MARCH 10, 2010

Packers continue to pursue steady money bids and cattle feeders continue to show resolve for higher asking prices. Cattle owners in the south were firmly stuck on $95 asking prices. Show lists are composites of both cash offerings and formula committments. Cash market show lists were steady but smaller formula schedules reduced the number of cattle set for next week's slaughter. Both buckets must be viewed together for context.

Box prices pushed higher with select cuts leading the way following last week's smaller slaughter number. The benchmark choice box cut out firmed to $149.50 with select gaining a dollar to $149. Carcass weights in the latest lagging indicator remain well below prior year, but pens are drying and cattle recovering from the storms in the south.    

Feeder cattle futures leveled out. Larger movements off wet wheat fields pushed offerings higher and some feedlots want to confirm better cash prices on fed cattle before committing to higher feeder prices. The remaining cattle will be offered for May delivery and will occupy graze out acres. A 750# steer was quoted at $102 in the southern plains. 

Corn prices weakened in mid week trading. Traders are working off the May contract and most basis trades were 25-30 over May in the southern plains. Corn is now pricing into most rations at $7.00 cwt.. 

NATIONAL ID REVISITED

If at first you don't get it right, then keep trying to get it wrong. USDA confirmed the notion that a bad plan is as good as no plan for identification of the national herd. Voluntary programs have fallen flat on their face. There is some lip service but virtually no support in the live sector for a national ID program. The processors support a program because it will help them sell beef but politics won't allow it to happen now.

Breeders are opposed believing it will result in liability to them when problems along the beef chain allow quick traceback to the origin. They also reject something that will cause extra cost and in their mind not allow the cost to be recovered in higher prices for their cattle. Feedlots give the program lip service but little vocal or strong support.

USDA is leaderless to present a plan.  Voluntary programs are a joke. Voluntary simply means those beef produced involved in a source verified or branded program will use ID, which they would anyway, and those not enrolled won't because it does nothing for their bottom line. USDA has now sponsored 4 pilot program over 10 years cost $100 million dollars and has no better plan or idea of how to implement a program then when they started. The logical extension of the current plan is another disaster when a health or herd event occurs and originates with an unidentified animal.

Identifying cattle in the nation's herd is necessary to the viability of the industry. At no time could it be more important than now. International competition will favor those countries with the ability to represent source and age verified products. We lose out on beef sales every day to countries that have mandatory identification. Whether the buyer wants traceback for health or mad cow or simply to know the producer, ID provides a comfort level that stimulates interest and increases sales.

The attendant side benefits are also compelling.  New low cost tags carry some additional information on the animal such as the location in GPS coordinates or the temperature.  This provides the framework for alerts to warn the owner when any cattle stray from their pasture or a rustler runs off with an animal. It also allows the cowboys responsible for cattle care to find a sick calf immediately and know the location. Benchmarking for competitive comparisons are another side benefit of national ID.

People are always resistant to change. They also are frequently hesitant to spend more money on projects with uncertain results. This program will have the most direct results --- increased beef sales and any additional demand for our product can only put more money in the pockets of all producers.

  FEEDER MATRIX

The Cattle Report introduces the FEEDER METER. The chart is interactive and updated every 15 minutes in real time based on changes in futures markets in grain and cattle. Corn basis information is based on current trade prices adjusted every two weeks. Feeder prices and fed cattle sales are par the appropriate futures contract.

TEETER METER

The Cattle Report introduces the TEETER METER. TEETER means to waiver unsteadily as markets will do. This report generated from industry averages attempts to simulate a typical close out based on prevailing purchase prices for a feeder steer 150 days ago. The close out assumes grain was purchased at market each month. Selling prices and interest rates are based on prevailing benchmark quoted prices. This chart will change weekly.

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