Market Responds to Negative Pressures
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The National Livestock Weekly March 10, 2008 • Vol. 87, No. 22 “The Industry’s Largest Weekly Circulation” Web site: www.wlj.net • E-mail: [email protected] • [email protected] • [email protected] A Crow Publication JBS/Swift goes on a buying spree —In one day, JBS/ mon stock. JBS will also acquire company with multiple locations National Beef to the North Amer- all of National’s outstanding to deliver the high quality cattle ican operations of his company Swift leapfrogs Cargill debt and liabilities upon the clos- they produce for our value-added was a key strategic decision. and Tyson to become ing of the transaction. programs. This opportunity will “We are looking forward to work- the largest packer in The purchase of National Beef establish a solid platform for fu- ing with (National’s) management the U.S. and the Packing added five slaughter ture company growth,” said Steve and employees to expand our busi- DELISTING BRINGS SUITSUIT— A coali- plants to JBS/Swift’s empire, in- Hunt, CEO of USPB, in making ness in the United States and in- tion of 11 environmental organiza- world. cluding two in Kansas, and one the announcement. ternationally. National Beef is an tions has delivered a notice to the each in California, Georgia and Wesley Batista, CEO of JBS industry leader in value added U.S. Fish and Wildlife Service inform- In a surprise announcement last ing the agency that they will be suing week, JBS Swift announced it had Pennsylvania. The company pro- USA, Inc., said the addition of See JBS/Swift on page 22 to keep the northern population of completed a buying spree, snap- cesses about 3.9 million head a the gray wolf on the endangered ping up two competitors in the year, or approximately 12,500 species list. They claim attempts to U.S., one in Australia, and the head a day. Last year’s sales vol- The packing industry was swept up in delist the wolf will lead to its demise. ume reached $5.6 billion at Na- Page 8 largest single cattle feeding opera- a wave of acquisitions last week when tion in the U.S. tional Beef. In addition to the Greeley, CO-based JBS/Swift purchased FARM BILL WOES — At the request Last Tuesday, officials at JBS/ purchase, National’s president, of Congress, the Office of Manage- Tim Klein, will become president Smithfield Beef, Five Rivers Cattle ment and Budget has prepared a Swift, headquartered in Greeley, detailed list of how farm programs CO, announced that they had and CEO of the combined JBS/ Feeding, and National Beef, consolidating will be impacted if the government come to an agreement with U.S. Swift-National operation. the packing industry to three major fails to pass the stalled Farm Bill. Premium Beef (USPB) to pur- “Our producer owners and other companies. The deal is likely to be Sources in Washington D.C., said chase National Beef Packing producers who market cattle last week that an extension now heavily scrutinized by the Department appears likely. Page 10 Company for $465 million in through USPB will now have a cash and $95 million in JBS com- more geographically diversified of Justice and Congress. PASTEURELLA — A new survey of U.S. veterinary diagnostic laboratories suggests the proportion of respiratory- related disease in cattle caused by the bacterium Pasteurella multocida may Mexico issues new be rising. Bovine Respiratory Disease Complex, also known as shipping fever, rule allowing Canadian kills more than half of all the calves that die in U.S. feedlots. Page 19 breeding stock FEED EFFICIENCY EXAMINED — Many breeders have tried unsuccess- —State agencies in the U.S. block Mexican fully to select for more efficient cattle border. by studying the feed efficiency or feed conversion ratios of their cattle. But, The U.S. cattle industry’s fight for free, science-based interna- now, an improved method of calcu- lating efficiency has been developed tional trade took a few more twists and turns recently when Mexi- that measures residual feed intake or, co issued an order which lifted the nearly five-year ban on live im- as some refer to it, net feed intake. ports of Canadian beef and dairy heifers. The order applies to females Page 30 under 30 months of age which come from herds where no instances INDEX of bovine spongiform encephalopathy (BSE) have been detected. Beef Bits . P- 5 Mexico suspended imports from Canada and the U.S. following Sale Reports . P- 14 the discovery of BSE in Washington state in 2003, and both countries Markets . P- 24 have been fighting since that time to reopen trade which is based Classifieds . P- 26 on international animal health guidelines. The World Organization Weekly Choice Cutout $170 for Animal Health (OIE) has since designated both Canada and the U.S. as minimal-risk countries