upon them and the complications of changes in wind direction, making it impossible to move cattle ahead of the fire.

    Even people evacuating their homes were back and forth on where to go as the shifting high winds fueled fires that jumped roads and turned in unpredictable ways throughout the day and night. Greg’s brother Garth had a few close calls, as the fire came first from the north and Garth’s family evacuated their home. Then it switched and the roads were blocked.

    Greg Gardiner described his own close encounter while following his brother Mark with a horse trailer. Mark and Eva were attempting to save three horses and two dogs with the fire closing in on their home. When a tree belt erupted in flames, the blackness descended and the heat of the fire reached Greg’s vehicle. He was forced to retreat with zero visibility, and was left wondering for what seemed like an eternity whether Mark and Eva had escaped before their home was engulfed.

    A firefighter emerged 30 minutes later to tell him they had made it out.

    “This thing is of biblical proportions. Everywhere you look, it is like an apocalyptic wasteland, but that seems like small potatoes right now: My family is alive,” said Gardiner.

    Waves of relief

    As the heart-wrenching stories and statistics emerge from the region, the focus is transitioning from cattle triage to organizing the significant short- and long-term needs of the ranchers. The agriculture community across the country is wasting no time organizing shipments of donated hay, milk replacer, fencing materials and other needs, while foundations are setting up methods to accept donated funds, and auctions are being organized to raise additional funds for these ranchers.

    “When the hay trucks rolled in, it was like the cavalry arrived,” said Gardiner, whose ranchlands were largely burned by the Starbuck fire, deemed the largest single fire in Kansas state history. All told, 22 counties in Kansas were affected by multiple wildfires.

    Truckers dispatched from drop points to ranches describe the evident relief in the faces of the ranchers they have met. While the early convoys of semis and flatbeds traveled under lifted highway restrictions, strangers along the way offered cash for fuel or for the ranchers. But the cost of fuel and the availability of trucking remain a bottleneck in getting some of the hay donations to their destinations.

    Hay has been delivered from mainly a 300-mile radius of the affected areas. Dr. Randall Spare of Ashland Veterinary Clinic said 800 bales are waiting in Waco, Texas, if they can find trucking. Convoys are also being assembled in South Dakota, Kentucky, Tennessee and Minnesota, with calls coming into the various state coordinators from as far away as Arizona, Wisconsin, Vermont and Canada.

    “By Friday we were just amazed at the amount of hay and calls we were getting, and it continues,” said Danny Nusser, Texas A?M Agrilife Extension regional director. “We put the message out Saturday morning that we will take all that we can handle.”

    By Monday, however, the 4,200-bale goal set for the three Panhandle supply points had been met, and Nusser reported they are taking names and numbers until they further assess the region’s needs. The goal was to gather a 30-day supply for the estimated 15,000 surviving cattle in the Panhandle.

    In Oklahoma, hundreds of large round bales were received over the weekend; one convoy was organized by ranchers in the southern part of the state.

    In Kansas, 3,000 large bales were received within a week of the wildfires, and according to Spare, they can use more. “We don’t want to turn down hay because some of our ranchers are just coming to grips with what their losses are and what their needs will be. Since Gardiner Ranch has the capacity to unload and accumulate hay where neighbors can come and get what they need, we are utilizing that.”

    Southwest Kansas has an estimated 15,000 surviving livestock on ranches that have lost most of their grazing and hay.

    Donations that lift spirits

    The challenge with the hay, said Spare, is that “some producers are saying they don’t need the hay or they feel embarrassed to take it, but the grass is all gone and we are 60 days from good grass [in unburned areas], and that’s if it rains, so we are still in the process of contacting ranchers, trying to help people understand as they make their plans that they will need to have something to feed.”

    As the immediate hustle to triage cattle and secure feed and care for survivors shifts to a longer-term coordination of ongoing recovery, those close to the situation are urging more distant donors to consider monetary donations to help with trucking of closer hay and materials and other needs instead of trying to send hay from 1,000 miles away.

    Spare has spent his time trying to connect the dots. And those dots include the growing number of orphaned calves.

    With fences to build and repair, feed to secure, cows still calving and long-term plans and decisions to make, there’s no time to bottle and bucket feed calves two and three times a day, particularly for those ranchers who have also lost their homes.

    Kansas county 4-H clubs put the word out early that youth members are taking in bucket calves to help the ranchers who have so many other things to do in the recovery. To follow their progress and donate milk replacer and other supplies, visit the Orphaned Calf Relief of SW Kansas on Facebook.

