News Update
July 6, 2011

View The Angus Report

The July 1 edition of The Angus Report, available at http://bit.ly/qL7Llq, provides coverage of how flooding is affecting North Dakota ranchers, the latest on the proposed GIPSA rule, and how feedyard management can maximize quality grade. The American Angus Association’s online news program covers a variety of topics in a traditional television news format. Watch www.angus.org for reports posted each Friday.

Quality Cattle = Less Risk

Tom Brink’s J&F Oklahoma Holdings arm of Five Rivers Cattle Feeding markets up to 2 million head per year. He explains why the company will pay up to $8 per hundredweight (cwt.) more for placements with a known high-quality background in this video news release provided by Certified Angus Beef LLC (CAB): http://bit.ly/pDJzPJ.

Carrington Research Extension Center Beef Tour Set for July 19

Beef research updates, tame cattle, manure sampling and the North Dakota beef industry’s potential will be among the topics at the beef production portion of the North Dakota State University (NDSU) Carrington Research Extension Center’s annual field tours July 19.

The beef production program will begin at 9 a.m. with registration and coffee. The livestock tour will start at 9:30 and run until noon. Agronomy tours will take place in the morning and afternoon.

Topics and speakers on this year's beef production program are:

• Livestock research updates: fly ash in feedlot aprons, self-feeding finishing cattle, pea forages in feedlot diets, and weaning rations with barley and distillers’ grains — Vern Anderson, animal scientist, Carrington Research Extension Center
• Cow-calf costs and profits: Farm Business Management program data — Jory Hanson and Steve Metzger, Farm Business Management instructors
• Tame cattle are more productive — Eric Berg, associate professor, NDSU Animal Sciences Department
• Report card for feeding cattle in producer feedout projects — Karl Hoppe, area Extension livestock specialist, Carrington Research Extension Center
• Discovery Farms and livestock waste run-off control — Ron Wiederholt, nutrient management specialist, Carrington Research Extension Center
• Manure nutrient sampling project — Chris Augustin, nutrient management specialist, Carrington Research Extension Center
• Potential of the beef industry in North Dakota — Jerry Effertz, Effertz Black Butte Acres, Velva, N.D.

Also, the NDSU Extension Service once again will offer free water quality screening during the field day. Anyone wanting water tested for nitrates, total dissolved solids, pH (acidity or alkalinity) and hardness should collect samples in any clean plastic bottle that can hold 15 to 20 ounces and bring them to the field tour event.

Minnesota Valley Testing Laboratories will test water for a coliform group of microorganisms that includes E. coli. People can pick up sterile bottles during the field tours at the Carrington Research Extension Center to take home to collect samples and send them to Minnesota Valley Testing's laboratory in Bismarck. The cost for this test is $10 and will be collected when people pick up the sterile bottles.

The Carrington Research Extension Center is 3.5 miles north of Carrington on U.S. Highway 281. For more information about the beef production program, contact Hoppe at 701-652-2951 or karl.hoppe@ndsu.edu. For more details on the water quality testing, contact Roxanne Johnson at 701-429-3756 or roxanne.m.johnson@ndsu.edu.

— Release by NDSU Agriculture Communication.

Farm Science Review, Sept. 20-22, is “Where Farmers Go to Dream”

The 49th annual Farm Science Review will be held at the Molly Caren Agricultural Center in London, Ohio, Sept. 20-22, and farmers can expect to see field demonstrations despite the heaviest rains in the state in more than a century.

“We were able to have all the corn and soybeans planted by June 8, so it’s possible depending on the weather that the crops may be ready for harvest during the Review,” said Chuck Gamble, Farm Science Review Manager. “Regardless of whether we’re harvesting at that time, attendees will see field demonstrations, such as tillage and GPS.”

