Bloomberg: Meat Inflation Accelerates as Demand Grows for U.S. Beef, Pork

Meat prices are rising in the U.S. at a faster annual rate than forecast a month ago, as increased demand for pork and beef exports erode inventories and high feed costs discourage livestock producers from expanding herds.

Read More at Bloomberg.com.

BEEF Daily: The Truth About HSUS Might Shock You

I often speak with producer groups, and although I often feel like a broken record at times — I believe it’s critically important to repeat this important message: the Humane Society of the U.S. (HSUS) is a wolf in sheep’s clothing, spending less than 1/2 of 1% of its annual budget to assist animal shelters.

Read More at BEEFMagazine.com.

CattleFax Risk Management Seminar

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American Way Magazine Got The Low-Down On HSUS

American Way Magazine Got The Low-Down On HSUS following an article it published in its current issue on the group and its CEO, Wayne Pacelle. American Way is the on-board magazine of American Airlines.
In a letter to the magazine’s executive editor, the Animal Ag Alliance politely and factually pointed out that the Humane Society of the U.S. (HSUS) is not the organization it appears to be. “HSUS is an animal rights group that uses its considerable budget to threaten America’s hardworking farmers and ranchers. It is not affiliated with any local animal shelter,” said Animal Ag Alliance Executive Vice President Kay Johnson Smith in the letter.
“HSUS and other animal rights groups are not concerned with improving animal welfare. These extremists are systematically working to prohibit the ownership and use of animals in any way — be it for companionship, entertainment or food,” Smith said.
In fact, she told American Way, analysis of HSUS’ 2008 tax return shows that only one-half of one percent of the group’s funds actually went toward caring for animals.
According to Smith, she received a phone call from the magazine’s executive editor, Adam Pitluk, within minutes of sending him the letter.

China’s Appetite For Feed Grains Could Mean It Will Soon Enter The World Market

“China’s Appetite For Feed Grains Could Mean It Will Soon Enter The World Market in much the same way it did for soybeans, putting pressure on U.S. corn prices and food prices,” Lester Brown, president of Earth Policy Institute in Washington, D.C., said this week in an interview with Feedstuffs.
“We can anticipate substantial further rapid growth in China’s grain consumption, most of it to expand beef, dairy and poultry production,” Brown said, noting that U.S. grain industry and international financial institutions analysts now believe that China’s entry into the world grain market is “inevitable.”
But, he warned, when the new demand from China is combined with U.S. grain demand and the use of grain for biofuel, “we begin to see a real price crunch in the making.”
Brown noted that unconfirmed reports in recent days point to China’s “quiet” steps to buy U.S. grain. If China imports only a fifth of its 400 million ton annual grain consumption, it would amount to imports of 80 million tons of corn. He agreed that U.S. Grains Council estimates of 9 million tons of Chinese purchases within a year were “definitely a possibility.”
He said he believes that China might import as much as 10 million tons of grain by the latter part of this year, including purchases of barley for brewing and wheat from Australia, and that could increase to 25 million tons by 2015. However he noted the difficulty of predicting Chinese demand because of the difficulty of getting reliable grain information from China, but said “if they come into the world market they will have to come to the U.S. because the U.S. is far and away the world’s largest grain exporter.”
Brown, a veteran agricultural economist who spent many years at the Worldwatch Institute before founding the Earth Policy Institute in 2001, is sometimes viewed as an alarmist, but few doubt his global view, Feedstuffs says. He said the U.S. would be unable to limit Chinese demand for grain “because China is our banker” and the era of cheap American food “may be about to come to an end.”

Cow/Calf Corner: What is a “Freemartin”?

Freemartinism is recognized as one of the most severe forms of sexual abnormality among cattle. This condition causes infertility in the female cattle born twin to a male. When a heifer twin shares the uterus with a bull fetus, they also share the placental membranes connecting the fetuses with the dam.

A joining of the placental membranes occurs at about the fortieth day of pregnancy, and thereafter, the fluids of the two fetuses are mixed. This causes exchange of blood and antigens carrying characteristics that are unique to each heifers and bulls. When these antigens mix, they affect each other in a way that causes each to develop with some characteristics of the other sex.