    Veterinarians are reaching out to colleagues in the hard-hit areas. Spare received a call late last week from Dr. Tera Barnhardt. She and Deerfield Feeders’ general manager, Cary Wimmer, came up with the idea of offering temporary homes and care in the calf ranch hutches for orphaned calves from Ashland.

    Many ag companies have donated milk replacer, feed, pharmaceuticals and other animal care products – and along with hay donations from other ranches, have come personal items for the families who have lost their homes and belongings.

    “Our hearts go out to the ranchers,” said Barnhardt. “I’m just glad we could help connect some dots and take something off their plate.”

    Moving forward

    With the fires mostly contained in the affected regions, conditions are still tricky in some spots, according to Nusser. He said it will be June or July, with sufficient rain, before the greenup slows the fire threat in the Panhandle.

    County FSA offices are asking ranchers to contact them with loss numbers so this information can be tied to emergency declarations from each state’s respective governors for grazing lands exceptions and assistance.

    The problem is that individual ranch losses will far exceed the individual $125,000 caps for USDA programs like the Livestock Indemnity Program and fencing cost shares.

    “Every individual rancher will weather these losses differently, depending on their financial position at the time of the fire,” said Dr. Steve Amosson, AgriLife Extension economist in Amarillo, Texas. His early estimate for the Panhandle, alone, is $21 million in losses, which he expects to see increase as more information is gathered. He said that for many ranchers, little insurance money will come into play.

    In Texas, the Perryton/Lipscomb fire is deemed the third largest in Texas state history.

    For the short term, the tangibles are necessary because it takes time for the various foundations to pool monetary donations and get resources to the ranchers. Over the next 30 to 60 days, the recovery will transition to a rebuilding effort.

    This will be a long recovery for ranchers who have lost 50 to 90 percent of their herds and multiple years of income and stockpiled forage, according to Spare.

    “We’re praying for rain,” he said, describing dirty skies as the wind lifts the gray dusty sand over charred soils.

    “I told CNN that we as ranchers are stewards of the grasslands, and that the only way we have something to sell for an income is to sell grass through the cows that are eating it. We are working to take care of that and start all over again,” said Spare, who had significant losses among his own cow herd and was relieved when his son showed up in the driveway Tuesday morning, taking time away from vet school before spring exams to take care of the home front while he worked with other ranchers and their cattle.

    As for the immediate fencing need, a short- and long-term approach is being pursued. While fencing certainly has its government specs to qualify for USDA cost-sharing, several ranchers interviewed for this report indicate that the amount of fencing they have to replace so greatly exceeds the cap on funds they will begin with what is donated to establish perimeters and do their cross fencing as they can over the next few years.

    While prayers are most coveted, those who want to help are urged to contact organizers in the affected states to see what the needs are as community leaders develop an ongoing relief plan.

    “There are no guarantees in agriculture. We know the risks and we appreciate this is life we have chosen to live,” said Gardiner. “This is an emotional deal, hitting us all every day. We’ll take it one step at a time. We’ll survive by keeping ourselves moving.”

    “There is so much appreciation in this community for the outpouring of love and compassion from the people who have come alongside us with prayers and help,” said Spare. “Many don’t know how they’ll get through this, but we know we will get through it.”  end mark

    The Starbuck fire consumed 43,000 of the 48,000 acres at Gardiner Angus Ranch. Over 12,000 miles of fencing in Kansas, alone, is estimated in need of replacement as the rapidly moving and intense fire disintegrated posts at the ground level. 


    Photo by Julie Tucker

    How you can help

    Wildfire relief organizers are indicating that the best way for distant donors to help is to provide monetary donations for transporting nearby hay and resources to the areas affected by the wildfires.

    In addition, auctions are being organized to benefit wildfire funds. For example, a heifer donated by Oklahoma West Livestock Market was auctioned 105 times on March 8 to garner $115,449 with proceeds going to the Oklahoma Cattlemen’s Foundation Fire Relief Fund. Similar ideas are creating a ripple response throughout the agriculture community and can be replicated anywhere.

    Trent Loos at Rural Route Radio is helping to organize this idea to fund the recovery and rebuilding efforts in the fire-ravaged areas of the High Plains through means of raising cash. For information about how to participate in this and to find a list of upcoming auctions, as well as how to set one up, contact Trent Loos at (515) 418-8185.

    To give supplies and trucking or to donate funds to foundations for direct wildfire relief, contact the state-by-state resources below.

    Kansas

    Monetary donations: Ashland Community Foundation/Wildfire Relief Fund at www.ashlandcf.comor P.O. Box 276, Ashland, KS 67831. The Kansas Livestock Association/Wildfire Relief Fund at 6031 SW 37th St., Topeka, KS 66614.

