A Publication of:

OSU Extension - Fairfield County

831 College Ave., Suite D, Lancaster, OH 43130

and the

OSU Extension BEEF Team

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

You may subscribe to the weekly Ohio BEEF Cattle letter by sending an e-mail to smith.263@osu.edu

Previous issues of the BEEF Cattle letter

Issue # 718

January 12, 2011

The Value of Genetics - Dr. Les Anderson, Beef Extension Specialist, University of Kentucky

Few beef producers would disagree that the genetic potential available for use in their herds via artificial insemination is greater than that of most natural service sires. The advantage of using AI stems from the improvement in the predictability of the bulls; their EPD's are simply more accurate and reliable. However, less than 10% of the beef cows in the United States are artificially inseminated each year (NAHMS, 2008). Many reasons exist for the low rate of implementation of estrus synchronization and AI (ESAI) into beef cow-calf operations. One factor that limits the use of ESAI in commercial cow-calf herds is the hassle factor. It is simply too much effort to gather the herd and work them 2-3 times in a 10-day period. However, the major reason, in my opinion, is that most producers cannot capture the added value of their AI-sired calves and the enterprise is not profitable.

Two real questions arise when thinking about using ESAI. First, are calves sired via AI more valuable? Second, how can a commercial cow-calf producer capture some of this value? These two questions have been investigated in an Advanced Master Cattleman program sponsored by the Kentucky Beef Network and the Agriculture Development Board. The goal of this program was to determine if steers sired by AI bulls proven in feedlot and carcass performance could actually perform better in the finishing phase and if these steers generated more revenue and were more profitable.

This project started in the fall of 2007 with 7 producers in Washington, Marion, and Nelson counties and has continued through this last breeding season. More than 900 head from 15 producers across KY were bred this fall alone. Each breeding season, estrus is synchronized and females in these herds are time-inseminated to an Angus, Polled Hereford, Simmental, or Charolais sire. The sires used are proven trait leaders in their respective breeds in feedlot and carcass performance. After weaning, the calves are vaccinated and backgrounded about 60 days. These producers retain ownership on their steers and they are sent to a feedlot in Kansas for finishing and harvest. Feedlot and carcass data have been collected on 139 head of steers sired either by an AI sire or a natural service sire.

Steers sired by proven AI bulls were more efficient in the feedlot. They outgained (.22 lbs per day) and required less feed per pound of gain (.31 lbs less feed per lb of gain) than steers sired by the herd bulls. Steers sired via AI were on feed 13 fewer days than steers sired by the herd bulls.

Using AI also improved the carcass performance of steers. Steers sired by proven AI bulls had a higher quality grade and a heavier carcass than steers sired by the herd bulls. The added feedlot and carcass performance improved the value of the steers. Steers sired by AI bulls were $146.60 more valuable at harvest than steers from natural service. After considering the feedlot costs, steers sired by proven AI bulls returned $163.18 more to farmers than steers sired by their herd bulls.

These data certainly demonstrate that using ESAI can improve the value of steers and the profit potential of beef cow-calf producers. Unfortunately, the only marketing method currently available to capture this added value is retaining ownership through harvest and many of the commercial cattlemen in Kentucky are skeptical of this marketing method. One alternative would be to establish local CPH-45 sales that feature steers and heifers sired by proven AI bulls. The calves in these sales would be source-, age- and "genetically"- verified for improved feedlot and carcass performance. The long-term goal of this Advanced Master Cattleman project is eventually to generate enough calves sired by proven AI sires that we can conduct CPH-45 "genetically-verified" sales.

For more information on this Advanced Master Cattleman Program contact either Dr. Les Anderson (859-257-2856) or Mr. Land Dale (859-278-0899).

EDITOR's NOTE: Many of the concepts discussed above by Dr. Anderson, including the incorporation of ESAI into the commercial cow herd and value based marketing concepts, will be a focus of the 5 part Ohio Beef School beginning in many Ohio County Extension offices on February 3. Find details, and a current listing of the host sites in the December 8, issue # 714, of the Ohio Beef Cattle letter.

OCA Accepting Bull Consignments for Seedstock Improvement Sales

The Ohio Cattlemen's Association is currently accepting bull consignments to the two Seedstock Improvement Sales held in April. The sales, held on Friday, April 8 at 7:00 p.m. at Muskingum Livestock in Zanesville and Saturday, April 16 at 12:00 noon at Union Stock Yards Company in Hillsboro, offer an affordable way to market bulls from multiple breeds in one location and on one day. Buyers have the assurance of buying bulls with known genetics, a completed vaccination regiment, and a breeding soundness exam.

