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January 2010 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

Time to Discuss Issues

Jan 25, 2010

By Steve Cornett

Typically, when you gather at the annual convention of the National Cattlemen’s Beef Association, the mood depends on cattle markets. Good markets equal good moods. Bad markets—especially markets like we’ve had the last years, with cattle feeders so bled down they have to beg beer off those few of us with expense accounts—equal bad moods.

Something tells me this year will be different for one reason: Last week’s election in Massachusetts. I know there are a few democrats at the typical NCBA convention and maybe even a liberal somewhere, but by and large, this is not a crowd you would call enthusiastic about the Obama agenda. At least, he isn’t a featured speaker like President Bush was a few years ago.
 
So, maybe there will be a few chuckles in the crowd this year, despite the market. 

And there will be lots of other things to talk about and—well, of course—argue over. 

I suppose one of the more interesting for those who like inside-baseball stuff will be the governance task force. You’ll recall that the association wants to reorganize itself. I’ve not heard a lot of concern with the task force report from within NCBA, but the leadership at the Cattlemen’s Beef Board is another matter.

As we mentioned in the January issue of Beef Today, the CBB leadership feels the proposed new structure would leave the federation of state beef councils too beholden to the will of non-CBB NCBA members.

The CBB leadership feels that the proposed structure would give the federation—whose state beef council members control half of all checkoff dues—would yield too much control to NCBA.

It will be interesting to see how it works out, but you can bet it will consume a bunch of time and attention as the various factions hammer at each other. That’s what I love most about NCBA conventions. You get to hear smart guys with (in some cases) hard heads argue over points so Lilliputian that one is occasionally reminded of the way calves bump heads, just to see how hard the other guy pushes back. It’s like a morning at the coffee shop, only with nicer clothes and (in SOME cases) more informed opinions.

The reorganization thing will have plenty of that, you can bet. But on other issues, this bodes to be a pretty mild meet. I haven’t found anybody promising to wear rooster gaffs, anyhow.

I’m advised there was, as of last week, no sign of any big stir on the “captive supplies” front. You may have seen that R-Calf hissy-fitted over the deal between National and Hitch Feeders, and the hissy worked its way back to some feeders, many of whom have been fretting about contracted cattle for years.

That could come up. Typically, state associations develop their recommendations at their state conventions earlier in the season, then forward them before the big convention starts. But there are several delegations that can be counted on to open an old wound if they sense a chance to make progress, and they can always bring new resolutions after the meeting starts.

I’m not sure that will happen this time. The Hitch-National deal will have little impact, if only because the two neighbor and most of the Hitch cattle go to National anyhow.

Nonetheless, every time a new drop hits the bucket of captive supplies, you can count on a howl from some folks.

There’s a reason for it. The USDA studies have never managed to find any big problem with it, but as more cattle get pulled out of the cash market, the sample gets thinner. Even the many feeders and producers who appreciate the reasons behind delivery contracts fret that if the market continues to consolidate, some day, somebody has to figure out a way to price cattle without the give and take of cash bids.

The problem is, nobody has dreamt up a better alternative just yet. Nobody I stumbled onto last week thinks it will be a big issue this meeting. But sometimes, when there’s nothing meaty to fight over, stuff boils to the top at the last minute.

So, as always, there will be some internecine bickering among NCBA members. But there won’t be much disagreement on some of the important issues facing the cattle business.

The association, for instance, last week signed on to a bipartisan congressional effort to force the Administration’s EPA to reverse its decision to treat carbon dioxide as a pollutant. For NCBA, such a position is about automatic, but there is also a lot of support for the concept on both sides of the aisle in Congress.

There is also the continuing challenge posed by exports, with some important customer countries refusing to accept what US producers and trade representatives regard as settled science. That challenge has taken on new importance with the threat of Russia refusing to accept poultry meat treated with chlorine.

I’m not sure what NCBA can, policy-wise, do about that. But they’ll do what they can, which is urge the Administration to push harder. 

You can tell by the cattle market that there are plenty of other issues standing between beef producers and profitability. Beef demand is an ongoing problem. The animal rights agenda seems to be still gathering strength.

If I’ve learned anything in attending NCBA conventions, it’s that there are enough opinions and ideas at play that you never know what might come up.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.

 

 


 

Praying for poultry?

Jan 11, 2010

By Steve Cornett

Let’s get one thing straight first. Taiwan is an important customer for beef. However, their politicians’ much ballyhooed announcement last week that they would renege on their promise to accept bone-in, older beef won’t have much impact on sales to the island.

On the other hand, warns Gregg Doud, chief economist and agitator at National Cattlemen’s Beef Association, Russia’s decision to stop taking U.S. poultry parts could result in an overwhelming backlog of protein. 

