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BEEF Cattle questions may be directed to the OSU Extension BEEF Team through Stephen Boyles or Stan Smith, Editor

You may subscribe to this weekly BEEF Cattle letter by sending a blank e-mail to beef-cattle-on@ag.osu.edu

Previous issues of the BEEF Cattle letter

Issue # 622

February 4, 2009

Calf Scours - Rory Lewandowski, Extension Educator Athens County

Calf scours or diarrhea is among the leading causes of early calf hood death. Calf scours seemed to be prominent in a number of herds during February and March of 2008. If you remember what our weather was like during this period, you will recall it was rainy and cool as cattle and cattleman alike battled mud and bone-chilling conditions. In fact, rain and mud lead to hypothermia, lower the calf's ability to resist infections, and can open the way for scours or diarrhea to occur.

There are a number of infectious agents that are responsible for diarrhea in calves, among them viruses and bacteria. The most common viruses associated with calf scours are rotavirus and corona virus. Both of these viruses infect and destroy the cells that line the intestinal tract. The calf looses the ability to digest and absorb milk. If the calf survives, this damage can be repaired but meanwhile the calf experiences serious fluid and electrolyte (generally potassium, sodium, chlorine and bicarbonate) loss from the accompanying diarrhea that leads to severe dehydration and acidosis.

The most common bacteria associated with calf scours/diarrhea is E. coli (Escherichia coli). This bacteria releases a toxin that damages the cells lining the gut, causing the normal absorptive capacity of the intestine to change and result in fluids and electrolytes being secreted and lost. This type of calf scours is generally seen only in very young calves up to about 5 days in age. There are also species of Salmonella bacteria associated with calf scours.

Under less severe cases of diarrhea or in early stages of diarrhea, calves exhibit loose stools, dryness of mouth and some loss of skin elasticity due to dehydration. More severe or prolonged diarrhea leads to worse dehydration and chemical imbalance in the body. Symptoms include: eyeballs beginning to sink into the eye sockets, calves become weak and lethargic, calves may be unable to stand, body temperature drops to below normal, and loss of nursing reflex. At this point, if calves are not treated they can move into coma, shock and then will die.

The most important treatment for calf scours/diarrhea is to replace the fluids and electrolytes that the body is losing. There are numerous commercial products available that can rehydrate the calf, correct pH imbalances and replace lost electrolytes. You may want to consult with your veterinarian as to a specific product and recommended volume/mixture to use in treatment of sick calves. A key point is to start fluid replacement early on while calves are still standing and have a nursing reflex. If the calf will nurse from a bottle, electrolytes can be provided in this manner. If the calf refuses to nurse from a bottle, replacement fluids and electrolytes will have to be given by using an esophageal feeder probe/tube. Again, you may want to consult with your veterinarian about the proper use and placement of an esophageal tube. Keeping calves hydrated will help the calf to maintain vigor, enable the calf to continue to nurse, and help the calf to maintain its body temperature. Once a calf loses the ability to stand and suckle, the only recourse is intravenous (IV) treatment.

While antibiotics and sulfa drugs are commonly given as an oral treatment to calf scours, it has been found that this is not effective treatment and may even be detrimental. According to an article on calf scours by Don Hansen, Extension Veterinarian at Oregon State University, ". . . antibiotics and sulfa drugs given orally alter the normal population of organisms in the gut and sometimes predispose to super infections or fungal infections. Some antibiotics, when given orally, actually inhibit glucose absorption and alter the cells that line the gut wall. In these cases, continued oral use actually prolongs diarrhea."

Early fluid replacement treatment can be effective, but prevention of calf scours is, of course, preferable. Prevention goes back to management and understanding how scours can develop. Think of a triangle, with each leg of the triangle representing a factor that needs to be present for scours to develop. There are three: a susceptible animal, an infectious agent/organism and a favorable environment. Management practices that can reduce or break any of these legs of the triangle can reduce the severity of, or prevent scours from developing. A calf that is able to ingest a good quantity of colostrum, 5-6% of the calf's body weight within the first 6 hours after birth, is less susceptible to scours than a calf that nurses late or only ingests a small amount of colostrum. Vaccination programs that include an initial shot and a follow up booster to cows 6-7 weeks before calving boost antibody levels in the colostrum to provide added protection against early calf hood diarrhea/scours. Anything that can be done to keep the calf dry and relatively warm can go a long way in reducing a favorable environment for disease organisms and help to prevent occurrence of scours. Mud is the enemy in this regard.

Another management practice that should be followed as a preventative measure is to make sure that new replacement animals are NOT introduced into the herd within the two months prior to calving to two months after calving window. These animals could carry and introduce disease organisms that calves have no protection against from colostral antibodies.

Calf scours can be a disheartening experience during the calving season. Wet, muddy conditions increase the chance of calf scours. Anything the cattleman can do to provide warmer, drier conditions can help to prevent scours, along with making sure that a good first meal of colostrum is ingested soon after birth. Once scours develop, the most effective treatment is replacement of fluids and electrolytes.