The Seedstock Improvement Sales are open to consignments from all breeds of bulls. Consignors must be a current member of the Ohio Cattlemen's Association to participate. Bulls are required to be registered and to have expected progeny differences (EPDs). The bulls will be placed in sale order based on a within breed evaluation star system using EPDs for birth weight, weaning weight, yearling weight, and milk. Bulls consigned to the sales can be from one to five years of age. History of the sale shows that bulls 18 months of age and older command a higher price. New for 2011 all bulls are required to be tested for Bovine Viral Diarrhea (BVD) persistent infection (PI) status. Complete health requirements can be found on www.ohiocattle.org

For more information on the sales, visit www.ohiocattle.org and look under the Beef Improvement section or contact the OCA office at 614-873-6736 or through email at beef@ohiobeef.org. Interested consignors or buyers can also contact John Grimes, will be managing these sales as one of his responsibilities in a new role as OSU Extension Beef Coordinator, with any questions at 937-763-6000 or grimes.1@osu.edu. Consignment deadline for both sales is January 31, 2011.

Grazing Management Workshop "Pasture for Profit - Grazing School"

The first grazing school of 2011 is scheduled for the Tuesday evenings of January 11, 18 and 25. The three session course will be held 6:00 to 9:00 p.m. at the Ohio Hi-Point Career Center Auditorium, 2280 State Route 540, Bellefontaine, Ohio. A Grazing School is designed for the producer or farm manager. It provides valuable information in a fun atmosphere that can be used to ensure that the grazing operation on your farm is environmentally responsible as well as economically viable. If you are a producer or an agency person with an interest in grazing management please plan on attending. Registration is $40 that will include the Pasture for Profit Notebook and Pasture Stick. A flyer with the agenda and registration form is available at http://co.logan.oh.us/soilandwater/.

Additional information is available by contacting Bob Stoll, District Conservationist, Bellefontaine at 937-593-2946 extension 114 or email bob.stoll@oh.usda.gov.

Benefits from attending:
-Qualifies you for additional points when applying for USDA EQIP
-Increase knowledge about forage growth to improve pasture management
-Improve the environmental quality; clean water and air, healthy soil, plants and animals
-Learn ways to increase net profit in your farming operation

Ohio Beef Expo Deadlines Approach

As you break out your new 2011 calendar and begin to add important dates, be sure to mark March 18-20 for the Ohio Beef Expo to be held at the Ohio Expositions Center in Columbus, Ohio. Plans for the 2011 Expo are well underway and this year's event is shaping up to be one of the best ever with breed sales, shows and one of the Midwest's largest and most competitive junior shows.

The Expo will once again include a three-day industry trade show. Last year's trade show which encompassed over 22,000 square feet of indoor space was a full house. If you are interested in promoting your cattle industry related product with a display in the 2011 event, contact Jamie King at (614) 873-6736 as soon as possible. The early deadline to reserve space in the trade show is January 3.

Consignments are now being accepted for the Angus, Chianina, Hereford, Limousin, Maine-Anjou, Shorthorn and Simmental sales. For complete details about making a consignment or to request a catalog for one of these sales, log on to www.ohiobeefexpo.com and click on the sales link.

The ever-popular genetic pathway will once again be a feature of the main hallway and upper concourse of the Voinovich Livestock and Trade Center. To reserve display space for your bull prospects or donor cows contact the OCA office at (614) 873-6736. A limited number of spaces are available on a first-come, first-served basis. This is a premier opportunity to reach commercial, seedstock and club calf producers all in one location.

The Ohio Beef Expo will again offer a lot of opportunities for youth participation and education throughout the weekend. Youth events include: judging contest, beef quality assurance session, showmanship and the junior heifer and market animal show.

Over 25,000 visitors from 20 states and Canada routinely attend the Ohio Beef Expo. It is ranked as the ninth largest event hosted in central Ohio and is the premier location to meet Ohio's cattle producers. Don't miss it!

For complete details on the 2011 Ohio Beef Expo, visit www.ohiobeefexpo.com. The Ohio Beef Expo is a function of the Ohio Cattlemen's Association (OCA).

Dry Conditions Limits Winter Wheat Grazing - Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Despite the fact that we are receiving some snow in Oklahoma as I write this, it is extremely dry in most of the winter wheat grazing areas of the Southern Plains. Dry conditions last fall made it difficult to establish wheat pasture in many areas and limited growth for winter grazing. With high feeder prices and limited feeder supplies, there is a lot of interest in how many wheat pasture cattle are out this winter and what will be the timing of those cattle into the market?

Wheat pasture conditions vary considerably in different regions and it is difficult to make an overall assessment. Most wheat pasture was planted late and developed late delaying placement of wheat pasture cattle. High wheat prices may have limited grazing interest somewhat but attractive wheat grazing prospects remain much of the fall. However, emerging dry conditions truncated grazing prospects prior to Christmas so the overall window for placing wheat pasture cattle was fairly narrow. All of that leads me to the conclusion that the number of cattle on wheat is probably no greater than it was last year and may be somewhat less.

