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Rural economic outlook promising

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• Wheat prices are expected to hold well into next year.• Beef cattle prices likely will remain strong.• Farmland values are expected to stay strong.• Farmers and ranchers also will face more rules and regulations.

Wheat prices are expected to hold well into next year, and farmland values are expected to stay strong.

Beef cattle prices likely will remain strong as well, but producers must manage production costs, especially feed, closely.

Farmers and ranchers also will face more rules and regulations as the pace for regulatory change continues to increase for farms and small businesses.

That’s the gist of an economic outlook presented by a quartet of Oklahoma State University Extension economists recently at the third annual Rural Economic Outlook Conference in Stillwater.

Derrel Peel, Breedlove Professor of Agribusiness and livestock marketing specialist, said drought continues to weigh heavily on the beef industry with continued herd liquidation, record high grain, forage and replacement cattle prices.

Producers are experiencing reduced cow-calf profitability, and feedlot and packer margins have been poor. Herd liquidation also has resulted in higher wholesale beef prices, more limited beef demand and weaker beef exports.

That’s a recap, he said for 2012.

For 2013, the industry wonders if drought will persist, accompanied by even more liquidation. Or will more normal weather mean higher heifer retention? He anticipates tighter cattle supplies into 2014. “Beef demand is the key unknown and is tied to the general economy.”

Prices will push higher

Cattle and beef prices, he said, will push higher because of limited supplies next year. “Beef production is down by 4.5 percent. Beef demand will limit price increases, however.”

Other factors that could affect the cattle markets are how much higher beef prices will move before hitting a barrier and whether and how much feed prices will moderate. Higher cow and heifer prices also will influence the cattle market and breeding cow and heifer demand.

Cow-calf operators have opportunities for good profit but must manage costs. “Stockers offer good value with gain but packers and feedlots will continue to struggle and loss of capacity is likely. Production challenges will be bigger than marketing challenges.”

Peel said the industry will be a long time in transition. “We expect a long period of limited cattle supply.”

Land values, said Damona Doye, Sarkeys Distinguished Professor and Extension economist and regents professor, are variable across the country but have held up in Oklahoma. Nationally, cropland value is up 14.5 percent with pastureland up 4.5 percent. In Oklahoma, cropland is up 16.8 percent with pastureland up 10.6 percent.

Values in Oklahoma are higher where there are mineral rights. “North Central Oklahoma has the highest land values in the state,” she said.

Nationally, the corn states show the highest value for cropland. Improved pastureland to the east also is valued higher than native pastures in the west. Pastureland in Oklahoma is valued at $1,150 per acre, same as the national average.

“The highest land rental values are also found in states with the highest cropland values, the Midwest.”

In Oklahoma, dryland cash rent rates were up 10 percent in 2012, compared to 2011. A breakdown by crop shows wheat land at $32.81 per acre cash rent. Alfalfa is $41.40 and grain sorghum is $29.03 per acre.

Doye said pastureland for rent was limited last year because of drought. “If folks had pastureland to rent, however, they could command high rental rates.”

In spite of farmland values holding up investing in rural land is not always a good option. “The investment does not always provide a good return,” she said. “We have seen times when farmland outperformed the stock market, but timing is the key.”

She said renters and landowners need to communicate accurately. “That’s why we need to see more written lease agreements.”

Wheat outlook

Kim Anderson, Extension economist and wheat marketing specialist, said wheat prices should remain profitable into 2013. Drought will continue to affect the market even though wheat stocks currently are adequate.

Corn supply will continue to influence wheat, Anderson said. Drought and “the ethanol effect,” will keep pressure on corn supplies. “Corn will have to buy acres and that will keep prices up.”

If corn stocks decline, wheat may move into the feed market.

“If we don’t get corn and beans planted next spring, we could see $10 wheat,” he said.

Anderson quoted one-time colleague Luther Tweeten about the effect government programs have on the wheat market. “He said, ‘policy comes and policy goes, but weather determines prices.’”

Shannon Ferrell, assistant professor, OSU agricultural economics department, discussed changes in agriculture law and the changing population dynamics facing farms and ranches.

“The pace of (regulatory) change for farms and other small businesses is changing. Agriculture will face more rules and regulations.”

The economic impact of regulations, he added, is not considered.

Regulatory change also comes in conjunction with changing farm population dynamics. A recent survey shows that 55 percent of farms in Iowa are owned by “people old enough to retire, 65 years or older.”

He said older farmers are less productive than younger ones.

“We have to think about how to turn over farms to the next generation,” he said. “We have to manage that transition, and manage it in time for the next generation to learn.”

