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The National Livestock Weekly October 20, 2008 • Vol. 88, No. 02 “The Industry’s Largest Weekly Circulation” Web site: www.wlj.net • E-mail: [email protected] • [email protected] • [email protected] A Crow Publication INSIDE WLJ USDA increases crop production numbers HAY SUPPLIES—Hay supplies across much of the U.S. are sippi River Valley, USDA officials and North Dakota. tions cut into corn crop yields in improved from the past two years, —Wheat pasture however, they remain below his- grazing prospects said. The per-acre yield is pre- Much of the increase in corn the Ohio and Tennessee valleys toric norms. Page 7 dicted to reach 154 bushels per acre production estimates is the result and eastern Corn Belt, while yields uncertain as a result nationally, up from an estimate of of better than expected growing were decreased in parts of the BORDER PATROL—Washington of volatility. 152.3 bushels per acre in the Sep- conditions nationwide through the Delta and Missouri because of farmers are concerned about tember report. USDA also in- early fall. However, in pockets excessive moisture and stress from new Immigration and Customs hurricanes Gustav and Ike. Enforcement agency tactics in the According to creased the expected soybean pro- around the country, USDA said it state which are affecting workers. USDA’s most duction from 2.934 billion bushels reduced yield expectations as a The report caught some market Roadblocks and random checks recent crop to 2.983 billion bushels, with an result of drier than normal condi- analysts by surprise and caused well away from the border are cut- estimate, the estimated yield of 39.5 bushels per tions. The continued dry condi- See Corn on page 18 ting into the already tight supply of U.S. total corn acre nationally. available workers. Page 8 production is The increase in soybean pro- Volatility in commodity markets has CALIFORNIA WATER—A recent expected to duction reflects an increase of 3 tour of central California raised reach a total of percent in harvested acres to 75.5 created uncertainty in the wheat concern about the low levels in 12.2 billion million acres. Soybean yield fore- several of the state’s reservoirs. bushels, up casts were steady to lower across pasture grazing prospects this winter. The cutbacks as a result of historic from the Sept. the Corn Belt and Great Plains, drought this year caused substan- 1 estimate of 12.072 billion bush- with the exception of Illinois tial losses, but unless precipitation improves this winter, it may be just els. The increase in production is which increased three bushels the start for producers in the state. largely the result of better than per acre and Kansas which was Page 12 expected harvest conditions being increased by one bushel per acre. reported in the central Corn Belt, Yields were cut by four bushels SOUTH KOREA TALKS—A USMEF Great Plains and upper Missis- per acre in Ohio, South Dakota team recently participated in a series of meetings with key South Korean distributors, wholesalers, retailers and industry consultants California’s Proposition 2 to assess current market condi- tions and fine-tune the organiza- tion’s approach for U.S. beef and could decimate industry pork in this key export market. Page 22 California’s ballot initiative Proposition 2 is receiving a good deal of attention in the weeks leading up to the vote Nov. 4 as both INDEX sides of the issue debate the animal welfare movement on a na- Beef Bits . P - 3 tional stage. Several states have seen similar measures pass by Sale Reports . P - 11 wide margins in recent years. In California, however, the vote will Markets . .P - 16 have broader impacts than in any state so far. Classifieds . .P - 19 Proposition 2, if it is passed by voters, will ban battery cages Sale Calendar . P - 23 for egg-laying hens, prevent veal producers from utilizing confine- ment pens, and ban the use of gestation crates in hog operations. Weekly Choice Cutout $180 Exceptions to the proposed law would be allowed for transporta- tion, certain livestock events, lawful slaughter, and for the pur- $170 poses of research and veterinary medicine. Violators would be subject to a misdemeanor charge, punishable $160 by a fine of up to $1,000 and a jail sentence of up to 180 days. The language in the measure is similar to that which was passed in $150 Arizona and Florida in previous elections, but those states had few $140 operations that were impacted. The combined economic impact in California, one of the nation’s largest producers of eggs, could be $130 immense, opponents of Proposition 2 claim. If it becomes law, pro- J FMA MJ J A