In addition to the field demonstrations, attendees will also be able to see:

• The latest in agricultural technology;
• Livestock handling equipment;
• Grain and machine storage and other outbuilding structures;
• Natural resource practices and programs at the Gwynne Conservation Area; and
• Ohio Land Improvement Contractors Association demonstrations of drainage systems, if harvest takes place.

More than 600 exhibitors will have their products and services on display to help farmers learn about and adopt the newest technologies to improve their on-farm efficiency and profitability. This year’s Review theme, “Where Farmers Go to Dream,” will put the emphasis on agricultural innovation and an effort to spark new ideas and long-term vision for farmers and the agricultural industry.

Tickets are available for sale at local agribusinesses and any Ohio State University (OSU) Extension office for $5 in advance, or $8 at the gate. Children 5 and under are free. For more information, go to fsr.osu.edu.

Farm Science Review is sponsored by the College of Food, Agricultural, and Environmental Sciences, Ohio State University Extension, and the Ohio Agricultural Research and Development Center. It attracts more than 140,000 visitors from all over the country and Canada, who come for three days to peruse 4,000 product lines from 600 commercial exhibitors, and learn the latest in agricultural research, conservation, family and nutrition, and gardening and landscape.

— Release by Melanie Witt, OSU Extension.

Ag Economist: Higher Commodity Prices the “New Normal?”

Higher commodity prices might be the rule rather than the exception in the coming years, a Purdue University agricultural economist says.

While prices regularly rise and fall, they have trended upward in a way that suggests they’ve reached a plateau, said Mike Boehlje. He attributed much of the price movement to bullish export markets, weather-shortened supplies and the effect monetary policies have had on interest rates and investors.

“This higher level may be the new normal,” Boehlje said. “But volatility has increased significantly for agricultural prices, as well as for agricultural inputs. In terms of corn, for example, it’s not unusual in the futures markets to see prices moving 30¢ or more on a daily basis. And although prices may be higher, so are costs to producers. So margins are not likely to stay unusually high.”

Corn and wheat in recent weeks have been trading in the range of $6-$7 per bushel and soybeans above $13 per bushel, about double the prices five years ago.

The strong prices are not driven just by weather and shortage of crops. A major cause of surging prices is global demand for food. While agricultural exports always have been a mainstay of the U.S. economy, they have taken on even greater prominence as personal incomes grow in developing nations, Boehlje said. Along with having more money to spend, people in those nations are demanding more and better food.

“There’s been a very rapid growth of income in Asia and, particularly, China,” Boehlje said. “They’ve been very aggressive in buying food and trying to improve their diets. That was a big part of why agriculture in the United States didn’t have the same level of pain from the recession as most of the rest of the U.S. economy.”

China is a major purchaser of U.S. grains, especially soybeans. While many nations were still reeling from the global recession, China recovered quickly and continued to import agricultural products. Concerns about inflation have since cooled China’s economic expansion, Boehlje said.

Less obvious, but significant, influences on agricultural prices are actions the Federal Reserve has taken to strengthen the U.S. economy, Boehlje said. The Fed’s moves to both keep a lid on interest rates and provide U.S. capital markets with dollars have made agriculture an attractive option for those with cash to invest.

Chairman Ben Bernanke on June 22 announced that the Fed would end its second round of Treasury bond purchases later in June. The $600 billion program, known as “quantitative easing,” contributed to a loss in dollar value. The weaker dollar further boosted U.S. exports to those nations whose currency is worth more, Boehlje said.

Bernanke also said the Fed would leave the federal funds rate — a key interest rate used as a benchmark for business and consumer borrowing — near zero percent. The fed rate has been unchanged since December 2008.

The additional liquidity in capital markets from both rounds of quantitative easing means there is more money for investors to deploy. That creates complications, however, when interest rates are at or near zero percent, Boehlje said.

Investors “need to find some place to put those funds,” he said. “And when you’ve got very low interest rates it’s not particularly attractive to put those funds into financial instruments that have low rates of return. So you start looking at other places to invest those funds.”