As the farming population ages, he said, the next generation may be well into middle age by the time they take over farm management. “We have to actively engage the next generation,” he said.

Rising input costs also create hardships for young farmers. Land prices, for instance, have risen steadily since 2003. And recent increased prices for agriculture commodities have been largely offset by increased production costs.

“More young farmers are now embracing a leasing mentality to bridge the expense gap to get into farming,” he said.

The shift to renting or leasing farmland should include educating landowners on the advantages of adopting new production technology. 

Ferrell said change is inevitable and has been for thousands of years. He quoted the Greek philosopher Heracleitus: “Nothing endures but change.”

rsmith@farmpress.com

 


Fewer cattle may weaken feed demand

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Editor’s note: Brian Splitt will share his grain marketing expertise, “How to market with technicals and fundamentals,” at the upcoming Farm Futures Business Summit Jan. 19-20, 2023. Review and register here.

Agricultural futures finished 2022 on a strong note with fund managers long corn, soybeans and soybean meal – likely window dressing their positions into year-end to pad their profits and, by extension, their bonuses.

Once the calendar flipped, it appears as though the first agenda item was to begin booking those profits and exit their length.  

History would suggest that if USDA raises yields in November, they are likely to do it again in the upcoming January report. While yield changes are difficult to forecast, some of the pre-report estimates suggest a 75 million bushel increase in production is likely.

U.S. season-to-date corn exports are down 27% versus last year and 18% below USDA’s goal. This trend could support USDA dropping U.S. corn exports roughly 100 mb. Brazil’s corn exports reached a record 43.1 million metric tonnes in 2022, up 109.5% from 2021.

With a Quarterly Stocks report as part of the data drop coming next week, there is a very real risk of USDA finding bushels that get plopped right onto the balance sheet. There is an awful lot of bullish rhetoric in the cattle market, for example, due to low cattle numbers in the country. This should cause concern regarding the Feed/Residual portion of the balance sheet for corn.

It is entirely plausible that corn’s balance sheet will expand next week on both the supply and the demand ledgers. With that being said, USDA will have to increase carryout for corn by 303 mb to match the 1.540 billion bushel estimate from the January 2022 report.

Either way, if the data dump is bearish enough for March futures to break through the $6.35 low made in December, there will be plenty of talk about the remaining gap at $5.91 yet to be filled.

It is important to note that the rally into the end of the year brought corn to a confluence of several resistance levels that proved to be a major turning point. Contract highs for old crop corn were made in May of 2023, and last week’s high failed at the down trend line from May. Last week’s high also failed at the 62% retracement level of the break from the October high to the early December low. While making the October high, March corn futures bounced repeatedly off levels in the low $6.80s; these lows provided a ceiling at last week’s high.

Corn Price Chart

Soybeans reach objective

Soybean futures also reached a major objective on last week’s rally. March, May and July futures filled gaps left in June when soybean futures gapped lower coming out of Father’s Day weekend.

Since then, another round of precipitation has landed in Argentina and parts of Brazil. Brazil’s 2022 soybean exports were down 10.1% from their record export program in 2021 of 86.6 MMT, as last year’s drought reduced exportable supply. The reduction in Brazilian soybean exports has kept China coming to the U.S., but for how long?

We expect Brazil to reach a new soybean export record in 2023 with their current crop reaching new record production levels above 150 MMT.

With the bulk of harvest beginning this month and shipments out of Brazil expected to build momentum in February, one must consider the negative impact a strong Brazilian export program on both domestic basis and futures. Cash markets in areas with beefed-up crush capacity will likely hold better than elsewhere, but overall, the bias would be for values to weaken as Brazil’s crop is made available to world buyers.

The same assumption would hold true for soybeans as it relates to increased production in November translating to increased production in January. Pre-report estimates suggest a 20 mb increase to production is likely. U.S. season-to-date soybean exports are down 7% vs last year which some believe could support USDA dropping U.S. soybean exports 50 mb.

Soybean price chart

Potential weakness?

While soybeans are still respecting their uptrend from lows scored in October, it is important to identify where weakness could accelerate. The uptrend on March Soybeans comes in near $14.70, while a shelf of support was established in mid-December in the low $14.60s. A breach of this support could lead soybean futures all the way back down to the low end of their multi-month trading range which is about $1 low; there is a gap yet to be filled below the market at $13.5825.

Next week’s report will likely set the tone for the first quarter of 2023. The average price for December 2023 Corn and November 2023 Soybeans during the month of February will dictate crop insurance revenue levels and AgMarket.Net has been actively protecting 2023 production as the crop will be one of, if not the most expensive crops to plant.

