Back in the saddle

Jun 1, 2012

I have felt a little out of the loop the past few weeks, not keeping up with cattle markets and issues. A few weeks ago, I had to have major back surgery which took me out of the game for a while. It’s been difficult to stay up with the markets, but I figured it’s time to make some kind of appearance. I even had to miss our annual Western Livestock Journal ranch tour in California, one thing I certainly didn’t want to miss, but doc’s orders. Miss it or risk not walking again. It was a pretty easy choice. Walking still appeals to me.

I had three disks in my spine fused together. For those of you who know me, I have been trying to put these fusions off for a long time and it finally came to the point when the docs said do it or risk never walking normally again, which could still be a risk, for all I know. I was never a good walker anyway, but my wife Rita tells me I was a pretty good dancer at one time.

Even though I wasn’t on the tour, I received tons of thank you letters for our efforts on putting together another great tour, along with lots of get well cards.

I’m very thankful that I have a good staff that doesn’t miss a beat when I’m gone, and great colleagues who can step in and deliver some comment about the cattle business. Traci Eatherton did a nice job making sure our paper was completed and Logan Ipsen did a good job stepping in as the new guy and covering the tour. This week’s paper has a photo recap of the tour to give everyone a glimpse of just how much fun it is.

But the best part during my absence is it appears that live cattle prices have risen and perhaps we’re on our way to a stronger summer market. We did stop in the grocery story over the weekend and noticed the ground beef counter was fairly picked over and boxed beef prices were much stronger. Slaughter is finally picking up. So it was nice to come back to a stronger cattle market.

Memorial Day weekend was a great week for beef sales, especially for the steaks. I suppose consumers have had enough hamburgers and had to satisfy that desire for a good steak.

The last cattle on feed report was quite a surprise with cattle feeders not too eager to place cattle at any weight. Placements were down 15 percent, which is fairly dramatic at this point and time. Cattle on feed numbers were just under 100 percent of last year, which should put inventory in pretty decent shape going into summer. And West Coast and wheat belt cattle should be looking for new homes about now.

Beef consumption is tied so closely to fuel prices that at times it seems unrealistic. All disposable income is tied to fuel prices, which may have a small impact on beef sales. For the month, gasoline prices have dropped 21 cents a gallon while the Choice beef cutout has increased somewhere around the same level. Could it be a one-to-one trade-off for gasoline and beef? I wouldn’t think so.

Our friend Andy Gottschalk remains concerned about cattle weights becoming too large and creating too much tonnage for a smooth marketing summer. It sure seems that the overall numbers are headed in the right direction, but he says that carcass weight data and grading continue to confirm an industry which is less current than last year. If some marketings are deferred as suggested, the added weight will also become a price limiting factor, despite fed cattle supplies beginning to decline entering the fourth quarter. Each additional 8 pounds gain year to year in carcass weight is equivalent to adding approximately 1 percent to beef production— which gives us about 3 percent slack since we’re that far behind on total beef production so far this year.

Steve Meyer at the CME said that weekly steer carcasses weights have been as much as 24 pounds higher than last year and have averaged 15.47 pounds more so far in 2012. Heavy weights have increased even more dramatically, growing an average of 17.8 pounds, or 2.3 percent, so far in 2012 with weights the week of March 12 exceeding the 2011 level by 30 pounds! YTD beef output is down 3 percent from last year, but that number would have been -5.2 percent had steer and heifer weights been equal to last year.

Feeding conditions have been ideal for cattle feeders and I just wonder how the widespread use of Optiflex and Zilmax have added to beef production this past year. These two growth promotants have certainly had the opportunity to change the industry. But at some point, they may become a problem for the industry, too.

While it’s only been a few weeks since surgery, and it’s still a little difficult to keep my head in the game, this business is like learning how to ride a bike, “once you get it, you got it forever.” — PETE CROW