News Update

News Update
Jan. 26, 2006

Keep Eye on Domestic Market, MU Analyst Says

Domestic consumption of U.S. beef just became more important, Scott Brown, a University of Missouri (MU) livestock analyst, told the Dallas County Cattlemen’s Association Monday night. He spoke after Japan announced it was again closing the borders to imported U.S. beef, just weeks after trade had been reopened.

Brown said he is cautiously optimistic about the beef price outlook for the year ahead, although beef supply is growing and export to Japan remains in doubt.

“The strength of U.S. domestic demand on the price outlook can’t be overlooked,” Brown said. On the positive side, the U.S. population continues to grow to 360 million people, creating potential beef eaters.

The MU Food and Agricultural Policy Research Institute (FAPRI) projects that the United States will produce nearly 83 billion pounds (lb.) of beef, pork and chicken in 2006, up from 79 billion lb. in 2004.

“That’s over 3 billion more pounds of meat,” Brown said. “Exports are likely to go up only 600 million pounds this year.”

The cattle cycle turned to the herd-building phase in 2004, after eight years in decline. As more cattle are added to the herd, more beef supplies will put downward pressure on prices for the next eight years, Brown said.

While prices will soften, the year ahead looks good, he said. Based on the current FAPRI baseline, feeder cattle will not match the record-setting prices of 2005, but the average will break below $115 per hundredweight (cwt.) by mid-2006.

Feeder cattle set a record-breaking average of $126 per cwt. in the second quarter of 2005.

“Remember, the season average price from 2000 to 2003 was $92.80 per hundred, which seemed a good price at the time,” Brown said.

The FAPRI projection on harvest-cattle price in fourth quarter 2006 is $77 per cwt. at Nebraska feedlots.

“Prices for boxed beef paid by grocery stores continue in the range of $150 to $155 per hundredweight,” Brown said. “Packers can afford to continue to pay good prices for cattle.”

In addition to declining cattle prices, producers face rising costs. “Several things outside of agriculture will affect the outlook,” Brown said. “Interest rates, fuel and fertilizer costs, and other expenses will continue to rise.”

Looking at exports, Brown pointed out that Japan imported 1 billion lb. of beef a year from 1995 to 2001. Those imports dropped to zero after a case of bovine spongiform encephalopathy (BSE) was found in the United States.

Meanwhile, Mexico is importing more U.S. beef at an average rate of 35,000 lb. per month. Those sales are projected to increase.

“There were real concerns about NAFTA (North American Free Trade Agreement) opening the borders,” Brown said. “But that is beginning to pay off for us.”

Korea has announced plans to reopen markets to U.S. beef. At their peak, South Koreans were buying 600 million lb. a year. “The latest news from Japan of reclosing their borders to beef may give Korea cause to reconsider,” he added.

“Export markets continue to be important to U.S. producers, but don’t lose sight of the fact that we consume more than 90% of our beef here,” Brown said. “Any trimming of our domestic consumption would have serious impact.”

Keeping U.S. consumers satisfied with beef must remain a priority.

“Those programs, such as QSA (Quality Systems Assessment from the Missouri Department of Agriculture), will be vital in expanding the export markets,” Brown said. “Just buck up and take part. … I urge you to start keeping better records on when those calves are born.”

— Release provided by MU Extension

Producers Can Participate in CBB Meeting Online

Cattle producers who are unable to attend this year’s Cattle Industry Annual Convention Feb. 1-4 in Denver, Colo., can still stay informed and take an active role in Cattlemen’s Beef Promotion and Research Board (CBB) decisions.

Cattlemen can participate through the www.beefboardmeeting.com Web log (blog), according to CBB Vice Chairman Jay O’Brien of Amarillo, Texas.

The blog will feature postings throughout the convention following the various committee meetings to inform producers about discussions that are taking place and decisions that are made on how their beef checkoff dollars will be spent. O’Brien says the CBB wants all producers to have the opportunity to participate in decision-making at the national level.

The interactive nature of the blog format will allow producers to get information from the committee meetings almost as soon as it happens and provide feedback immediately as well. To provide input, simply click on the comments link under any of the committee information pages on the site. Comments will be continuously monitored, collected and circulated to committee members during the meetings.

This is the first time the CBB has used this new communication method, and board members are hopeful it will help producers become more knowledgeable about their checkoff investment.

Additional Hurricane Assistance Available

Agriculture Secretary Mike Johanns today announced $2.8 billion in aid to assist victims of the 2005 hurricane season. Agricultural producers will receive $1.2 billion through various programs, and $1.6 billion will restore homes and rural communities.

“These funds will help producers of many different crops and livestock to recover from damage to their agricultural operations,” Johanns said. “We’re also pleased to assist rural residents who lost their homes and to help rebuild rural communities through grants and loans to restore water, electrical and telecommunications systems.”

Johanns authorized the use of $250 million from Section 32 funds in October 2005 for crop disaster, livestock, tree and aquaculture assistance. These funds will be distributed by way of five new programs: the Tree Indemnity Program (TIP), the Hurricane Indemnity Program (HIP), the Livestock Indemnity Program (LIP), the Feed Indemnity Program (FIP) and an Aquaculture Block Grant program.

Producers in Alabama, Florida, Louisiana, Mississippi, North Carolina and Texas counties that were declared primary presidential or secretarial disaster areas in 2005 because of hurricanes are eligible to apply for assistance under the new programs. A complete list of these counties is posted online at www.usda.gov/HurricaneInfo.xml.

On Dec. 30, 2005, President Bush signed the 2006 Defense Appropriations Act, which provides $900 million to address natural disaster damages from 2005 hurricanes. Of these funds, approximately $200 million is designated for the Emergency Conservation Program, $400 million for the Emergency Forestry Conservation Reserve Program, and $300 million for the Emergency Watershed Protection Program (which is available to communities and landowners in Tennessee, in addition to those in the six previously mentioned states).

Sign-up dates for the new programs (LIP, TIP, HIP and FIP), as well as the Emergency Forestry Conservation Reserve Program, will be announced as soon as new regulations and software are developed. Eligible producers can apply now at any U.S. Department of Agriculture (USDA) Service Center for Emergency Conservation Program funds to remove hurricane debris from farmland. Emergency Watershed Protection Program funds for eligible projects are available today. Aquaculture grants will be awarded to states, and application procedures will be established by governors or their designees. Aquaculture producers not covered by other disaster programs will be eligible for these funds.

In addition to the funds for farmers and ranchers, the Defense Appropriations Act of 2006 contains $1.6 billion in Rural Development program assistance for hurricane victims. Nearly $1.5 billion is allocated to provide housing funds under the agency’s direct and guaranteed loan programs. Additionally, nearly $160 million will be dedicated to four areas: $54 million for housing repair loans and grants for very low-income applicants; $45 million in grants for hurricane-damaged water and wastewater facilities; $50 million for telecommunications program assistance; and $8 million to restructure electrical loans in the hurricane-affected areas.

USDA also made the following programs available to farmers and ranchers adversely affected by the 2005 hurricanes: the Emergency Conservation Program, Emergency Loan Program, Federal Crop Insurance and the Noninsured Crop Disaster Assistance Program.

USDA’s assistance is part of a larger, comprehensive relief effort being coordinated by the Department of Homeland Security.

Additional information about USDA hurricane assistance is available at USDA Service Centers nationwide and online at www.usda.gov/HurricaneInfo.xml.

— Release provided by USDA.

— e-List compiled by Crystal Albers, Angus Productions Inc.