    Hay, trucking and fencing donations: Call Ashland Feed and Seed at (620) 635-2856. (Ashland Feed and Seed is also taking credit card orders over the phone for feed and milk replacer or other supplies for ranchers in the area.)

    Texas

    • Monetary donations: Texas Department of Agriculture STAR Fund.
    • Hay, trucking and fencing donations: Ample hay has been received for two to three weeks, so call to see if and when more is needed. Fencing supplies are needed, which can go to the Agrilife supply points. Contacts are J.R. Sprague at (806) 202-5288 for Lipscomb, Mike Jeffcoat at (580) 467-0753 for Pampa, and Andy Holloway at (806) 823-9114 for Canadian.
    • For questions about donations or relief efforts, contact Texas A?M Extension at (806) 677-5628.
    Colorado
    • Hay, trucking and fencing: Contact Kent Kokes (970) 580-8108, John Michal (970) 522-2330, or Justin Price (970) 580-6315.
    Oklahoma
    • Monetary donations: Oklahoma Cattlemen’s Foundation Fire Relief at P.O. Box 82395, Oklahoma City, OK 73148 or www.okcattlemen.org.
    • Hay, trucking and fencing donations: Contact Harper County Extension at (580) 735-2252 or Buffalo Feeders at (580) 727-5530.
    • Other states organizing deliveries
    Preliminary statistics
    • Texas: Four deaths and more than 480,000 acres burned and early livestock loss estimates of 2,500 adult cattle. Texas A?M Agrilife Extension estimates preliminary damage at over $21 million, not counting equipment losses. Gov. Greg Abbott declared a state of disaster in six counties in the Texas Panhandle.
    • Kansas: One death, 11 injuries, more than 40 homes destroyed and 702,000 total acres burned, 462,000 of which stem from the Starbuck fire deemed the largest single fire in Kansas state history. Kansas Gov. Sam Brownback signed a disaster declaration covering 20 counties. Early estimates of livestock losses are 3,000 to 6,000 adult cows and additional calves.
    • Oklahoma: One death, eight homes and 381,000 acres burned from the Starbuck fire. Three additional fires in the state have burned 120,000 additional acres. Gov. Mary Fallin declared a state of emergency for 22 counties. Early estimates of livestock losses are 3,000 cows and additional calves.
    • Colorado: Five homes were destroyed and more than 30,000 acres burned; early livestock loss estimates are 185 cow-calf pairs.
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    February 15th: Comprehending the Immensity of the National Debt

    This does not directly pertain to the cattle market, but we recently came across the map of the United States found below that shows the proportion of Federally owned land in each state. This prompted the question, "How much of the nearly $20 trillion National Debt could be paid if vast amounts of this land, much of which costs more to administer than it generates in lease payments, were sold and the sale proceeds applied to the debt?" -- National Debt Clock

    What was found in the New Estimates of Value of Land of the United States - Bureau of Economic Analysis - April 3, 2015, is astounding and may be the most compelling and understandable way to comprehend the immensity of the National debt...

    In the conclusion of this report, it is stated... "This paper presents new estimates of the value of land in the lower 48 United States from 2000 to 2009. In 2009, the value of land was approximately $23 trillion, $1.8 billion of which is owned by the federal government.  According to the National Land Cover Database, 6% of the lower 48 states is developed, and according to the estimates in this paper, this land consists of 50% of the overall land value. Land values rose until 2006 and then fell until the end of the sample in 2009."

    "The estimation methodology consists of dividing the U.S. into a mosaic of parcels at the census tract level and below, assigning ownership and prices to each parcel, and tabulating.  Whereas past estimates have omitted large areas of land or have based valuation on potentially implausible estimates of structure values, this attempt instead misses no land area and uses hedonic estimates of land values."

    The Bottom Line... Selling all Federally owned land and applying the sale proceeds to the National Debt would only be "a drop in the bucket" and nearly all of the land in the lower 48 states would have to be sold to pay the debt.