Feel free to contact me directly at 815-665-0463 or anyone on the AgMarket.Net team at 844-4AGMRKT for assistance. We are here to help.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. AgMarket.Net is the Farm Division of John Stewart and Associates (JSA) based out of St Joe, MO and all futures and options trades are cleared through ADMIS in Chicago IL. This material has been prepared by an agent of JSA or a third party and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading information and advice is based on information taken from 3rd party sources that are believed to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. The services provided by JSA may not be available in all jurisdictions. It is possible that the country in which you are a resident prohibits us from opening and maintaining an account for you.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

Tech can make calving season easier

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For ranchers in the Northern Plains, spring calving might mean muddy or snowy conditions, or anywhere in between. However, certain equipment and technology can make calving season easier:

Calving sensor. To find out sooner when calves will drop, try a calving sensor such as Moocall. The sensor attaches to the cow’s tail three to four days before her due date. It detects when a cow or heifer will calve based on her tail movements.

Moocall captures about 600 data points every second. Its algorithm filters the data, and when a certain threshold is reached, the first alert is triggered. You will then be notified via text message on certain breeding management applications.

Moocall claims its calving sensor can reduce calf mortalities associated with difficult births up to 50%. Purchase of a sensor includes a year of data, software, updates and support for the device, as well as a one-year warranty. Find more information at moocall.com.

Camera surveillance. Being able to check your herd via cameras from anywhere can save labor during calving season. South Dakota State University specialists say calving cameras come in various specifications to meet most needs.

The first decision should be choosing a camera either capturing a single direction or a panoramic view. If an outdoor camera is required, it needs to stand up to the elements.

camera surveillance system in calving barn can
INSIDE LOOK: South Dakota State University Extension specialists say adding a camera surveillance system to your calving barn can save on labor during calving season.

Some cameras might need specific software packages and hardware such as antennas or wireless routers. Researching model options can ensure that you’ll be able to work with accompanying software and hardware on your operation.

These camera systems can go beyond calving season to monitor calf sickness or daily maintenance, or to watch machinery, grain bins or other places on the farm. Prices are from $100 and up for a surveillance system, depending on your needs.

Digital calving book. Keep records in one place and easily accessible by using a digital calving book. Calf Book lets ranchers keep a digital record of calving data, weaning and yearling performance.

Distributed by EDJE Technologies Inc., Calf Book can generate reports by sire, or by the calf crop as a whole. A semen tank function within the application will let you manage your semen and embryo inventory.

Applications such as this can help identify individual performance, as well as changes that can be made in the next calving season. Calf Book is available in both basic and premium versions for iPad and iPhone at the Apple Store. For more information, visit calfbook.com.

Kansas net farm income holds steady in 2022

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A Kansas State University agricultural economist says farm income in Kansas has remained “pretty good” in 2022 despite the rising cost of doing business.

But Greg Ibendahl says farmers should be cautious heading into 2023, as the combined effects of weather and higher prices for fertilizer, gas and other inputs are likely to hit their pocketbook a bit harder.

“Going into 2022, [the agriculture industry] was definitely in an environment of higher input prices, but I think a lot of farmers were able to lock in [lower prices] for some of those inputs before they went very high,” Ibendahl says. “So I don’t think farmers fully felt the effect of higher prices in 2022.”

In January 2022, Ibendahl reported net farm income for Kansas grain farms to be $261,000, a 39% increase from the previous year. In May, the Kansas Farm Management Association reported the statewide average net farm income in 2021 was $310,230, the highest ever recorded.

Ibendahl has yet to see final numbers for the current year, but he suspects Kansas’ net farm income will fall short of 2021’s record numbers. Nonetheless, this year’s final figures should still look good for most of the state’s farmers and ranchers.

“Farm income kind of bottomed out about six years ago,” he says, “but ever since then, it’s been rising every single year. Net farm income will certainly be down from what it was in 2021 — but from a historical perspective, I think it’s still going to be pretty high, which is good for producers.”

Drought continues to have effect

Ibendahl says drought conditions in much of Kansas, especially in the southern part of the state, put a drag on net farm income the past year. Crop insurance helped some farmers, he says, “but it’s certainly not going to be what it could have been if we would have had normal rainfall this last year.”

He adds that although prices for many grains were up, Kansas farmers couldn’t take full advantage of that bump because of lower yields due to drought. Government payments also slowed post-pandemic.