One attractive investment option for investors worried about possible inflation from an increased money supply and low interest rates is real goods, Boehlje said. Commodities, farmland and other real assets often are better hedges against inflation than financial assets, he said.

Although signs point to continued high commodity prices, Boehlje noted that markets can retreat at any time. He urged farmers to carefully consider any additional risk they might take in their operations and be prepared for market corrections.

"When you’re on a higher plateau you also have the potential to fall a lot further when things don’t go well," Boehlje said. “We need to acknowledge that we do have a lot more downside potential than we might have had otherwise.”

— Release by Steve Leer, Purdue University.

U.S., Mexican Governments Resolve Ongoing Trade Dispute

National Cattlemen’s Beef Association (NCBA) Manager of Legislative Affairs Kent Bacus said the United States and Mexico crossed the first of two important hurdles in resolving the ongoing trade dispute regarding Mexican trucks on U.S. roadways stemming from the North American Free Trade Agreement (NAFTA). The dispute has resulted in Mexico levying $2.6 billion worth of retaliatory tariffs on U.S. products. While in Mexico City, U.S. Department of Transportation Secretary Ray LaHood today signed a memorandum of understanding (MOU) establishing safety guidelines for trucks from Mexico to be allowed on U.S. roads. In addition to establishing safety guidelines, the MOU also lifts half of the retaliatory tariffs. Bacus said cattlemen are relieved the dispute has been resolved before U.S. beef joined the ranks of other U.S. commodities that were hit with tariffs.

“The agreement signed today between the governments of Mexico and the United States to resolve the cross-border long-haul trucking dispute is a major win for U.S. agriculture, American jobs and our nation’s economic prosperity,” said U.S. Department of Agriculture (USDA) Secretary Tom Vilsack. “President Obama and President Calderon announced a path forward in March to resolve the dispute, and today the U.S. Department of Transportation — after months of hard work with Mexican counterparts — closed a deal that will provide tariff relief for numerous U.S. agricultural products and manufactured goods.”

“The United States exports more beef to Mexico than any other country. In fact, Mexican consumers purchased $819 million worth of U.S. beef last year alone. We cannot afford to jeopardize that relationship. This MOU ensures that won’t happen,” Bacus said. “NCBA commends the U.S. and Mexican governments for reaching an agreement to resolve this issue before more U.S. commodities are hit with retaliatory tariffs.”

Under the MOU, the remaining Mexican tariffs will be lifted when the first Mexican truck is authorized to drive on U.S. roads. Bacus said NCBA encourages U.S. Department of Transportation to proceed expeditiously toward the second phase of the MOU.

“Under NAFTA, Mexico eliminated its tariffs on U.S. beef imports. That gave the United States a competitive advantage. However, if U.S. beef imports were added to the list of tariffed commodities, we would lose market share that would be difficult to regain,” Bacus said. “As we look to expand trade opportunities for U.S. beef around the globe, it is critical that we continue to build the relationship with our neighbors to the South. We are encouraged by the signing of the MOU and encourage full implementation of the agreement to end the dispute once and for all.”

“For U.S. farmers and ranchers, the lifting of these tariffs means jobs and fiscal relief — lifting constraints on American products, removing barriers to trade with a key trading partner, and putting Americans back to work at a time when U.S. agriculture is setting record export figures. Mexico is U.S. agriculture’s third-ranked trading partner, buying $14.5 billion of U.S. farm goods last year. Already in 2011, exports to Mexico are up nearly 25%. Today’s agreement will allow America’s farmers and ranchers to continue to lead the way to America’s economic recovery. U.S. agricultural exports alone will support more than 1.1 million jobs in America this year. And strong U.S. farm exports will be a key contributor to building an economy that continues to grow, innovate and out-compete the rest of the world,” said Vilsack.

— Release adapted from NCBA, USDA.

— Compiled by Katie Gazda, editorial intern, Angus Productions Inc.