Comments from the director: February 2008

Iowa Beef Center Director Dr. John Lawrence has a monthly column published in Iowa Cattlemen magazine discussing current happenings at the Beef Center and issues in the beef industry.
Below is his February column about IBC. To view his colunn about the cattle market outlook, which he co-writes with Shane Ellis, ISU Extension livestock economist, click here.

Iowa Beef Center continues research

on co-products into 2008

In the last Iowa Beef Center report, I commented on how it was sunny and 70 degrees. That is not the case today, New Year’s Eve. It is sunny but hazy, and it’s 20 degrees with about 6 inches of snow on the ground — not counting the ice. Days like today make me truly appreciative for my desk job and for all the work you do out there to provide a safe, wholesome and affordable beef supply.

Besides my daughter’s birthday, New Year’s Eve is a special time to look back and ahead. The year 2007 was a busy one for the Iowa Beef Center. The ethanol industry continued to create new challenges and opportunities for cattle producers, and IBC continued to work to address these issues for producers. In addition to the dozens of meetings that reached nearly 3,000 producers in 2007, IBC members were active with on-farm demonstrations, one-on-one consultations and applied research, all of which addressed practical methods to reduce costs to the producer.

One approach IBC has been using to inform and educate Iowa beef producers has been to fund mini-grants to faculty and staff, so they may work on practical solutions to everyday problems. The Iowa State University 2007 Animal Industry Report summarizes these projects at www.ans.iastate.edu/report/air/.

There were several mini-grants funded in 2007 that addressed questions about feeding distillers grains and solubles (DGS). One measured sulfur levels in the feed that was delivered to the bunk. Another looked at the impact on marbling and the fatty acid profile of feeding DGS. Another analyzed that stuff that grows on wet co-products, including solubles, while in storage and if there reason for concern. Others looked at how solubles work in lick tanks on pastures during the summer months and mixing solubles with ground corn stalks for winter feed.

There continues to be opportunities for and questions about using corn co-products, and we will continue to look for and report solutions.

Now, with the now higher-priced corn, forage, pasture and co-products, the opportunity for profit from fine-tuning your rations has never been greater. IBC’s Beef Ration and Nutrition Decision Software (BRaNDS) is one of the best ways to evaluate alternative rations and feeding programs for beef cow herds or feedlot cattle. This software is available in both producer and professional versions through our Web site under the “IBC software” section. Also, look for BRaNDS training classes, which will be offered to provide additional information about the software.
Looking ahead to upcoming projects, we have several interesting mini-grants approved for 2008, and you may be asked to participate in one or more of them. This year’s list of projects includes: investigating deep-bedded cattle barns for cattle performance, air quality and manure nutrient retention; strategies for protecting water quality in pasture systems; and methods for handling and long-term storing of corn co-products with corn stalks in upright silos and silage bags, among other projects. There also are other applied research projects for wet DGS storage under way at the McNay and beef nutrition research farms. Watch for the results from all of these projects at www.iowabeefcenter.org, or look in next year’s Animal Industry Report.

In an effort to gain some new ideas on how to handle and distribute wet DGS, the Iowa Beef Center and Iowa Farmer Today, with support from the Iowa Farm Bureau, Iowa Renewable Fuels Association and 104.3 KRKN and 1240 KBIZ radio of Ottumwa, is holding an invention contest. We’re hoping to surface innovative ways to store, handle and feed wet corn co-products, as these are some of the biggest challenges in using such co-products . The contest is called Iowa’s Next Top Inventor, and entries are due Jan. 25. The top three finalists will be presented at the Cornbelt Cow-Calf Conference Feb. 23 in Ottumwa, where the attendees will vote to determine the winner. First prize is $2,000, and second prize is $1,000. Be sure to submit your entry, and attend the conference to see the winning inventions. The top inventions also will be featured in the Iowa Farmer Today.

The annual Cornbelt Cow-Calf Conference is the largest cattle producer meeting in Iowa -- and perhaps the Midwest — with more than 500 people attending each year. It’s a great event to attend. In addition to numerous exhibitors and the invention contest, there will be a dozen speakers who will focus on a variety of topics that impact beef cow herds. Check out the conference brochure here, and plan to attend the event Feb. 23.