I traveled some over the holiday period and noticed a wide range of wheat pasture conditions at this time. Most notable to me were several sets of cattle grazing extremely short or limited wheat. Those cattle will have to move very soon to other pasture or be marketed. The cold weather currently in place certainly means that no growth is occurring and the amount of lush wheat pasture is, I believe, quite limited. Cattle prices are attractive (though they may go higher yet), and strong wheat prices means that producers will want to minimize risk to grain yield. There seems to be little incentive to hold on to cattle, particularly if forage is short. I would not be surprised to begin seeing wheat cattle trickling into the market in the coming weeks. I don't expect to see any sizable bunching of wheat pasture cattle or a noticeable "run" of any size going into early March.

Forage Focus: Stressed forages need some TLC for a successful 2011 crop - OSU/Purdue Extension's AgAnswers

The well-being of the 2011 forage crop will depend on whether producers alleviate some of the stresses caused by past management concerns, according to Purdue Extension forage specialist Keith Johnson.

Heavy rainfall in the spring of 2010 delayed hay harvest for many, and dry weather in the late summer and fall may have led producers to allow animals to overgraze pastures.

"The 2010 crop year was stressful to forages because the early spring rains didn't allow producers to get the harvested hay crop out of the field as early as they would have liked and the quality was less than desirable," Johnson said. "Following that was a very long, dry period. As time went on, producers were stressing pasture crops they did have and overgrazing occurred."

Regardless of weather, forage growers need to take the time to identify the stresses on their hay and pasture crops season to season so they can eliminate some or all of those issues in the best interest of the existing plants.

First and foremost, Johnson said producers need to look at soil types (http://websoilsurvey.nrcs.usda.gov/app/) and take soil samples. Those samples should be air-dried and sent to be tested (http://www.agry.purdue.edu/ext/soiltest.html) for pH, phosphorus, potassium, magnesium, cation exchange capacity and organic matter. A basic test should cover all of these different measurements.

Any measures of the test that come back at critical levels or less should be given immediate attention - especially pH.

"Different crops have a different pH level at which they grow best," Johnson said. "The cool-season grasses, really ought to be grown in a soil with a pH of 6.2-7. Most of the legumes we grow, such as alfalfa, really need a pH closer to 7."

Having the proper soil pH ensures nitrogen fixation in legumes and affects the availability of nutrients to the forage crop. A pH that is off ultimately could alter the forage composition, and producers could see less desirable forages growing in their fields.

Growers also need to evaluate the stands in their fields. They should look at what is in the pasture and determine whether it's more forages or weeds. If a pasture has been overgrazed and an abnormally large amount of soil is showing, overseeding might be an option.

Other pest stressors to watch for besides weeds are insects and diseases.

"It's the dynamics of growing crops that are important," Johnson said. "Do a good job of scouting. Look at the well-being of the crop as it grows. Understand why the crop might not meet your objective as it grows. Be diagnostic about things and take care of the issues in some fashion so the crop can be as productive as possible."

For farmers unsure of the best process for taking fields or pastures from evaluation to overhaul, Johnson recommended following the Procedural Order for Pasture Renovation:
* Assess the need for pasture improvement.
* Soil test and apply amendments.
* Control perennial broadleaf weeds.
* Leave residual growth at less than 4 inches of height.
* Make seed selections and purchase.
* Overseed before dormancy breaks.
* Reduce competition to young seedlings by grazing growth of established forages, or by hay harvest.

More information about managing forages is available in the Purdue Extension Forage Field Guide at https://mdc.itap.purdue.edu/newsearch.asp. The guide is $7.

In response to the forage issues of 2010 and the effects of short and low-quality forages on livestock, Johnson and Purdue Extension beef specialist Ron Lemenager hosted a free webinar that is archived and accessible to anyone at http://www.thebeefcenter.com.

Risk Back On - Nevil Speer, Professor, Animal Science, Western Kentucky University

Last year at this time the Monthly Market Profile began with the following observation: "We're in a dark wood and the way is not straight." Broader economic challenges led to subsequent characterization of the market being defined by resilience - ". . . in the hedge rows fighting our way out to some open ground." Well, so much for prognostication. The beef complex became seemingly invincible; markets never looked back, breaking out sooner and more easily than expected.

The current run provided 2010 with an exclamation point. The year ended with decisive action as fed cattle traded at $107 following the Christmas holiday; that's about $12 better since the market's near-term low in early-October (it's also the best level since October, 2003 - an artifact derived from BSE's influence on supply). More importantly, from a longer perspective (as discussed last month), the market has surged $27 from the low established in December, 2009 - the equivalent of fifty cents per week or the difference of $350/head in just over a year's time.