Although the male twin in this case is rarely affected by reduced fertility, in over ninety percent of the cases, the female twin is completely infertile. Because of a transfer of hormones or a transfer of cells, the heifer’s reproductive tract is severely underdeveloped and sometimes even contains some elements of a bull’s reproductive tract. A freemartin is genetically female, but has many characteristics of a male. The ovaries of the freemartin do not develop correctly, and they remain very small. Also, the ovaries of a freemartin do not produce the hormones necessary to induce the behavioral signs of heat. The external vulvar region can range from a very normal looking female to a female that appears to be male. Usually, the vulva is normal except that in some animals an enlarged clitoris and large tufts of vulvar hair exist. Freemartinism cannot be prevented; however, it can be diagnosed in a number of ways ranging from simple examination of the placental membranes to chromosomal evaluation. The cattleman can predict the reproductive value of this heifer calf at birth and save the feed and development costs if he is aware of the high probability of freemartinism. In some cases, there are no symptoms of freemartinism because the male twin may have been aborted at an earlier stage of gestation.

Estimates of the percentage of natural beef cattle births that produce twins vary. One estimate (Gilmore) puts the percentage at about .5% or 1 in every 200 births. Approximately one-half of the sets of twins should contain both a bull and a heifer calf. (Source: “The Causes and Effects of Freemartinism in Cattle” by Laurie Ann Lyon.)

Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist

Cow/Calf Corner: What Does Seasonality Mean This Year for Cattle Markets?

Historically, seasonal cattle price patterns have been one of the most reliable tendencies in cattle markets. This is particularly true in a stable market environment. However, the market is anything but stable now and that means that normal price seasonality may not mean much this year. Anticipating cattle markets is always a daunting task and is particularly challenging this year with so many short and long run factors affecting the market at the current time. Feeder and fed cattle prices have advanced more than seasonally through the first quarter but still there are indications that markets may be close to a seasonal top or plateau. However, there is much turbulence in the water and the picture is far from clear.

Most recently, a series of global events has introduced additional uncertainty and hesitation into markets in general and have affected cattle markets as well. The continuing unrest in the Middle East and Africa provokes general political uncertainty and adds volatility to oil markets. The Japanese disaster and ongoing nuclear concerns add additional uncertainty to markets. These factors may or may not subside in coming days and weeks but make it particularly difficult to read cattle markets at this time. Though cattle and boxed beef prices have looked a bit “toppy” recently, it is unclear if this is normal seasonality or short term uncertainty causing a brief pause in the recent strong market trends. The combination of global unrest and seasonality may cause cattle markets to plateau but the underlying market strength, driven by supply fundamentals may limit any seasonal weakness through the middle of the year if the global factors subside. Potentially adding more uncertainty, attention will begin to be focused on 2011 crop conditions and corn markets may add additional volatility to the mix and emerging drought conditions may temper summer feeder cattle demand.

Looking a little longer term, there is still the question of beef demand and trade. Over the next 12 to 24 months, these factors will be particularly important in determining cattle market possibilities. There seems little doubt that cattle and beef supply fundamentals will get even tighter over this period and it will be domestic and international demand factors that determine the operating range for cattle and beef prices.

Longer term yet will be the influence of the internal dynamics of industry supply. The process of herd rebuilding is likely to begin in 2011 but the process will be slow and will take several years. The questions of just how tight supply will get and how long it will last will play out over the next three to five years. There is still a cattle cycle component to this industry but it may be hard to pick out amidst the myriad of other short and long run market factors that will be at work simultaneously.

Finally, there are some very long run structural changes at work in this industry that will take many years to work out. The industry we know today was built on cheap energy and cheap corn and we are not likely to have either of those in the future. Permanently higher feed prices changes how the industry will produce by putting much more emphasis on forage. Increased competition for agricultural land use for crop production will likely also lead to regional shifts in the cattle industry over time. These factors will likely change cattle price relationships by cattle class and region.

Against this very complicated backdrop of influences, it is difficult to develop a clear picture of the current market situation. Some of these factors will either pass or will become more clear with time but no doubt other short run factors will emerge. Supply fundamentals are certainly in the driver’s seat and suggest that downside risk is limited. Still it is hard to forecast summer cattle prices. The seasonal bet is for lower prices while recent trends could mean higher prices. Or the two could offset and move prices sideways. For the next few weeks, cattle prices will change according to the net effect of seasonal tendencies, underlying short and long term trends and external volatility. It is a situation that requires constant monitoring.

Derrell S. Peel, Oklahoma State University Extension Livestock marketing Specialist