Both were in the news last week, and nobody cowy could find good news in either story.

This trade thing is tricky, isn’t it?

You get a market built up in a country, adjust your production, and here comes some new rule—intentionally protectionist or not—and you’re worse off for a while than you were before you built the new market.

We saw it back in the 70s with grain. We’ve certainly seen it with beef in the wake of that BSE cow. But chickens?

As you may have noticed, chicken production in the U.S. has been increasing for decades. One reason is that poultry perpetrators learned to sell the dark meat to poor folks abroad, thus allowing them to sell white meat cheaper in the U.S.

The biggest market for that dark meat has been Russia. In fact, the  U. S. has been shipping something like 600,000 metric tons of mostly chicken legs to Russia annually. That, assuming my math is correct, would equal 4,624 fed cattle a day—almost 1.7 million a year.

You cannot just go suddenly having that many extra cattle and not expect some market problems. Doud points out that the going price for a chicken leg is 30 cents a pound. What you don’t want, assuming you have a fed steer or component part thereof for sale, is your customers—already bargain hunting in these hard times—to have the option of a bunch of extra metric tons—metric or otherwise—of dry-but-edible chicken parts hogging the meat cooler.

So even the chicken haters among us,  should wish USDA good luck in their efforts to get the Russians to change their minds. Their complaint strikes those of a scientific bent as a bit chicken to start with. U.S. poultry producers—you’ve heard they have some food safety challenges?—like to wash their product in chlorine. That’s the same stuff we pour in swimming pools so our children can drink it. 

But the Russians, noting that too much cholrine can kill you, said that as of Jan. 1, they will no longer accept chlorine-rinsed poultry. It sounds like they might make and exception for product already enroute and they’ve agreed to meetings later this month to discuss the possibility of changing their minds.  

Doud says the outcome of those talks will be more important to his membership than similar talks planned with the Taiwanese over their decision. They are still accepting boneless cuts from cattle under 30 months of age, and they took about 30,000 metric tons of that last year, making them the 8th largest customer for U.S. beef. 

So Doud and others are mad at the Taiwan folks over reneging on the trade agreement. Still, their move reflects on their domestic politics than on any fear of U.S. beef.

So this is no time for us to go all protectionist. Beef has had a few tough years in the export market since the BSE problem, but things are getting better almost monthly. We’ve learned to pretty well fill the demand for cattle of documented age. Our dollar is getting cheaper. You get past the dead chicken problem, and the outlook for exports increasing is pretty darned good, actually.

With a weak domestic economy, exports are our best chance for getting a much-needed runup in cattle prices. So, just this once, let’s all pray for poultry.
 

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to register.

 

New Year Certainties

Jan 01, 2010

By Steve Cornett

It would be easy to look back on beef’s 2009 and find things to complain about. But that would be, well, complaining. And we don’t do that, do we? If we weren’t all optimists we wouldn’t be expecting to support our families off something coming out of that end of a cow anyhow, would we?
 

So let’s look at all the good things that will almost certainly* happen in 2010.

  1. The weather will be better. The El Nino is here, so those of us who are deserving—namely in the Southwest—should get some rain. Then the weather will change and you sinners will get some. Anyhow, we’ll all have lots of green grass this summer and that will be swell because
  2. We’ll start holding cows and heifers to take advantage of the swell grass we have and
  3. A big uptick in the market as grass fever strikes about April. I still slobber a little when I remember 1979 when that very unswell "Wreck of the Seventies" ended and I had to actually pay income tax. You about need rock climbing equipment to even look at the chart of cattle prices that spring. It will be so nice that
  4. We’ll make peace among cattle producers. National Cattlemen’s Beef Association’s new governance plan will be adopted at the  annual convention in San Antonio and it will allow leadership to stop the association’s Tyranny of the Majority so that there can again be one voice for the industry which will be just swell because it will let us
  5. Pay attention to the many “opportunities” provided by the current political atmosphere  and do things like
  6. Renew the industry’s commitment to beef promotion and exports by developing newer and stronger state beef councils that can do stuff the national program can’t do and
  7. All work together on protecting the industry from the opportunity of excessive regulation and
  8. Goofy animal rights referenda and
  9. Being labeled as carbon-coughing, methane-making global warmingists which will let us all
  10. Have a Swell New Year!   

* To paraphrase the churnmasters in the commodity business: The risk of trading can be substantial and each investor and/or trader and/ or starry-eyed optimist must consider whether cattle are a suitable, or even sane, investment. Past performance, whether actual or indicated by simulated historical tests of strategies and promoted by old guys who have been predicting turnarounds for, oh, about 3 years now, is not indicative of future results.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.


 

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