The new year also brings a new look for the Iowa Beef Center’s Web site. The Web address is the same, www.iowabeefcenter.org, and the information is as dependable as always. However, the site is now better organized, easier to navigate, and we believe a better resource for you.
I have used the analogy that a Web site is like a garden. When it is planted and starts to sprout, it is simple and neat with everything in its place. After a while, though, things begin to grow and spread across the rows and into other areas. Our old site had that problem. As we added more information, it became increasingly difficult to keep that information organized and easy to find. The new organization and fresh start will help.  The Web page committee worked several months to design and develop a site that would meet the needs of our visitors. If you have any suggestions or comments about the Web site, please let us know.

Finally, from all of us at the Iowa Beef Center, we wish you a successful and prosperous 2008 and look forward to working with you in the year ahead.

Cattle market outlook: 2007 in review

Two-thousand seven was an interesting year to be in the cattle business. Fed prices set a new record high, but feedlots still lost money in seven of 12 months. Yearling prices were below their record-high prices in 2005, but were very near prices in 2006. Calf prices, while still the third highest on record, were lower than the average from the year before. Corn prices were $1.25 per bushel higher in 2007 than 2006.

Despite steer calf prices that were more than $1.20 per pound, beef cow and heifer slaughter was higher in 2007, suggesting that the cow herd is contracting. Feedlot losses and rising costs of gain will pressure feeder cattle prices, but excess feedlot capacity will cause feedlots to chase a smaller calf-crop. Grain, forage and pasture costs are rising and weather forecasters are increasing the likelihood of a drought in the Corn Belt in the coming year. Thus, presidential politics may not be the only discussion at coffee shops in 2008.

BY THE NUMBERS
Fed cattle prices set a record annual average price of $91.86 per hundredweight live or $146 per hundredweight dressed (Table 1). This price surpassed the old record from 2005 of $86.85, and was up 8 percent from 2006. Yearling prices were $108 and $102 for steers and heifers, respectively, unchanged from the year before. Average calf prices for the entire year were weaker in 2007, but fourth-quarter calf prices were about the same as in 2006.

The Iowa State University Estimated Returns to Feeding Steer Calves and Yearling Steers indicate that in spite of record-high selling prices, feedlots lost an average of $23 to $25 per head if selling an equal number each month. It shows that cattle sold in late spring and early summer were profitable. What it doesn’t figure is the stress and expense caused by the snow and mud last winter.

The U.S. Department of Agriculture’s January Cattle Report will confirm the numbers, but it appears that the beef cow herd is contracting. Beef cow slaughter in 2007 was 6.1 percent higher than 2006 and was the largest beef cow slaughter since 1998. Figure 1 shows the annual beef cow slaughter as a percentage of the January beef cow inventory. The 2007 value was 9.6 percent, the same as 2003 and 1998, but was below the liquidation years of 1986-90 and 1996-97. Heifer slaughter was up 3.6 percent, while steer slaughter was down 1.4 percent. Even in the fourth quarter, cow and heifer slaughter rates were up 3.2 percent and 5.2 percent, respectively, compared to the same period in 2006. In October, there were 50,000 fewer heifers in feedlots than the year before. This would be about 1 percent more heifers kept for breeding if that number holds. Not exactly a robust expansion.

Live cattle imports are equivalent to about 7 percent of U.S. federally inspected cattle slaughter. With all but the final week of the year reporting, the total number of live cattle imported to the U.S. is 2.4 million head (Table 2). More than 1.5 million imports are feeder cattle coming to U.S. feedlots with about twice as many coming from Mexico as did from Canada. Mexico does not export slaughter cattle to the U.S. Slaughter steers and heifers from Canada totaled 800,000 in 2007, up 15 percent from 2006. The border was closed to cattle older than 30 months until Nov. 19, 2007. Cows and bulls for slaughter totaled more than 16,400 in the first five weeks.

* Border opened to over 30 month cattle Nov. 19, 2007.

Through October, beef imports increased by 2.2 percent, and exports increased by 27.2 percent. At the current percentage increase, the annual totals for imports and exports will total 3.15 and 1.45 billion pounds, respectively. These compare to 2003 values of 3.0 and 2.5 billion pounds of beef imports and exports, respectively.

LOOKING AHEAD
Watch the USDA’s January Cattle Report for a snapshot of inventories and direction for 2008 and beyond. Most forecasts are for fed cattle prices to average slightly higher and for feeder cattle prices to be steady to slightly lower than 2007. Feeder cattle supplies are expected to be tight, but a rising cost of gain will limit feeder cattle prices. A key number to watch will be the heifer retention. If cow herds begin to rebuild, that will reduce the supply of feeder heifers now, but increase feeder supplies in 2010. If they do not, feeder cattle supplies will be steady to larger in 2008, but smaller in the years ahead.

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