Don't cut back on fertilizer

Farmers are likely to feel the brunt of high prices for fertilizer. Ibendahl notes that the cost of anhydrous ammonia — an efficient and widely used source of nitrogen fertilizer — topped $1,500 per ton in 2022. “Based on my models, I think we’re going to be looking at $1,200 to $1,500 for the next year or two, so it’s going to be pretty high, and I don’t think there’s going to be any way to avoid it like some farmers did the past year,” Ibendahl says.

Cutting back on the amount of fertilizer applied is not necessarily a good option, he adds: “You’re still going to want to apply close to the normal amount of fertilizer to get the yields that you need. So, that’s going to be a big expense that farmers are going to have to deal with.”

Reduce debt

Ibendahl also says the coming year is not a good time to incur more debt due to rising interest rates.

“We don’t want to be in a situation where a dime out of every dollar goes to paying interest,” he says.

“Something I recommend all the time is to watch your family living. Farmers are not different from anyone else in the world; when income is up, it’s not unusual for farm families to raise their family living. Now’s the time you’re really going to have to watch what you’re doing with your family living so that you don’t get those debt levels up.”

Regular updates on the economics of farming are available on agmanager.info, a website published by K-State's Department of Agricultural Economics.

Melgares is a writer for Kansas State University Research and Extension News Service.

Source: KSURE News Service

 

Population demands will challenge ag productivity

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The world’s population hit a milestone, 8 billion souls, on Nov. 15, 2022, according to a report from the United Nations.

The population grew by one billion over the last 12 years and estimates indicate the number will hit 10 billion around 2040.

A rapidly growing population means increased competition for land, water, food, and other resources necessary for human survival.

Agricultural productivity will be challenged to meet those needs. Research in improved varieties, products and management techniques to increase productivity will be crucial, say an agricultural economist, a plant pathology specialist, and a director of agricultural research.

“It is going to be important for agriculture to continue to improve production practices so we can meet the demands of that growing population,” said Aaron Smith, Extension economist with the University of Tennessee Institute of Agriculture, Knoxville.

“I think we have the capacity in the United States to meet the demands for improvements in food production with better use of resources — land, fertilizer, fuel, water, all those things.”

Cliff Lamb, director for Texas A&M AgriLife Research, College Station, said efforts must focus on future needs while trying to solve some current problems. “We try to solve today's issues, but for the most part, we're trying to solve issues that are going to hit us five to 20 years from now,” Lamb said. “We need to look to fundamental work that will  change agricultural systems in the future.”

Smith pointed out that much of the population growth will occur in developing nations.

“Where that population growth occurs makes a difference, especially from a consumption outlook,” he said. “A lot of growth has occurred in India and some Southeast Asian nations, and Africa is a large driver. In those areas, population growth will result in increased consumption just to sustain nutritional requirements.

“A huge difference exists in commodities and products that are consumed for countries seeking to meet basic nutritional requirements and countries that are building or expanding the middle class.”

Bob Kemerait, Extension plant pathologist, University of Georgia, Tifton, has traveled to numerous developing countries to help create or improve programs to increase farm productivity.

Kemerait said lack of per-acre productivity is common in Africa, as well as Haiti, the Philippines, and other developing countries. “Limited inputs, including seed supplies, fertilizer, mechanization, and water all limit production,” he said.

Unique solutions

He also said importing American production techniques will not always solve problems in these countries.

“We can’t go in and say, ‘do like we do,’” he said. “Many people in these regions depend on labor from the land. Too much mechanization too quickly, for instance, results in loss of jobs, especially for women, who do a lot of the farm labor.”

He added that “mechanization absolutely increases productivity. But people have to be able to afford food, so they need the jobs.

“I have seen a lot of small farmers who lack inputs, infrastructure, education, and mechanization needed to increase productivity and profit. But they can’t depend on doing what we do. It has to be a process.”

“We are fortunate in the U.S, that we're in a food surplus set of circumstances,” Smith said, “but other areas of the globe obviously are not. That provides incentives for increased production from places like the U.S., Brazil, Russia, Western Europe, and Eastern Europe.”

Global concern

A lot will depend on political issues, he said. “We have the capacity to meet food requirements; it's a question of making sure that we continue to evolve production practices and environmental stewardship.”

“Our food systems are global in nature,” Lamb said. “Consider the impact the war in Ukraine and Russia has on our agricultural systems. It’s a perfect example of the impact of disruption in an area where a significant part of the global production of fertilizer takes place.

“That conflict affected production systems in the U.S. It increased input costs significantly —at the very least it's doubled, but in most cases, it was triple to almost four times what it was a year ago, simply because of disruption to the supply chain. We have to talk about resilient food systems on a global basis.”

Developing world challenges

Kemerait sees four significant challenges to meet the demands of a rapidly rising population, including agriculture’s environmental impact, climate issues, resource limitations, and attracting the brightest minds to work in agriculture.

