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OSU Extension BEEF Team
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Previous issues of the BEEF Cattle letter
Issue # 903
September 17, 2014
Ohio State Buckeyes 4 Beef - Sierra Jepsen, 2014 National Beef Ambassador, Agricultural Business and Applied Economics, The Ohio State University
What happens when you combine a newly chartered collegiate organization, a burning passion for the beef cattle community, and an excitement to share that passion with the students of your college university? The Buckeyes4Beef Ohio State campus event!
Buckeyes4Beef took place this past weekend on my college campus, The Ohio State University. Through the efforts of the Collegiate Cattlewomen's Club of Ohio State, the 2014 National Beef Ambassador team, and funding provided by the Beef Checkoff, our team of beef enthusiasts was able to successfully execute the largest beef promotion event to ever hit the city of Columbus.
It was so exciting to see OSU students writing positive notes about beef and posting them to our #BeefBuzz Board
Buckeyes4Beef was divided into two days. On Friday, our event was held on a large grassy space in the center of campus, which we call the Oval. On the Oval, our group spent the day playing games, such as Meet Your Meat, Beef Busters, Who's the Heifer, and Size Up Your Servings, and sought opportunities to have genuine conversations with our peers about their concerns involving the beef community. During the event, we collected surveys, asking students one question of whether their opinion about the positives of beef had improved, remained the same, or decreased after their time at the Buckeyes4Beef event. Of the 58 students surveyed, 78% said that their opinions had improved, and 22% said their feelings had not changed. Pretty awesome statistics!
National Beef Ambassador, Rachael Wolters plays beef trivia with Ohio State's mascot, Brutus the Buckeye
On Saturday, the Buckeyes4Beef event continued with a tailgate during the Ohio State vs. Kent State football game. During the tailgate, our team served all-beef hot dogs to football fans and handed out fun beef prizes. The most exciting part of the tailgate was the "Take-the-Steak" competition; a Chopped- style cook-off where collegiate clubs and organizations formed teams to show off their beef grilling and culinary skills. After three rounds of tough competition (and a lot of really great beef) it was a pleasure to award the Buckeye Dairy Club with the Take-the-Steak trophy and the grand prize; a steak dinner for 20!
Congratulations to our Take-the-Steak champs, the Buckeye Dairy Club!
All in all, Buckeyes4Beef was a huge success. After assessing attendance of the two events, I estimate that we were able to reach approximately 700 students and tailgaters with our event, not to mention the #BeefBuzz that was exploding throughout Facebook, Twitter and Instagram. It was such an amazing experience to work with our newly chartered Collegiate Cattlewomen's club to put on this event, especially considering the entire production was planned before we have had our first official club meeting. It just goes to show how impactful a group of millennials can be when we set out to share our passions. Eat Beef and Go Bucks!
All for the Love for Beef, Sierra Jepsen
Grazing Recycles Nutrients - Peter Callan, Extension Agent, Culpeper County, Agriculture & Natural Resources, Farm Business Management, Culpeper, Virginia
Over the past 10 years increasing numbers of cattle producers have started to intensively graze pastures to maximize pasture as a source of feed. Rotational grazing is a management intensive system that concentrates animals within a relatively small area (paddock) for a short period of time e.g. 1-3 days for beef cattle. A pasture may be divided into multiple paddocks. The animals are then moved to another paddock while the other paddocks are allowed to recover and regrow. Animals are moved according to a flexible schedule based on herd size, the amount of land available, quality of forages in the paddock and forage consumption.(1) Continuous grazing is use of one pasture. The type of grazing system implemented on a farm has major implications regarding pasture fertility.
Missouri researchers estimated that grazing animals recycle 75-85% of forage nutrients consumed. An even distribution of manure throughout a paddock is required for productive plant and animal growth. Intensity of grazing rotations affects the manure coverage in paddocks. In a rotational grazing system there is an even distribution of manure because the animals are forced to consume forage in the paddock before being moved to another paddock. The Missouri researchers calculated that under continuous grazing practices, 27 years would be needed to obtain one manure pile per every square yard within a pasture. Conversely, the pasture was divided into paddocks and a two day rotation was used. Then two years would be needed to achieve an even distribution of manure within the paddock.(2)
The location of hay feeding areas will impact the distribution of nutrients within a field. Manure will be deposited near the feeding areas. Depending on weather conditions and the potential for creating mud and ruts in the pasture, feeding areas may be moved throughout the pasture to insure a more even distribution of nutrients. Whenever hay is baled, nutrients are removed from the field and exported to the feeding area. Kentucky researchers have estimated that a ton of grass hay (fescue, orchard grass) removes the following nutrients from the soil: 12 lbs. of phosphate and 50 lbs. of potash.(3) If these nutrients are not replaced; soil reserves will be depleted over time. Consequently, there will be a reduction in crop yields. Soil testing determines the amount of fertilizer that needs to be applied to maintain hay yields.