which allows them, under World $160 Trade Organization rules, to freely export both beef and live cattle to other countries. $150 Mexico is just one of several nations which are not currently See Mexico on page 23 $140 $130 2008 2007 5 yr Avg 2008 2007 5 yr Avg Market responds to negative pressures WeeklyWeekly Steer Steer Dressed Dressed Weights 870 Fed cattle trade was off to an on the low side of the figures; there dropping demand even farther. week at $160.55, while the fresh 860 earlier than usual start last week was also some light live trade Fuel prices, at nominally record- 50s and 90s showed continued 850 840 with some fair volume trading there at $90. In Nebraska, dressed high levels, have meant increases strength. The 90 percent lean con- 830 hands on Thursday in Iowa, Texas trade came at $145-147, with most in fuel and food and consumers are tinued to trade about the Choice 820 and Nebraska. However, the mo- action at the $146 price. Previous clearly swapping down in terms of product, at $150.21, and 50 percent 810 mentum for trade looked to be week trade was from $93-93.50 protein choices as evidenced by trim product was steady to higher 800 lower after a mid-week sell off in live and dressed sales ranged from high ground beef, pork and poultry at $61.42. 790 the boxed beef markets at sharply $147.50-149. movement and firm pricing of those The news of JBS’ purchase of 780 J 2008F M A M J 2007J A S O N 5 yrD Avg lower prices. Likewise, the Chi- In the boxed beef markets last items at all levels. Meanwhile, Smithfield, National and Five Riv- 2008 2007 5 yr Avg cago Mercantile Exchange (CME) week, the light cattle slaughter Choice boxed beef was unable to ers rippled through the markets trade was lower last Wednesday, numbers were unable to sustain sustain the gains made over the last week and added some to the causing a decline in expectations the cutout higher as a result of previous two weeks. Last Thurs- negative sentiment on the CME for the week. In Texas, some early lackluster demand at the retail and day, Choice was down 86 cents at last Wednesday, however, Vetter- trade was reported at $91 before wholesale levels. Consumer de- midday, trading at $149.30, and kind Cattle Brokerage analyst LIVE STEERS DRESSED STEERS CME FEEDER $90.37 $145.47 $101.79 packers backed away and dropped mand in March is traditionally the Select dropped back 22 cents to Troy Vetterkind warned against WEEK ENDING: 3-6-08 offers to $90, causing a stall there. lightest of the year and higher trade at $147.15. On the other side, playing into the psychological as- In Iowa, dressed trade came in at prices being faced by consumers are in the cow beef markets, the cow pects of the news, particularly $143-145, with most cattle trading cutting into discretionary spending, beef cutout remained steady last since any potential impact could be months or more away. “There were various strikes throughout June, August, and Bush issues final say on Farm Bill October receiving attention, with volatilities once again firm. The Recent moves by JBS may give known, as are Bush’s dislike of the ‘budget gim- path of least resistance right micks’ and additional taxes proposed to pay for the now appears to be lower and life to packer ban talks. massive farm bill. What hasn’t been clear until you’re getting a lot of people With the March 15 deadline for the Farm Bill’s recently, however, is just how the White House bearish, which is adding to the completion looming, legislators look for direction— planned to pay for the policies which have been downside pressure,” Vetterkind and perhaps motivation—to help make something deemed key. House Agriculture Committee Chair- said. “Whether the futures mar- dramatic happen so that an agreement on another man Colin Peterson, D-MN, recently received a ket is right or wrong, the funda- extension might be reached. letter from the administration which outlined just mentals of the cattle market still It appears to be a goal among many in Congress that. The letter makes clear the places where Bush remain firm, in my opinion, go- to get a Farm Bill done, but fears of a veto by is willing to compromise and how the government ing into the end of March and President Bush seem to temper most discussions. should pay for the new bill without raising taxes. April. There was some talk about Though most members of Congress would agree “The administration is willing to consider spend- the JBS deal creating some un- certainty within the cattle indus- they are ready to move forward, it is well-known at ing of up to $10 billion above baseline if the agree- Time Sensitive Priority Handling try and this was being touted as this point that the body will need more time to iron ment contains significant program reforms over reasons for selling cattle futures out the details.