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OSU Extension BEEF Team

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

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Previous issues of the BEEF Cattle letter

Issue # 591

June 11, 2008

"One Man's Pie is Another Man's Poison" - Dr. Roy Burris, Beef Extension Specialist, University of Kentucky

The argument over just how much the price of grain is affecting world food prices has reached a new level. Some contend that it is really the high price of fuel that is driving food costs upward. One report said that it couldn't be the price of grain because "there is only about six cents worth of corn in an 18-ounce box of corn flakes". We already knew that only a small percentage of the cost of food actually gets back to the farmer. However, some type of agricultural producers do have it better than others.

I was just reading a farm magazine in which a cotton producer was lamenting the rising costs of inputs like fuel, fertilizer and seed. He had to decide whether to grow cotton, soybeans or corn - all of which are at record prices. Corn prices have increased from $2.50 to around $6.00 a bushel with December futures now at $6.37. I would never begrudge this farmer making a good living but I will say that his economic situation is better than most livestock operations.

The fact is any operation that depends on feed grain is struggling unless they can pass on the costs to the consumer. According to the National Pork Producers Council (NPPC), U.S. pork producers lost more than $2.1 billion in just seven months. They are now losing about $50 on each hog marketed due to the doubling of feed costs.

Cattle operations that depend on feed grain are also feeling the pinch. Cattle producers, especially those in the southeastern United States, must lessen their dependence on feed grains. Fortunately, ruminants (like cattle) have the ability to consume large amounts of forage and to convert that feed to meat and milk. In fact, that is what they are naturally adapted for and that is what they do best. We must "put the rumen back in ruminants" to be sustainable in this part of the country. Our ability to produce forages, and the cow's ability to convert them to meat, has always been our "ace-in-the-hole".

The drought and ensuing feed shortage of last year should have taught us a couple of valuable lessons. One is that purchased feeds can be very expensive and the other is that improved pasture management systems can really pay off.

What can we do now? First, practice rotational grazing for more efficient forage utilization. Then, look at ways to extend the grazing season. Try to have something to graze during July and August. Fescue is pretty much dormant during that period of time. Summer grasses can be of benefit for both grazing or making hay. They will add some flexibility to your feeding program. You can also work on the end of the grazing season. Consider stockpiled/accumulated fescue pasture for December and January or beyond. Our goal should be to graze at least 10 months of the year. You won't likely have much pasture in February and March so you should have an adequate supply of hay available.

Backgrounding operations can work on a combination of forages and by-product feeds to lessen their dependence on feed grain. We need to get ourselves in a position where we don't have to compete with ethanol production and the world's food supply to obtain cattle feed. Forages and by-products can allow us to do that.

For more information and to register, call (740) 732-2682 or (740) 732-5681.

Find the station at 16870 Township Road 126 in Caldwell near Belle Valley. Take Exit 28 off I-77. Turn south on State Route 21. Go east (left) on State Route 215 for about one mile. Turn right onto Bond Ridge Road (a township road) and look for signs.

The facility is one of 10 OARDC outlying agricultural research stations located around Ohio.

OARDC and OSU Extension are the research and outreach arms, respectively, of Ohio State's College of Food, Agricultural, and Environmental Sciences.

Implanting Calves Still Pays Dividends - Dr. Mark Wahlberg, Extension Livestock Specialist, VA Tech

Growth-promoting implants are a well-established technology in the beef business. For more than 30 years some of these products have been available to improve growth and feed efficiency in cattle. A great deal of the more recent product development has been with implants designed for use in feedlot steers and heifers. However, there are a few implant products that are approved for use and will effectively work in calves prior to the time of weaning.

The use of all of the implant products is monitored by the Food and Drug Administration (FDA). Based on the research, FDA has determined that when used as instructed, implants have no withdrawal period.

Implants produce an increase in muscle growth, at the expense of fat deposition, in cattle of all ages. This growth effect is variable, and is affected by age and sex of calf, the calf's genetic potential for growth, level of nutrition, and overall health and vigor of the calf. But in general, one implant administered preweaning generates from 10 to 25 pounds of extra pounds at weaning.

The implants approved for use in preweaning calves contain lower doses of the growth-enhancing substances. In addition, the substances used for preweaning calves are less potent than those designed for use in feedlot cattle. In table 1 are shown the implants approved for preweaning calves.