“How do we manage the impact that agriculture has on the environment?” Kemerait asked.

He said whether folks believe in climate change or not, evidence indicates increases in severe weather phenomena—droughts as well as an increased number and increased severity of storms. “All of that has an impact on agriculture.”

He added that regardless of the region, developed or not, agriculture must “attract the best and the brightest to solve the problems of producing more food on limited acres while minimizing the environmental impact.

“These problems are global,” Kemerait added. “And we have to find out how to get good people recruited in agriculture. If we do not address that, how will we find ways to feed and clothe people?”

Research challenge

The research needs are significant and require different approaches, Lamb said.

“Rather than trying to figure out where we can get more fossil-based fertilizer, why don't we develop more resilient plants that require less nitrogen, less phosphorus, and far less water? We’re working on those things now.

“When you look at the technology available, we're advancing scientific knowledge much quicker, at an exponential rate compared to where we were 20 to 50 years ago.”

Water is crucial

Lamb said water use efficiency plays a big role in research efforts.

“Desert plants survive in arid conditions because they make do with less water,” he said. “They have adapted to close leaves up during the heat of the day to reduce evaporation. Identifying those genes and inserting them into food and fiber crops can reduce water use, perhaps 50% to 70%.

“These are the types of things that will change global production systems. These technologies were not available to us until recently.”

Where things grow

Smith said population growth, combined with climate change, may necessitate changes in where crops are grown.

“We will see some evolution in where certain things are grown. A lot of models  predict land use change; we might see more vegetable production in some locations to meet demand, for instance.”

Climate change also could force some growers to adapt production to dryer, hotter, cooler, or wetter conditions.

“I'm not in the business of predicting weather or climate, but something can be said about intensification of some weather events,” Smith said. “In Tennessee, we're above typical annual rainfall, but the timing matters. There was severe drought in June and July and intense rainfall events in February and August. Is this something that could result in a shift in cropping enterprises or production timing?”

Consumer expectations will also affect demand, Lamb said.

In addition to increased numbers, he said per capita or per family incomes also affect demand. “The amount of expendable income is increasing. Globally, the middle class is growing. People will want more land for homesites.

Land fragmentation

“We will see land fragmentation, which means less arable land as urban populations keep growing. Consumers also will demand more protein in their diets, creating more demand for food production.”

The solutions will be complex.

 “I don't think the answer will be a one-system-fits-all,” Lamb said. “Regenerative agriculture will play a role, offering opportunities to improve soil quality and grow crops or raise livestock in places that traditionally would not allow that.”

He said rotations that include crops and livestock may increase per acre productivity.

Technological advances, Lamb added, will allow producers to be more efficient with available resources. “They can use less water but achieve higher outputs.”

He said robotics, artificial intelligence, and data technology will determine when to plant, when to spray herbicides and pesticides, how and when to fertilize and when to harvest.

“A lot of farm decisions will be out of the hands of humans,” he said.

Global aid

Globally, Kemerait said numerous agencies, research facilities, and government programs offer aid to improve agricultural productivity.

“Programs like the U.S. Agency for International Development (USAID) and others help find solutions to improve productivity.”

He said agricultural research scientists and crop specialists work with farmers across the globe to identify problems. “We can sometimes recognize what they cannot, things like pH, soil health, and poor variety selections,” he said.

“We work together across the globe to identify and solve production limitation problems. Colleagues around the world are doing outstanding work identifying factors that limit production.”

Registration open for SowBridge educational series

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Registration is now underway for SowBridge, a cooperative effort among 15 colleges and universities to provide a series of distance education sessions for those who work with sows, boars and piglets, and with genetic and reproductive issues of swine. Programming begins in early February and will be provided online through Zoom or via a call-in option.

Joel DeRouchey, Kansas State University Extension swine specialist, says participants guide the selection of future topics and speakers, and attendees have the opportunity for live interaction with speakers at each session.

“SowBridge provides all participants with the opportunity to hear directly from industry-leading experts, and to contact those experts following the individual sessions,” DeRouchey explains.

Sessions generally are hosted on the first Wednesday of the month and run from 11:15 a.m. to about 12:15 p.m. Central time.

During each session, participants can ask questions of the industry expert presenter from the comfort of their home, office or swine unit. Each registration provides access to one Zoom connection per session and all program materials provided by presenters.

The cost is $200 for the first registration, and half that amount for each subsequent registration from the same entity.

Registration is due Jan. 20 to ensure participants have access to materials for the first session on Feb. 1. Additional information and a registration form are available on the Iowa Pork Industry Center website or at ksuswine.org.