Cooperative extension agents can assist producers in the design of rotational grazing systems for their farms. Virginia Tech livestock budgets have shown that the implementation of rotational system can maximize profitability for cow/calf producers. There are Virginia livestock producers who have increased net profits by $200 per head due to the implementation of rotational grazing systems on their farms. Rotational grazing systems can maximize farm profitability by recycling nutrients which results in a major reduction of purchased fertilizer inputs.
Cattle at the Crossroads - Paul Peterson, Department of Agricultural and Consumer Economics, University of Illinois
The year-long across-the-board rally in cattle prices has been driven by a combination of favorable supply and demand factors which have aligned to push prices to record levels (Figure 1). On the supply side, the starting point is cattle numbers. Beef cow numbers are the lowest since 1962, and last year's calf crop was the smallest since 1949. Cows are the "factory" where beef production begins. Over the years, a combination of poor returns, weather problems in key areas, and strong cull cow prices to satisfy the demand for processing beef encouraged the industry to "tear down" much of its production capacity. Obviously, this situation didn't develop overnight, but it did set the stage for what has happened in the past 12 months. Rising carcass weights have partially offset the decline in cattle numbers, but the net result has been tight beef supplies.
Favorable Supply, Favorable Demand. Supplies of competing meats have also been unexpectedly tight. Hogs and broilers have much shorter production cycles than cattle, and historically both have been quick to respond to lower feed costs. However, despite the steep drop in corn prices, both pork and broiler production have been much lower than would normally be the case. Porcine epidemic diarrhea virus (PEDv) has reduced hog numbers, while production issues have limited broiler expansion.
The demand side has been equally positive for cattle and beef prices. US consumers have been willing to pay record-high prices for beef (Figure 2), despite what has been a slow and somewhat shaky economic recovery. Likewise, overseas buyers have shrugged off higher prices, and export shipments have continued at levels consistent with recent years.
Expansion Unclear. Record returns for cow-calf operators have prompted questions about when herd rebuilding will begin and the "factory" will expand. USDA's midyear Cattle inventory report was inconclusive on this question, at least from an industry-wide standpoint. Areas that have received moisture and have seen grazing conditions improve appear to be taking the first steps toward bumping up production; areas that have not been so fortunate weather-wise are still trimming herds in an effort to hang on until conditions improve. These region-by-region differences make it difficult to determine whether the industry as a whole is expanding, contracting, or holding steady.
Beyond grazing conditions, another consideration driving the expansion decision is the income foregone when a heifer calf is held back as a replacement in the breeding herd instead of sold as a feeder animal. At current price levels, this foregone income is in the neighborhood of $1,200 to $1,500 per head. This makes the decision between the certainty of a dollar now and the possibility of a dollar-plus in a year or two just that much more difficult. Producers considering bred replacement cows will find that bred cow supplies are limited, and prices have increased by 50% in the past year (Figure 3).
The Road Ahead. When heifer retention finally does get fully underway, already-tight feeder cattle supplies will become even tighter. This will support stronger calf prices and higher returns for cow-calf operators. But this is also where the fortunes of producers and feedlots might diverge. Smaller numbers could push feeder cattle prices even higher and squeeze feeding margins for cattle feeders. The feeding sector also should expect competition from larger supplies of pork and chicken in the months ahead, and some downward pressure on fed cattle prices, as the pork and broiler industries overcome production problems that until now have kept supplies in check.
Marketing Cull Cows this Fall - Andrew Griffith, University of Tennessee Extension
The beef cattle herd in many regions of the country is in expansion mode. Cattlemen expand the herd by retaining heifers or by holding older cows for an additional year or two. Both options for herd expansion can be risky as it can be expensive to develop a heifer with no guarantee of a live calf while older cows have a higher probability of facing physical problems. Considering older cows, many operations have economic losses from holding an older cow one year too long. Older cows are only ever held one year too long, because they end up being buried on the farm instead of being marketed and harvested for valuable products.
Market cows, known as cull cows to most readers, account for 15 to 20 percent of gross income for most cow-calf operations. This is a large portion of income for a cow-calf enterprise and can be the difference in having a profitable year or recording losses for the year. Thus, the decision to cull and market cows should be considered carefully.
There are a number of factors to consider when making a cow-culling decision. Factors may include pregnancy status, poor performance of offspring, age, mouth, udder, structural soundness, health problems, disposition, etc. Regardless of why the decision to cull and market a cow is made, it is important to consider the timing of marketing to maximize profits.
Many operators with spring calving herds make cow culling decisions in the fall after the calves are weaned and pregnancy evaluation is performed on the cow. Subsequently, cattle producers sell market cows immediately after making the culling decision. The decision to market immediately is often made because producers do not want to carry a cow through the winter and incur the costs associated with winter feeding. Additionally, marketing cows in the fall can provide cash flow. Each of these factors must be considered by individual producers to meet the needs of the operation.