Table 1. Implants approved for use in preweaning calves

*Zeranol has approximately 30-33% the estrogenic effect of Estradiol.

The mid-summer time period (July) is a good time to do various management practices to winter and spring-born calves. Applying a dewormer to calves at this time is often advantageous. Administration of the first round of vaccines is a good start towards immunizing calves leading up to weaning. At this same time, an implant can be applied to the calves.

Advantages of pre-weaning implants - The big advantage is more pounds at weaning. The cost-benefit payback is quite high. Most implants cost from $1.00 to $1.50 per dose. They typically will generate 10 to 25 extra pounds at weaning. With higher levels of nutrition, such as with creep feeding or creep grazing, the improvement in gain will likewise be higher. Put a value on those pounds of calf and it is readily apparent that implanting calves is one of the highest-paying management practices that can be done.

Disadvantages of pre-weaning implants - Nothing is 100% positive. A few factors to consider about pre-weaning implanting include:

Negative effects on reproduction. Replacement heifers may have reduced reproductive performance if implanted improperly. They need to be at least 45 days old, and implanted only one time. Bulls kept for breeding should never be implanted. The safe approach with heifers is to not implant unless you are certain those heifers will not be kept for breeding.

Reduced Quality Grade - Quality grade comes from more marbling. Fat within the lean is marbling. Implants reduce fat deposition. Thus, implants reduce Quality Grade. However, the lower-dose implants used for preweaning calves have less of a fat-reducing effect. A much greater reduction in quality comes from inappropriate use of the high-potency implants in feedlot cattle. To reduce the quality grade effect, use just one implant prior to weaning.

Implant Strategy - Producers must evaluate their specific production and marketing situation regarding many management practices. This is certainly true regarding the use of implants. The producer who will benefit most from the use of preweaning implants is the one who sells calves at or shortly after weaning. If the producer offers creep feed or creep grazing, which enhances the nutritional status of the calf, the implant effect will be even higher. The producer selling at weaning will have the additional pounds of calf to run through the marketplace.

Producers who retain ownership, especially through the feedlot, will benefit less from preweaning implants. This is because their payday is delayed until the cattle are finished. The extra pounds at weaning will not be converted into cash right away. Particularly if the cattle are to be sold on a Quality-oriented pricing grid, a producer may choose to not implant preweaning due to the risk of a quality grade reduction.

Summary - Implanting preweaning calves with one of the implants approved for that use is one of the highest-paying management practices available for beef producers. The extra pounds of calf at weaning come at a very low cost. While there are negative effects associated with implants, when just one implant is administered to calves prior to the time of weaning, these effects can be minimized.

COOL Is Back…Again - Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Now that the Farm Bill process is finally over, cattle producers should be ready for the long delayed implementation of Country of Origin Labeling (COOL). The new Farm Bill has some language that modifies the previous COOL legislation and that has a couple of implications for producers.

First, the new language simplifies the meat labels and the records requirements for COOL. This should make it easier for some producers to meet COOL requirements although the legislation applies to the requirements for meat retailers and it will be up to them to decide exactly what records to request from packers, feedlots, stocker and cow-calf producers. The second implication is that the legislative changes mean that the Agricultural Marketing Service (AMS) must change the implementation rules to conform to the new language. This means that the final rules are not yet spelled out and there is some uncertainty about the dates of implementation. It is anticipated that AMS will move quickly to implement interim rules while going through the process of finalizing the rules.

The new language emphasizes the use of existing business records whenever possible to minimize the burden on producers. For many cow-calf producers, existing business records are likely sufficient and producers may simply have to offer an affidavit that they have the records to document the origin of the calves they sell. Documenting cull breeding animals could be problematic and producers should give some thought to keeping records for later years when cull animals are sold. Current animals will likely be grandfathered in as of a date to be determined.

For many stocker producers, COOL may require some new recordkeeping efforts. Producers will likely need to request affidavits of origin for cattle they buy and maintain records sufficient to link those buying groups to commingled and sorted selling groups. It is not necessarily the case that producers must use individual animal ID to meet COOL requirements.

It may be possible to verify multiple purchase groups of animals that all have the same origin (i.e. born and raised in the USA) which are subsequently sorted and commingled into different selling groups but can be shown to all be covered by the same label, for which the stocker producer can offer an affidavit as seller.