S OND ducers are likely to move to other states where these practices are 2008 2007 5 yr Avg See Proposition on page 24 Weekly Ch/Se Spread $20 Fed cattle prices pressured by contract weakness $16 Good levels of trade in southern week instability in live cattle con- cutout prices had declined $4 over ever, those gains were largely the Plains cash cattle developed last tracts, forcing cash prices lower the prior week, they remain above result of inflation in commodity $12 Wednesday in a range of $87 to last week. Some additional weak- year-earlier levels while fed cattle markets finally making its way to $90 with most trade at the upper ness from the retail segment $8 prices remain very near year-ear- the consumer. end of the range, down $2-5 from spilled over into boxed beef prices, lier levels. Slaughter volume for “Proponents of subsidized bio- $4 the previous week’s level of $92. adding to the negative sentiment the week had also been cut back fuels have blamed food price in- In the Corn Belt, a good number in the market, which accounted for as packers work to maintain their creases that occurred through $0 of cattle traded in a full range of the lower mid-week trade despite margins as best they can in an mid-2008 simply on higher trans- J FMA MJ J AS OND $134-137 dressed and $86-87 live. expectations by some that a bot- effort to boost retail pricing. For portation costs. On that note, 2008 2007 5 yr Avg Of particularly good news in the tom might be nearing. the week through last Thursday, they are largely correct. Many region is that the majority of the Choice boxed beef prices contin- packers had harvested 493,000 food items contain only small excessively heavy cattle that had ued their slide for much of last head, down 6,000 from the previ- amounts of grains, oilseeds and been overhanging the market in week. At mid-day last Thursday, ous week and 23,000 head from their products, so higher ingredi- the region were cleared out over Choice boxed beef was down the same period a year earlier. ent costs would not cause much LIVE STEERS DRESSED STEERS CME FEEDER the past two weeks, paving the sharply at $146.46 while Select fell Market analysts Len Steiner higher prices for these items,” $88.20 $135.89 $97.99 way for better feedlot trade in the slightly to reach $139.15 with 136 and Steve Meyer noted that pack- they said as part of a report is- WEEK ENDING: 10-16-08 weeks ahead. fabricated loads and 39 trim and ers’ efforts were starting to pay off, sued to traders on the Chicago The continued instability in the grind loads trading hands in time in that recent retail pricing was Mercantile Exchange (CME). stock market created some early for the morning report. Although starting to show some gains. How- However, they noted that the argument ignores the fact that the high grain prices are amplified in Impact of Agriprocessors’ raid still being tallied the production of protein because The effects of the Immigrations and Customs may never be known and many contend it would of the volume of inputs required Enforcement (ICE) raid on the Postville, IA, Agripro- be far higher if it could be measured. The result to produce the end product pur- cessors Inc. plant are still rippling through the is an ever more urgent need to reform the immi- chased by consumers. town, even as the government counts the costs. Last grations process, critics say. “We, and other analysts, have week, ICE said the total financial cost to the Town officials and residents say the raids and warned that higher grain and agency was above $5 million and still climbing. immigration policy has been a disaster for Post- oilseed costs would eventually ICE agents arrested 389 undocumented workers ville and its residents. Last week, Postville have a much larger impact on at the plant during the May raids, of which about Mayor Bob Penrod said his town had been turned poultry and meat prices than they were having on other food items,” 50 have been deported to their home countries and upside down and left to clean up the problems they noted. “The higher costs, another 50 are being detained at federal facilities created by the action. though, had to cause financial as their cases are processed through the system. “Basically, all we wanted was some advice on how losses and the resulting reduction Des to deal with some of the situations that keep aris- According to ICE documents obtained by the of supplies before prices would Moines Register ing,” Penrod told CNN, noting that even help from , the costs for the raid, equal to about rise. That impact is beginning to $13,396 for each individual arrested, include agent the governor’s office has been withheld.