News Update

News Update
May 18, 2007

Research Available to Producers

An eight-year study shows that high-percentage Angus calves are worth $30 per head more at auction than their non-Angus counterparts.

The Certified Angus Beef LLC (CAB) “Here’s the Premium” survey of 10 auction markets across the United States notes an increasing trend in the premiums paid for calves of known Angus genetics. Spring 2006 found a record $32.64 incentive.

As part of an ongoing effort to share research with producers, CAB has created a new “Black Ink Basics” Technical Bulletin featuring this information.

“Angus Advantage Still Growing” was also recently added to the collection of 13 total. To view, print or share these documents, visit www.cabpartners.com/news/basics/index.php.

Study Assesses Biofuels Effect

A new study conducted by the Center for Agricultural and Rural Development at Iowa State University estimates that increased corn prices driven by rapidly expanding U.S. ethanol production have increased U.S. retail food prices by $14 billion annually.

The study was funded in part by the American Meat Institute (AMI), Grocery Manufacturers/Food Products Association, National Cattlemen’s Beef Association (NCBA), National Chicken Council, NGFA, National Pork Producers Council and the National Turkey Federation.

The study’s purpose, according to AMI, was to provide a realistic assessment of future growth of the U.S. biofuels sector, and to estimate its effect on crop markets, the livestock and poultry sectors, exports, and grain-based wholesale and retail food prices.

Study findings show the increase in U.S. retail food prices could reach $20 billion annually under a scenario in which crude oil prices range from $65 to $70 per barrel and U.S. corn prices reach $4.42 per bushel (bu.), compared to the $2 per bu. that existed in mid-August 2006.

According to AMI, the study indicates that corn yield gains would ultimately provide sufficient additional corn stocks to moderate grain price increases if corn-based ethanol production peaks at 14 billion to 15 billion gallons (gal.) annually by 2010, when existing ethanol plants and those already under construction come online. The study projects that under this scenario, corn prices would peak at about $3.43 per bu. in 2009 before leveling off at $3.16 per bu. by 2016. Ethanol production at that level would equate to approximately 10% of U.S. gasoline consumption.

The study projected that if season-average corn prices over a 10-year period ending in 2016 increased to $4.42 per bu., retail beef prices would increase 4% and production would decline by 1.6%.

The study also examines the effects of removal of some acres from the Conservation Reserve Program (CRP) and elimination of the current tariff on ethanol imports. It notes that the CRP could play a useful role in “alleviat(ing) some of the financial stress on livestock producers” (during the early years of rapid ethanol growth), as well as mitigate short-term disruptions in grain supplies. However, it found that shifting 11 million of the 36 million CRP acres into crop production would have only a mild tempering impact on long-term constrained supplies of basic commodities, adding just over 1% to corn supplies and reducing long-term corn prices by 2.2% (7¢ per bu.) under the low-price crude oil scenario.

The study is available from Iowa State University’s web site at www.card.iastate.edu/publications.

USDA Clears Swine for Processing

The U.S. Department of Agriculture (USDA) announced May 15 that it will allow swine held on farms due to the melamine issue to be released and approved for processing.

According to the agency, testing confirms that meat from swine fed rations supplemented with pet food scraps containing melamine and related compounds is safe for human consumption.

Testing of meat from swine exposed to the feed in question confirms that melamine and melamine compounds does not accumulate in pork and is filtered out of the body by the action of the kidneys. USDA reports the testing also bolsters the conclusions reached by a human health risk assessment that there is a very low risk of human illness from the consumption of meat from animals exposed to the feed in question.

There were approximately 56,000 swine that consumed the feed in question and were held on farms in California, North Carolina, South Carolina, New York, Kansas, Utah and Illinois, according to USDA.

Lawmakers to Likely Close Last Horse Harvesting Facility

Illinois lawmakers approved a measure Wednesday to ban the harvest of horses for human consumption, according to Meatingplace.com. The move will likely force the closure of a DeKalb, Ill., processing facility — the last U.S. plant of its kind in operation — the news service reports.

Two other harvesting facilities in Texas were also forced to close earlier this year.

— compiled by Crystal Albers, associate editor, Angus Productions Inc.