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Iowa Senator Chuck Grassley says it's time the United States shows leadership and gives our international trade negotiators a stronger footing for dealing with beef issues. The main stumbling point is the lack of a comprehensive BSE rule for beef imports. Mr. Grassley says that puts our trade negotiators at a disadvantage when negotiating with other countries. The following is an "op-ed " article authored by Senator Grassley and provided to us by the National Cattlemen's Beef Association.


"International trade bolsters job creation here at home and helps foster economic activity in communities across the country. The beef industry plays a big role in the United States' trade portfolio.


"Last year alone, U.S. beef producers exported to countries around the world nearly $5.5 billion worth of product. And, it's generally agreed upon that increasing exports are the key to increasing demand for U.S. beef products.  Unfortunately, our own government is hindering progress in opening new markets for these products.


"The problem lies in a comprehensive BSE rule for beef imports that would make the United States compliant with international trade standards set by the World Organization for Animal Health. The rule has been caught in the federal bureaucracy for several years, starting in 2004 shortly after BSE was discovered in a Canadian cow brought into the United States. Earlier this year the rule finally cleared the Animal and Plant Health Inspection Service, or APHIS as most cattle producers call it, but is now sitting at the Office of Management and Budget waiting for approval.


"This continued inaction is hurting our producers. So I led, along with Senator Ben Nelson of Nebraska, a bipartisan group of senators in pressing the Office of Management and Budget to release a final comprehensive rule as soon as possible and help give U.S. trade negotiators a stronger bargaining position."

You can read Senator Grassley's full article by clicking here.

Prices, Incentives and Margins in the Beef Industry 

It is a fact that cattle and beef prices tend to go up and down together. But, as OSU Extension Livestock Marketing Specialst Derrell Peel explains in the following analysis, it is also a fact that cattle and beef prices do not usually go up and down by the same amount and at the same time. It is this second fact that creates so much of the short term dynamics in cattle and beef markets.

Clearly, the supply pressure resulting from limited feeder cattle supplies continues to grow and has the expected impact of pushing feeder cattle prices up farther and faster than fed cattle prices, which in turn push up boxed beef prices, which then put pressure on retail prices. However, experience shows and economic theory predicts that prices adjust less and more slowly as one approaches the retail level. This always means that margins for the various sectors in the industry get squeezed for a period of time when cattle prices are rising.

The current cattle and beef market is quite unique. Cattle numbers and corresponding beef supply is creating unprecedented pressure for higher cattle and beef prices. This pressure will accelerate over the 2-3 years as anticipated herd rebuilding draws feeder supplies to even lower levels.    At the same time, beef demand, which was significantly impacted negatively during the recession, is recovering but very slowly and remains sensitive to macroeconomic conditions, energy prices and other external factors. This s a recipe for very dramatic margin squeezes for some sectors of the industry. A look at each sector illustrates the general incentives and situation in 2012.
 

Economist Sees Opportunities to Build Herd Size, Demand and Price Simultaneously

With current cattle numbers down nationwide, University of Missouri livestock economist Scott Brown sees opportunities for producers on the horizon. But, he says, producers have to be ready to make the most of those opportunities.

Brown says shrinking herds have now spurred prices enough to keep up with rising production costs. This, he says, will mean rising herd sizes in the future. This could lead to another market bubble which, depending on prudent choices, could result in producers exiting the industry or producing products capable of increasing consumer demand for beef.

Brown says the best solution, obviously, is to increase consumer demand. He sees the potential for a ten percent increase not in commodity beef, but in high quality beef. He says the potential expansion could be as high as six million head.

To take advantage of this market opportunity, Brown says producers need to get educated and not be so reliant on production techniques that were viable 20 years ago. He sees the market clearly shifting toward the production of high quality beef.

Click here to see a video in which Scott Brown explains the opportunities he sees.