Here are the 2023-24 program session dates and topics:

  • Feb. 1. Why the concern with feral pigs?;
  • March 1. Identifying African swine fever at barn level
  • April 5. Foreign animal disease front-line response battles
  • May 3. Managing heat-check boars
  • May 31. Antimicrobial use and resistance
  • July 5. Scours management and mitigation
  • Aug. 2. Managing fevers post-farrowing
  • Sept. 6. Farm security: How to keep your barn secure
  • Oct. 4. Identifying sick sows early; individual sow care
  • Nov. 1. Farrowing assistance practices
  • Dec. 6. Importance of record keeping
  • Jan. 3. Sow mortality considerations

For more information on registration, contact DeRouchey at jderouch@ksu.edu; or Sheri Hoyer, Iowa State University, at 515-294-4496 or shoyer@iastate.edu.

Source: Kansas State University Department of Animal Sciences and Industry

 

Use calving pasture rotation to prevent disease spread

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The old saying that “an ounce of prevention is worth a pound of cure” is one that commonly refers to the importance of reducing the risk for disease spread. 

And in the case of beef cattle scours, where cows calve has a lot to do with how well the newborns can stay healthy in the first few weeks of life, say the experts at Kansas State University’s Beef Cattle Institute.

Speaking on a "Cattle Chat" podcast, veterinary experts outlined how calf diarrhea, also known as scours, can be a serious issue in newborn calves — but one that can be minimized by rotating the pastures where the cows calve. Scours can lead to dehydration and death in newborn calves, says Bob Larson, K-State veterinarian.

“A newborn calf’s worst enemy from a germ standpoint is a calf that is a few weeks old, because those older calves shed more germs that cause scours,” Larson says.

Sandhills system

To reduce the exposure between newborns and calves that are a few weeks old, Larson and the other experts recommend following the Sandhills Calving System that was developed through University of Nebraska research done years ago in the state’s Sandhills region.

“The Sandhills Calving System is one of the most impactful interventions that we have for calf scours,” Larson says.

In this system, cows that are heavy in their pregnancy are moved to new pastures every two to three weeks, and once they calve, they stay in the same pastures where they gave birth until the calves are old enough to be commingled with the others in the herd, according to veterinarian Brian Lubbers.

“This allows the calves to be born on the cleanest pastures, and then once a certain percentage of the herd has calved, those cows that are still pregnant move to a new pasture,” Lubbers says.  

Larson says the goal of each herd following this system would be to move the pregnant cows away from cows that have already calved at least three times — from the start to the end of the calving season. 

“After cows have been calving for two or three weeks, move the pregnant cows to a new pasture and do that again after the next two to three weeks of calving,” Larson says.

Lubbers adds that the bacteria and viruses that cause scours are spread through fecal to oral transmission, so by having a fence between the calving groups, most of the risk for scours passing through the groups of calves is minimal.

Timing to bring spring calves together

Regarding the timing of bringing all the spring calves together in the same pasture with their dams, the veterinarians agree that when the youngest calves are 6 weeks of age, the greatest risk from scours is passed — and it is safe to bring the herd together again.

“Make sure the last pasture they go to as a group is not one that was used for calving earlier in the season, so that they are all being moved to a clean pasture,” Lubbers says.

To hear the full discussion on these topics, listen to the "Cattle Chat" podcast online or through your preferred streaming platform.

Moser is a writer for K-State Research and Extension.

Source: Kansas State University Research and Extension News Service

 

Alabama couple named nation’s top young farm family

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Alabama farmers Daniel and Carla Trantham were named the nation’s top young farm family during American Farm Bureau Federation Convention in San Juan, Puerto Rico.

This is the first time an Alabama Farmers Federation farm family has won the achievement award.

“From the moment I saw the state award given at a state conference, winning this contest was my goal,” Daniel said. “This national award was the icing on the cake. This is a dream come true for our family.”

As winners, the Tranthams of Calhoun County will receive $35,000 toward purchasing a Ford vehicle and registration to AFBF’s FUSION Conference in Jacksonville, Florida. The Tranthams were eligible for the Achievement Award after winning the Federation’s Outstanding Young Farm Family contest in August 2022, where they scored over $75,000 in prizes.

ALFA President Jimmy Parnell applauded the Tranthams for their hard work, dedication and impressive win.

“Young farmers like Daniel and Carla give me incredible hope for the future,” Parnell said. “They have a tremendous family operation, and we are so proud for the whole family. This award is a testament to the time they have put in and the love they have for agriculture.”