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    All Cattle & Calves Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    Beef Cows Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    Replacement Heifers Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    January 31st: January 1 Cattle Inventory Up 3 Percent
    USDA - National Agricultural Statistics Service (NASS)
     
    • All cattle and calves in the United States, as of January 1, 2017, totaled 93.6 million head. This is 2 percent above the 91.9 million head on January 1, 2016. 
    • All cows and heifers that have calved, at 40.6 million head, are 3 percent above the 39.5 million head on January 1, 2016. 
      • Beef cows, at 31.2 million head, are up 3 percent from a year ago. 
      • Milk cows, at 9.35 million head, are up slightly from the previous year. 
    • All heifers 500 pounds and over, as of January 1, 2017, totaled 20.1 million head. This is1 percent above the 19.9 million head on January 1, 2016. 
      • Beef replacement heifers, at 6.42 million head, are up 1 percent from a year ago. 
      • Milk replacement heifers, at 4.75 million head, are down 1 percent from the previous year. 
      • Other heifers, at 8.88 million head, are 1 percent above a year earlier. 
    • Calves under 500 pounds in the United States, as of January 1, 2017, totaled 14.4 million head. This is 2 percent above the 14.1 million head on January 1, 2016. 
      • Steers weighing 500 pounds and over totaled 16.4 million head, up slightly from one year ago. 
      • Bulls weighing 500 pounds and over totaled 2.23 million head, up 4 percent from the previous year. 
    • The 2016 calf crop in the United States was estimated at 35.1 million head, up 3 percentfrom last year's calf crop. 
      • Calves born during the first half of 2016 were estimated at 25.6 million head. This is up 4 percent from the first half of 2015. 
      • Calves born during the second half of 2016 were estimated at 9.53 million head, 27 percent of the total 2016 calf crop. 
    • Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 13.1 million head on January 1, 2017. The inventory is down 1 percentfrom the January 1, 2016 total of 13.2 million head. 
      • Cattle on feed, in feedlotswith capacity of 1,000 or more head, accounted for 81.2 percent of the total cattle on feed on January 1, 2017. This is up 1 percent from the previous year. 
      • The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) is 26.6 million head. This is 2 percent above one year ago. 
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    November 16th: What Did it Cost to Produce a Calf This Year?
    Aaron Berger -- University of Nebraska Extension

    Weaning of spring-born calves has occurred for many cow calf producers. Right after weaning is a good time to analyze the business and see what it cost to produce a pound of weaned calf.

    Cow costs and thus the cost to produce a weaned calf have shot up over the last 15 years. From 1987 to 2001, the Livestock Market Information Center reports that annual cow costs increased from $300 to $400 per cow. From 2002 to 2015, cow costs more than doubled from $400 to $875 per cow.

    These annual cow costs figures are from National Ag Statistics Surveys. Cow costs in much of Nebraska would be equal to or higher than the national average due to the cost of pasture. Obviously not every cow weans a calf, so the actual cost per calf produced is much higher than $875!

    This information prompts the question: What did it cost you to produce a pound of weaned calf this year? What do you project it will cost in 2017?

    Unit cost of production (UCOP) is a value based on a relationship in production between costs and units of product made or produced.

    Unit Cost of Production = Costs / Units Produced

    The relationship between the numerator (Costs) and the denominator (Units Produced) is what drives the UCOP value. The power of the UCOP ratio for cow-calf producers is that everything involved in the production of a pound of calf is represented in the numerator or denominator of the equation. For example, if a producer wants to buy a pickup that will be used in the production of calves, he can estimate how the purchase of that pickup will affect his UCOP in terms of cost per pound of calf produced. The same thing goes for the purchase of a bull. Evaluating the purchase of a bull in light of how many estimated pounds of calf that bull will produce in relation to his cost can give insight into what a producer might be willing to spend.

    What did it cost to produce a pound of weaned calf this year? What is it projected to cost next year? The old adage "you can't effectively manage what you don't measure" is true in relation to managing the cow-calf enterprise. The first step in calculating UCOP is to have accurate production and financial records. These records do not have to be complicated, but they need to be accurate and thorough. If current management and information systems don't provide the data to run this type of analysis, consider making changes that will provide the records needed.

    Unit Cost of Production takes into account both product produced and input costs. Knowing UCOP allows a manager to look forward utilizing both present and projected input costs with production numbers to make informed decisions. You can’t change last year’s cost of production numbers, but with good information, you can make management changes that will impact the upcoming year. Cow-calf producers who know UCOP numbers and understand the interaction between costs and production can implement strategies to effectively manage resources to meet business and personal goals.

    As with most things in life, the first few times you do something, you make mistakes and through the process learn how to get better. The first time someone learns to drive, there is going to be gears grinding, lurching and jerking, and some killed engines. There also is likely going to be some parent or adult with more gray hair (or perhaps less hair) in the process! Passing the driver’s test and being able to drive is well worth the hassle and effort!

    Learning how to calculate UCOP is a similar process for cow-calf producers who have never done it before. The first few times through the mental gears will be grinding and there will be frustration along the way. However once someone does it and gets comfortable, the value of knowing this information and being able to confidently make decisions that improve profitability is extremely satisfying! 

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