References:

Calf Scours: Causes and Treatments, Don Hansen, Cattle Producer's Library, CL646.

Diarrhea in Calves Under One Week of Age, Sebastian E. Heath, Animal Health Forum Newsletter, Fall 1992.

Environment Plays Key Role in Scours Prevention, Nolan Hartwig and Wendy Miller, Iowa Beef Center News Release, January 24, 2001

Monthly Market Profile: 7 Isn't Always Lucky - Nevil Speer, Professor, Animal Science, Western Kentucky University

The beef complex will never receive mainstream media attention compared to the likes of the financial, auto, or airline industries. Absence of attention doesn't dampen, though, the critical condition within beef's current operating environment. January was particularly tough with little indication of major reprieve in the coming months. That's especially true for the cattle feeder. The market began the year at $86; January finished by putting a "7" in front of some fed trade (the first time since July, 2006) - the market ended the month at $79-81.

Consider that it's been only seven months since the fed market peaked at $101 in July. That $20-22/cwt difference represents roughly $250-300/head. Stated another way, cattle feeders have watched their inventory decline in value in excess of $1/head on a daily basis; the decline largely equates to current closeout losses. It gets even worse when considering potential hedging opportunities. Yearlings closed out in January could have been hedged at $107-8 in August when they went on feed; thus January cash-to-cash closeouts represent an opportunity cost of approximately $350/head when NOT implementing risk management. Regardless, cumulative, industry-wide equity losses during the past six months, from a cash-only perspective, approach $2-3 billion.

Will it get better? That depends on several factors. The economy has been an enduring theme during the past twelve months for the beef complex. Bottom-line: the market will struggle to facilitate any type of significant rally until there's a kick-start for beef demand - both domestically and internationally.

Several graphs below represent some of the basic struggles within the complex. The first, as general background, depicts monthly cutout averages during the past three years. January cutout values represent a relatively flat trend. On one hand, that's potentially encouraging given the propensity of bad economic news during the past 12 months; the market has seemingly found solid and well-tested support at the $140-5 level. On the other hand, it reflects an absence of revenue growth and the current trend is in the wrong direction. The second graph, though, is more troubling: it represents declining contribution of middle meats (rib and loin) to the overall cutout. That's largely indicative of shrinking consumer action on the travel and dining fronts. Meanwhile, the fed market has also been pressed on the global front with economic concerns and strengthening U.S. currency has negatively impacted value of the drop.

Aside from beef demand, the financial crisis has seemingly had a secondary effect upon the fed market. Most notably, cattle feeders have yielded leverage back to the packer. The third illustration below represents the difference between the actual fed market and market value at which packers generate $145/head gross profit - a rough, industry-wide operating breakeven. Note that the exact figures may vary depending upon one's assumptions. What's important is interpretation of the overall trends. Data points above the zero-line indicate a fed market that favors cattle feeders; data points below zero favor processors.

Note the peak in late '07; cattle feeders were the benefactors of favorable action in the market while packers were enduring an extended period of negative margins. The momentum began to shift, though, as the financial crisis began to unravel with a streak of 33 weeks where leverage rotated back to buyers. Seller leverage bottomed-out in July and allowed the packer to clear some substantial margin during the previously-mentioned spike in cutout values. Cattle feeders clawed their way back and managed to gain some leverage this past fall. That advantage, though, seemingly collapsed in one week in late-November as the fed market declined $6.

Making sense of individual decision making, or painting a complex, fragmented industry with a broad brush is a shaky venture. However, given the trends of late it's possible to surmise that the action is at least partially attributable to the financial crisis; the influence was likely beginning to creep into the market in late '07. Further pressure to maintain cash flow and meet lending obligations has been fully manifested in late '08 for many businesses; the feedyard sector is not immune to that influence. That has potentially eroded weekly leverage when selling cattle. Simultaneously, the packer has also been effective in taking out capacity and subsequently been able to procure supply more judiciously.

The ultimate outcome? Notably, bullish perspective based strictly on supply is misplaced. Those hopes would be well founded in an otherwise stable environment. But that's not where we are. Traders need to clearly watch beef demand and financial obligations on the selling side. The temptation to focus solely upon impending and friendly impact of limited supply in coming months, no matter how encouraging, may prove too simplistic and potentially establishes erroneous expectations.

February is especially significant month for the grain complex. USDA releases its initial expectations for the marketing year at the agency's annual Outlook Forum; such estimates serve as an industry benchmark to work from. The final graph below details needed acreage depending upon estimates of total usage and yield. Assuming that usage might be 12.75 billion bushels and trend-line yield at 155 bu/acre mandates necessary planted acreage of approximately 89-million acres (92% harvest rate) in order to maintain current carryover. Lots of unknowns remain surround the market this coming spring including Argentina, soybean export expectations, energy price recovery, etc… Nonetheless, assuming initial planting-intention reports hovering around 83 million acres represents significant shortfall - perhaps as much as one-billion bushels. Carryover will decline in the coming year - to what extent remains to be seen but the market will need to purchase acreage and/or ration usage to maintain current levels.