The fed market now possesses a new record from an annual average standpoint (see first illustration below). Perhaps more significant is the feeder cattle front; 2010 prices are second only to 2005 (that standard, though, was established within a sub-$2 corn environment; comparatively speaking, per the current feed price structure, the feeder market has captured the fed market's entire advance and then some). The development is favorable for the cow/calf and stocker segments - the "feedtruck premium" proves enduringly supportive. It also speaks to cattle feeding risk/reward perceptions and possesses important credit implications across the feeding sector (more later).

Despite a $1-2 breather as we opened business for 2011, the market has established this breakout to the upside going into spring - that implicitly fuels optimism for the first part of 2011 and prompts questions about potential upper limits for cattle prices. Clearly, beef demand will be key with wholesale values leading the way. Current prices (~$165) coupled with normal seasonality could potentially put us at $175 and support some more upside on the live front (being very careful to acknowledge lots of potential stumbling blocks from the demand perspective).

That said, against the backdrop of the broader economy, the market's current level further serves as an important development on several counts. First, it likely functions as a catalyst for shifting cost structures within the food business. That is, protein costs, coupled with a general rise in commodity costs, will ultimately have to work their way into the business model. But that becomes especially challenging amidst ongoing consumer frugality. Retail and restaurant chains must walk a fine line - the need to balance margins on one side versus maintaining traffic on the other. Over the short run, it appears that consumer loyalty is the priority. For example, Weis Markets recently announced a sixth round of sweeping price freezes.

That type of commitment, though, ultimately has to be made up in other areas and/or at a later time. The question becomes how and when respective businesses rotate around rising costs and implement necessary price realizations. As mentioned last month, that will likely NOT occur for middle-aisle products but rather in the perishable section. Cost management strategies could potentially begin to infiltrate the beef complex during second half of the year (following beef's demand peak). Therein enters the importance of the margin mix - the price/value relationship (or the perception thereof) between pork, poultry and beef and subsequent competitive positioning. The wholesale pricing structure has proven especially dynamic during the past several years and warrants ongoing monitoring (see second graph below).

Meanwhile, industry prosperity cannot occur without top-line growth. The market's run has also produced important benefits for the production sector. Total revenue during 2010 was also record high with cattle sales generating nearly $27 billion - approximately $3.5 billion ahead of last year (see third graph below). That's a very different scenario from the situation just 18 months ago. At the time (July, 2009) I discussed the detrimental consequences of declining revenue and declared that, ". . . in my estimation the industry is at a very critical juncture!" The discussion's primary focus surrounded inventory trends within the feeding sector.

Seemingly, there's a new paradigm at work. The last illustration below highlights the 12-month cattle-on-feed moving average (to eliminate the "noise" that occurs when viewing feedyard inventories on a monthly basis). Note that there was a steady decline between 2007 and 2010 (bottoming out in May) - the impact of numerous factors including escalating feed costs, the onset of the financial crisis and fewer cattle available to feed. During that period the industry appeared to have entered an inescapable adverse feedback cycle. The "risk off" mentality was predominant.

However, feedyard inventories are back on the rise - even in the face of shrinking feeder cattle supply and higher feed costs. Those factors won't likely be the primary challenges for many businesses going forward. Rather, the limiting factor may be inability to keep up with the need to expand access to operating capital. Regardless, higher markets and better sales have altered risk tolerance among feedyard managers. Hence, "risk on" is back in play.

As mentioned previously, there are lots of snares and traps to be wary of. We're working within uncharted economic territory. But unmistakably 2010 also marked an important turnaround - shifting from perceptions of an industry in decline to one of growth - the difference between "risk off" and "risk on".

Price Summary


Week Ending:

1/7/11 12/31/10 12/24/10 12/17/10 12/10/10
Slaughter Steers ($/cwt) 105.49 106.26 102.51 99.11 100.87
Choice Cutout ($/cwt) 165.81 161.90 159.50 162.83 164.40
Select Cutout ($/cwt) 159.58 155.40 152.80 152.61 153.23
Hide and Offall ($/cwt) 12.42 12.39 12.24 12.11 12.08
USDA Slaughter Weights (lb) 1306 1304 1306 1304 1303
USDA Steer Carcass Weights (lb) 855 852 855 852 856
CME Feeder Cattle Index ($/cwt) 123.38 123.47 120.10 119.29 118.70
Cow Cutout ($/cwt) 138.19 134.80 132.30 129.99 128.52
Corn (basis Omaha: $/Bu) 5.68 5.90 5.93 5.80 5.55
Cattle Harvest (000 head) 639 569 548 659 674
Beef Production (million lb) 498.6 443.1 427.9 513.9 525.7

Visit the OSU Beef Team calendar of meetings and upcoming events

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.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status. Keith L. Smith, Associate Vice President for Ag. Admin. and Director, OSU Extension. TDD No. 800-589-8292 (Ohio only) or 614-292-1868

Fairfield County Agriculture and Natural Resources