In other cases, it may well be that the easiest and least costly way for the stocker producer to meet COOL requirements is to use individual animal ID to track animals through the stocker operation.

Producers should watch for additional information as the details are finalized in the coming weeks and months.

Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were off across the board on Monday. The JUNE'08LC contract closed at $93.175/cwt, down $0.675/cwt and $2.225/cwt lower than last Monday. AUG'08LC futures were off $1.225/cwt at $98.975/cwt and $1.850/cwt lower than this time last week. Higher feed prices, lower feeder cattle and speculative and hedge selling provided momentum to the selling. Higher corn prices are a bearish signal to buyers because of demand pressure on feeder cattle while fat cattle producers rush to sell to save on feed. The market seems to have factored in the latest South Korean rejection of U.S. cattle. On June 2, South Korea stated it would resend its agreement to buy U.S. beef it made last April. Will South Korea ever honor a deal? Cash cattle in the Southern Plains were off $2-$1.50/cwt. USDA's 5-area price was placed at $94/cwt, off vs. $95.18/cwt a week ago. Even though retail prices dipped slightly due to the seasonal expectations, the upcoming grilling holidays with gas prices holding grillers close to home for the festivities is seen as supportive. USDA on Monday put the choice beef cutout at $157.16/cwt, off $0.21/cwt. Packer margins were still positive on Monday at a plus $37.70/head, according to HedgersEdge.com. This was up $13.80/head last week. Cash sellers should consider pushing cattle off the feed lots as soon as they are ready. A risk management strategy hedging feed inputs should seriously be considered at this time.

FEEDER CATTLE at the CME were pressured lower on Monday. AUG'08FC futures were down $1.575/cwt at $110.675/cwt, $3.025/cwt lower than last Monday, and $5.975/cwt lower than week before last. The SEPT'08 contract finished the day at $111.875/cwt, also off $1.575/cwt from a week ago and $3.650/cwt lower than two weeks ago today. High corn prices triggered technical sell stops. Cash feeders have been supported by short supplies but the market focused on the higher feed costs that are coming. The CME Feeder Cattle Index for June 5 was placed at $109.54/cwt, down $0.19/cwt from last Friday but only a penny lower than a week ago. It might still be a good idea to hold feeders if you have good pasture and can price them on the bounces as the market struggles with these increased input costs. It would be a good idea to put into place a good risk management strategy for feed inputs at this time as corn is headed for higher ground.

CORN on the Chicago Board of Trade (CBOT) roared on Monday for contracts this side of December '09. Contracts after that that date declined an average of 3.0˘/bu -4.0˘/bu. Prices continued their upward momentum posting new highs as heavy rains in the U.S. Midwest roll in. Most believe now that the trend yield for corn will not be made this year. The JULY'08 contract finished at $6.572/bu, up 6.4˘/bu and 41.6˘/bu over last Monday and 68.6˘/bu higher than two weeks ago. The DEC'08 contract closed up 7.4.6˘/bu at $6.852/bu, 42.0˘/bu higher than a week ago and 70.4˘/bu over Monday before last. I was asked on a radio show May 28 where I thought prices were headed for corn and soybeans, I responded, "up." I didn't think it would be so high so quickly. Weather was the driving factor even as outside energy markets subsided. More rain is forecast and could begin to affect soybean prices. Farmers were expected to plant 86-87 mi acres this year. That has changed and will most likely be reflected in the USDA World Agriculture Supply-Demand Estimate report due out Tuesday. Cash corn in the U.S. Midwest was steady to weak on Monday while cash prices in the U.S. Mid-Atlantic States have jumped between 12.0˘/bu and 16.0˘/bu in the last two days. The market traded crop-condition estimates for a 5%-7% drop in good-to-excellent condition. USDA late on Monday placed the corn crop in good-to-excellent condition at 60% vs. 63% a week ago and 77% this time last year. USDA on Monday put the corn-inspected-for-export number at 36.315 mi bu vs. estimates for between 31-37 mi bu. Margin requirements to trade corn futures were raised to $1,688/contract from $1,350/contract and will take effect Monday night. Funds bought 7,000 lots while the CFTC Commitment of Traders report had large speculators cutting net bull positions by 2,100 lots to 179,721 contracts as of June 3. So far it has been recommended that 60% of the '08 crop has been priced. It could be a good idea not to price anymore corn at this time. This nearby market will most likely continue its upward momentum for a bit.

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

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