Boxed Beef Moves Higher Once Again-Market Recap with Ed Czerwin

According to Ed Czerwin of the USDA Market News Office in Amarillo, Texas, wholesale boxed beef prices continued to rise last week with the spot choice up $7.00 from the previous Friday which was the highest level since the week before Thanksgiving 2011.

However, the total loads were down considerably last week meaning retailers may be reluctant to buy too far in the future at these current prices. Loads sold dropped nearly 60 percent from almost 1600 to just under 1,000.

Export sales were also down on the week with sales of 558 loads, down 60 percent.

Middle meats posted a fast-paced finish with retailers purchasing steak products ahead of the grilling season. Ribs and loins finished ten-14 dollars higher, with chucks and rounds three to five dollars higher.

The weekly finished cattle trade was steady in the Southern Plains and steady to a $1.50 lower in the North. The Southern Plains saw $129 cash in light to moderate trade Friday. It was Friday evening before business was done. The average weight from the Texas Panhandle was 1232 pounds, the same as last week.

You can hear Ed Czerwin's full recap by clicking here.

USDA Study Shows Cropland Decreasing, Productivity Increasing

Is the conversion of farm land to land for housing reducing land available for food and fiber production? A recently released USDA study addresses that issue.

The amount of cropland is decreasing in the United States due to a variety of factors. That's one of the conclusions from the major land uses study by the U.S. Department of Agriculture's Economic Research Service. The study examined data o land use trends from 1945 to 2007.

Cynthia Nickerson with the USDA says, "We see productivity increases that are allowing farmers to grow more on less land over time and the reasons also vary by region. In some regions of the country where you have significant pressures to provide land for housing for example, you'll see declines in crop land. In other regions of the country it could be for other competing demands for land."

To read more about the cropland study or to see a video report, click here.

The conditions of small grains and canola improved over the past month with a majority now rated in good condition, according to Monday's Oklahoma Crop Weather report issued by the USDA-NASS Oklahoma Field Office. The good condition of the crops made continued grazing possible on a larger portion of the small grain crop than in previous years. However, a warmer than normal winter has allowed wheat to develop ahead of normal, so producers are beginning to pull cattle off of wheat that will be harvested this summer. 

Specifically- Conditions of wheat and other fall planted crops were rated mostly good, with 14 percent of wheat and 12 percent of canola rated excellent, respectively. For both crops- the good rating stands at 53%.  Wheat grazed was 45 percent of the crop, 11 points above the five-year average. Kansas wheat crop ratings are not quite as flashy as Oklahoma's numbers- 7% excellent and 45% good- while Texas remains with almost half of their crop rated poor to very poor- 43% rated poor to very poor- and only 31% in the good to excellent category.

Pasture and Range: Pasture and range condition ratings improved slightly from the previous month, but two thirds of the state was still rated poor to very poor. Much more rainfall is needed for grass to recover from the extended drought. The availability of pasture and grass will be crucial as producers decide whether or not to graze out small grains.

Click here to review the full report from NASS for Oklahoma.  Weekly reports pick up starting next week.

Environmental Working Group Weighs in on Conservation Title as Senate Ag Committee Holds Hearings Today on the Subject

An environmentalist group that has little love for the Commodity Title has issued a new report and web advertising campaign ahead of Tuesday's Senate Agriculture, Nutrition and Forestry Committee hearing on conservation.

The Environmental Working Group's report, Conservation Compliance: A Retrospective...and Look Ahead, supports their view that farmers and taxpayers are subject to a nebulous "compact" that was struck in the 1985 farm bill under which "growers agreed to keep soil from washing away and chemicals out of waterways in return for generous taxpayer support."

The report relies on seven polls taken over 30 years purportedly showing "that a solid majority of farmers believe that bargain is a fair one."

The report's author, conservationist Max Schnepf, says "The conservation compact was a godsend for agricultural and conservation groups and farmers." He also says, "In the 10 years following the 1985 farm bill, farmers did more to curb soil erosion than at any time since the infamous Dust Bowl years of the 1930s." 

Click here to read more about EWG's report and to find links to their full report and web ads.