Lastly, there were no surprises in USDA's cattle inventory report: the cowherd continues to shrink. Total beef cow inventory was pegged at 31.7 million cows - down 2% from last year's mark. 2009 represents continuation of a long-term decline in the size of the nation's cowherd - over 3.5 million head since the recent peak in 1996. That possesses a number of important implications discussed in detail previously in the Monthly Market Profile and will be covered in months to come.

Price Summary

EDITOR's NOTE: Next week in the Ohio BEEF Cattle letter, read Speer's AgSight column entitled Much Ado About COOL. The following week, on February 18 or 19, meet Nevil Speer in person during the third session of Managing Dynamic Change in the Beef Cattle Industry.

2009 CattleFax Outlook: Tough, Volatile and Hard to Come By

PHOENIX (Jan. 30, 2009) - With a slowing economy and consumers keeping a closer eye on their spending, some of the dynamics in the beef industry are shifting in 2009. Cattlemen attending the annual CattleFax Outlook Seminar here heard that cattlemen face softer beef demand to start 2009, but that could change if the financial markets begin to stabilize.

As in previous years where market volatility was prevalent, risk management will be an important strategy this year. "Know basis," says Randy Blach, executive vice president for CattleFax. "It needs to become second nature. We've got to learn to understand risk."

Consumer are making more meals at home and eating out less at nicer restaurants. That has lowered the value of the higher priced middle meats like the rib and loin. At the same time, the chuck and round are claiming a larger share of carcass value (21 percent vs. 19 percent) compared to a year ago.

Overall cattle supplies are expected to decline in 2009, following a 1.5 percent dip in 2008. Beef cow numbers have declined 600,000 head to 31.9 million in response to drought in some areas and marginal profitability elsewhere. Beef cow slaughter is projected to be at a liquidation pace in 2009. As a result, the calf crop for 2009 and 2010 is projected to shrink by 2 percent.

A decline in cattle inventory means a smaller beef supply and that could bump beef imports to 2.7 billion pounds for 2009, also encouraged by a stronger dollar that makes the U.S. market more attractive than it was a year ago. Supplies of competing meats also are projected to be lower in 2009, marking the first time in decades that all the major protein supplies have declined. This is happening partly as a result of higher feeding costs in the livestock industry.

Even with softening domestic demand for beef, worldwide demand for protein is increasing, says Brett Stuart, a CattleFax analyst specializing in exports. While the credit crunch will limit exports to some top markets, U.S. beef exports should post some growth, led by gains in the South Korean market as Mexico continues to be the No. 1 export destination for U.S. beef. For the year, CattleFax projects that beef exports will reach 2.3 billion pounds. That figure taken with net imports represents an improvement in the beef trade gap as U.S. exports continue to rebuild from the 2003 BSE incident.

Increased production costs for corn, estimated to be as much as 30 to 40 percent more than 2008, will impact planting decisions. The current crop is forecast at 12.5 billion bushels, and increased production is needed to meet ethanol demands, although that market is softening. U.S. and world stock levels remain historically low, which tends to support prices.

"You better have a disciplined approach to how you manage risk or you will not like the results," Blach says.

Over the last two years the average price of a bushel of corn has increased $2.70. CattleFax projects that the overall U.S. price for a bushel of corn in 2009 will be lower than 2008, $4.25 vs. $5.30.

"Economic conditions and credit availability, especially in foreign markets, are going to affect us a lot this year," Blach says. "We'll get through this and those who do a better job of managing their risk will get through a little better than the rest of us."

CattleFax is a Denver-based, market analysis and information firm. For information about CattleFax services, call 303-694-0323, or visit with Duane Lenz of CattleFax during the first session of Managing Dynamic Change in the Beef Cattle Industry on February 4 or 5.

Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) found strength on Monday. FEB'09LC futures closed up $1.900/cwt at $83.900/cwt; $1.55/cwt over a week ago. The APR'09LC contract closed at $86.825/cwt; up $1.725/cwt and $3.00/cwt higher than this time last week. Fundamental strength was found in Friday's bullish Cattle Inventory data. Cash cattle reflected that strength trading better than expected on a weakening economy. The USDA 5-area average was placed at $80.11/cwt. USDA placed the choice boxed beef at $142.78/cwt, up $0.95/cwt. According to HedgersEdge.com, the average packer margin was lowered $4.80/head from last week to a positive $49.60/head based on the average buy of $80.88/cwt vs. the average breakeven of $84.56/cwt. It might be a good idea to sell cattle when ready while trying to price a couple months' near-term corn needs.

FEEDER CATTLE at the CME closed up on Monday. MAR'09FC futures were up $3.000/cwt to $93.000/cwt and $1.275/cwt over a week ago. The APR'09FC contract closed at $93.325/cwt; up $3.00/cwt. Lower feed prices rallied some contract limits. USDA's bullish report also provided support to feeders even as cash feeders still showed weakness early Monday. The CME Feeder Cattle Index for January 29 was placed at $94.36/lb; down $0.34/lb. Advance feeder sales when ready. It also is a good idea to price a couple of months' near-term corn needs.

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