The Tranthams are raising five children — Davis James, Sadie Leigh, Anna Kate, Sawyer Davis and Callie Faye — on the family farm in Alexandria where Daniel was raised.

“This organization has changed the way our future will go, and it changes the trajectory of our kids’ lives,” Carla said.”

Since joining the farm full time in 2010, Daniel has doubled, and in some cases tripled, every aspect of the row crop, cattle and feed business.

“I’m most proud of our commercial feed business,” said Daniel, 34. “People wanted to buy feed, so once we saw we could fill that need, we went back to planting more corn and wheat.”

The Tranthams bag and sell 80 tons of feed and grain weekly at their storefront and through feed stores. Direct marketing reduces price fluctuations and offers a steady stream of revenue. They also sell wheat straw and Bermudagrass hay while improving yields on 1,000 acres of corn, wheat, soybeans and cotton through irrigation and seed selection. Since 2010, Daniel has more than doubled grain storage and more than tripled his cattle herd to 300 head.

Daniel’s family also operates a trucking company, where Carla manages payroll. The business hauls feed and birds for poultry integrators across the Southeast. The Tranthams give back to their community by coordinating farm days and speaking to hundreds of schoolchildren about farming annually.

Daniel is the Calhoun County Young Farmers chair; serves on the Federation State Soybean Committee and State Wheat & Feed Grain Committee as an ex-officio member; and is president of Trantham Farms. Carla serves on the Federation’s State Women’s Leadership Committee.

Source: Alabama Farmers Federation


When will cattle prices find their top?

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Cattle futures prices remain in a very slow, cautious uptrend on daily, weekly and monthly charts. The underlying friendly fundamentals are keeping the market overall well supported. The most recent USDA Cattle on Feed report confirmed the cattle herd is continuing to shrink, and high beef prices will likely be with consumers for some time.

Cattle in feedlots came in at 98% of a year ago. High input costs and, more importantly, enduring drought conditions in the western half of the United States have been a detrimental combo that cow calf and backgrounders have suffered.

The uptrend may be slowing

How long will the cattle rally last? When will it come to an end? The reality of tight supplies is priced into the market for cattle futures for both nearby and deferred contracts. Live cattle futures are gaining in proximity to the $171.97/cwt price high from October 2014. As futures prices approach those all-time highs, the rally does seem to be slowing, with traders cautious about how high prices could actually go, and when prices may finally start to top out.

Can demand stay strong?

Regarding domestic demand for beef, the American consumer continues to deal with food inflation, and retail beef prices are no exception. In recent months, beef prices have remained elevated with the average retail price at $7.37 per pound. In my opinion, as long as Americans have jobs, they will continue to pay for higher priced beef. They may opt for smaller portions or a lesser quality cut, but the demand is there.

Looking abroad, beef export demand looks strong overall, too. 2022 beef export value already set a record of nearly $11 billion for the full year. Export volume in the 11 months January-November was 1.36 million metric tons, a 3% increase over 2021’s record levels.

Risk management tips

Being a cattle producer is tricky right now. The good news is that your product is in high demand, but the bad news is the reality of the cost of doing business, let alone being able to secure feed in some locations.

Let’s look at feeder cattle. If you are seeking supplies, you may have to pay a lot more than desired due to tight supplies. How do you manage the risk? If you have not yet bought feeders and are intending to, you may want to guard against upside price risk. You could either buy futures (margin call risk) or buy call options. Call options provide the right (not the obligation) to own futures at a fixed price level. Once actual feeder cattle are purchased, you would then lift the long (bought) futures or call position.

On the flip side, if you have feeders to sell, some might consider purchasing put options that provide the right (not the obligation) to sell futures. Puts are attractive, as they leave the upside open for price appreciation while establishing a price floor.

If you are feeding cattle through to slaughter weight, then you might consider two risk avenues: pricing your end product and managing feed costs. Pricing your end product refers to the time cattle will be marketed. If you like a price, you could hedge (sell futures – margin risk). If you prefer to leave upside price potential in place, then purchase puts on live cattle contracts.

Feed costs right now are still historically high, and depending on how Mother Nature cooperates during 2023, grain prices could either re-test the 2022 price highs, or begin to slide lower back to “normal.” Pasture conditions could improve dramatically or still be a challenge in other locations. There are also ways to protect feed values with use of marketing strategies. Spend time with your marketing advisor and review your alternatives with knowledge of the risks and rewards.

Thankfully demand for beef is strong, there is no sign of a top, and as long as people still have jobs, demand for beef should stay consistent. Yet, be aware that prices are historically near the all-time price highs, and prices do not stay high forever.