Traditionally, marketing cows in the fall results in the cow being sold on the lowest market of the year. Using the last ten years of data, market cow prices have been 15 to 20 percent higher in the May and June time period than in the October through December time period. Thus, the price differential alone could result in a total revenue difference of $120 to $240 per head for a 1200 pound cow when considering prices experienced the last ten years. Additionally, increases in revenue may be possible for cows in poor body condition if they are fed to replace body condition and then marketed at a later date.
After having said all of that, there are high expectations for market cow prices this fall. Year to date cow slaughter through the end of July is 13.4 percent lower than the same time period in 2013 and was 17.9 percent lower in the months of June and July compared to the same two months a year ago. That is to say that there are a limited number of cows being harvested this year which has supported prices and will continue to support prices.
Prices for market cows in Tennessee started off the year at $85 per hundredweight and steadily increased through the end of June to $105 per hundredweight. The price of market cows then fluctuated between $100 and $105 per hundredweight leading up to the writing of this article. If last year's market cow prices are any indication of what will happen this year then prices are not expected to be pressured too much through the fall and winter.
Not everything in the market cow sector smells like roses. Since March of 2013, five U.S. cow processing plants have ceased operations and the sector continues to face over capacity. Cow processing facilities that have closed include operations in San Angelo, TX; Godwin, NC; St. Paul, MN; Milwaukee, WI; and San Antonio, TX. The closure of processing plants is largely due to the reduced availability of cows for processing caused by previous years of drought sell off and now retention of cows to reestablish cattle herds.
Due diligence should be taken by producers the next several months as cow-culling decisions are made. There has been and will continue to be potential for producers to garner high returns and receive a high salvage value for market cows ready to exit the cow herd. Though market cow prices are traditionally at their lowest point in the fall, prices for market cows in the fall of 2014 may not dip as low as previous years. Producers should consider current prices, expected future prices, and current resources when making the culling decision, because the cow must pay for herself over any time period she is retained. One thing is certain, a live animal sent to the market is always more valuable than an animal a producer has to bury.
USDA Report Summary: More Corn, Less Meat - John D. Anderson, Deputy Chief Economist, American Farm Bureau Federation
Last Thursday, USDA released the September Crop Production report along with the monthly World Agricultural Supply and Demand Estimates (WASDE) report. The market was closely watching to see what USDA thinks about what is shaping up to be a corn crop for the record books.
USDA's national average corn yield estimate came in at 171.7 bushels per acre. This was right at a bushel higher than the average pre-report estimate. It will be, if realized, a record national average yield. A number of key states are expecting phenomenal yields this year. Most notable is Illinois, for which the state average yield estimate was pegged at 194 bushels per acre. Among major producing states, record yields are currently projected for Indiana (184 bushels/acre), Iowa (185 bushels/acre), and Nebraska (179 bushels/acre). These yields correspond to an aggregate production estimate of 14.395 billion bushels, which will be the second consecutive year of record-high corn production following last year's 13.925 billion bushel crop.
With the increased availability of corn, use is expected to increase. Estimates of feed use, ethanol use, and exports were all increased modestly from last month's report. Higher use do not fully offset the higher production estimate, though; and corn carryover at the end of the 2014/15 marketing year is currently projected at just over 2 billion bushels - corresponding to a stocks-to-use ratio of 14.7%. This will be the highest level of carryover (in terms of stocks-to-use) since 2005/06. The record U.S. corn crop is expected to accompany record global wheat and oilseed crops this year. Overall, global grain and oilseed markets appear to be completing, with this year's crops, a transition to a relative abundance following almost a decade of relative shortage. Demand for feedgrains and oilseeds remains strong globally, and that is not likely to change in the near future; but global capacity has also been increased as well. It now appears that with this year's crops, world feedgrain and oilseed production will have exceeded use in three of the past four years.
The September WASDE paints a bit different picture for meat supplies. Estimates of U.S. red meat and poultry production for both 2014 and 2015 were revised down a bit from last month. To be more specific for 2014, beef and pork production estimates were revised downward from last month; the 2014 estimate of broiler production was revised upward but not enough to offset to lower pork and beef numbers. Beef production in 2014 is now projected to be 5.4% below last year's level, reflecting relatively tight fed cattle supplies and reduced female slaughter. Looking ahead to 2015, beef production is currently forecast to decline by a further 2.8%. On the other hand, pork and broiler production are both projected to expand by around 2.5% in 2015. If these forecasts hold, for pork this will mark the end of a couple of years of contraction. For broilers, it will mark the third year of increasing production.
Further tightening of beef supplies will continue to keep pressure on beef retail prices, which have surged to record levels this year. This will be balanced, though, by higher combined meat availability as pork production rebounds and poultry production continues to expand in 2015. In this environment, beef prices (retail and wholesale) will likely encounter stiff resistance to anything like the kind of price increases that have characterized 2014.
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BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.
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