Reach Naomi Blohm at 800-334-9779, on Twitter: @naomiblohm, and at naomi@totalfarmmarketing.com.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

Rail delays put California farms at risk

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Millions of chickens have gone unfed as rail disruptions delay corn shipments to a California poultry farm, according to documents that provide unique details of how one shipper has suffered from poor rail service. 

Foster Farms, which processes about 1 million chickens and 12,000 turkeys every day, has said it’s had to pause some operations because of delays from Union Pacific Corp., the second-largest freight railroad in North America. 

The supply issues also forced the company to shut down a plant that processes raw corn into animal feed to sell, it said in federal filings. That meant cutting off its dairy farm customers from corn meal and giving priority to its chickens, which start killing each other when they go hungry.

After a flurry of correspondence that offers unfiltered insight into shippers’ problems with rail service, the U.S. Surface Transportations Board ordered Union Pacific on Dec. 30 to deliver more corn-laden trains to Foster Farms.

This is the second time in the past year Foster Farms has asked the rail regulator to intervene directly because of Union Pacific’s failure to deliver animal-feed trains on time. It’s also the latest in a long-simmering tussle between shippers and railroads, which have seen profits rise even as carloads dwindle.

“These service failures, which began in February 2022, have resulted in numerous instances where Foster Farms has suspended its production and distribution of feed for tens of thousands of dairy cattle and tens of millions of chickens and turkeys,” the company said in a letter to the regulatory agency.

Foster Farms chicken for sale in San Francisco.

Suppliers like Foster Farms complain they have no viable alternative to using rail and can be captive to one carrier. Disturbances to these operations could potentially risk supplies for major food retailers including Costco Wholesale Corp. and Walmart Inc., which stock Foster Farms products.

The Livingston, California-based processor, which is owned by Atlas Holdings LLC, says it is the largest chicken grower in the Western US, with about $3 billion of annual sales. It said it resorted to hauling supplies by truck, but couldn’t find enough capacity and faced soaring costs. It takes 400 trucks to handle the same amount of grain as one 100-car train.

Foster Farms declined to comment beyond statements in public filings.

“Union Pacific is working closely with Foster Farms, providing daily updates and delivering the trains addressed in the order,” the railroad said in an emailed statement. “We continue to experience significant weather delays, including washouts in California, blizzards in the Midwest and rockslides in Nevada.”

Michael Booth, an STB spokesperson, said: “The Board is reviewing all relevant information and determining if further action is necessary.”

Service breakdown

Union Pacific has been at the forefront of a recent nationwide rail service breakdown that has plagued all carriers including Warren Buffett’s BNSF Railway Co., its closest competitor in the West, and CSX Corp. and Norfolk Southern Corp. in the East. Railroads have pointed to difficulties hiring train crews since the pandemic hit, along with usual disruptions such as weather and derailments. 

Shippers and unions say the problems began with an industrywide cost-cutting push about five years ago that slashed workforces, closed switching yards and parked locomotives. The five largest U.S.-based rails had a 7% drop in carloads versus a decade ago. Under an efficiency strategy known as Precision Scheduled Railroading introduced in the US in 2017, the railroads revamped customer schedules and slashed costs.

“You can only cut so far and they’ve already cut more than they should have, especially as far as employees,” said Daniel Elliott, a principal with GKG Law and a former chairman of the Surface Transportation Board. 

graph showing decline in rail car volumes

The decline in carloads over the last decade coincided with a windfall for the railroads. Net income for the five largest carriers jumped by 75% over the past 10 years. Adjusted operating profit margins rose to a record 41% in 2021 from less than 16% two decades ago.

After successful deregulation legislation in 1980 that rescued railroads from the brink of bankruptcy, carriers became more productive and improved service, allowing profits to rise as shipping rates fell. A wave of consolidation that also followed reduced the large railroads operating in the US to seven from about 40, transforming the competitive landscape.

rail company profit increases

The railroads’ power to affect service to its customers makes shippers hesitant to publicly criticize rail companies, according to trade groups. The American Fuel and Petrochemical Manufacturers said in a Dec. 15 written testimony that its members are “fearful of potential backlash” and one declined to provide service information for the STB’s hearing on Union Pacific “since such testimony could be linked back to their company leaving them vulnerable to retaliation or other subtler recourse from UP.”

The Surface Transportation Board is seeking to correct the imbalance, but has limited power. In December, it called on Union Pacific to explain a spike of service-limit notices designed to alleviate network congestion.

“It’ll be interesting to watch what happens over these next couple of years and see if the railroads do take a little bit of a turn” in their strategy, Elliott said.

‘Every minute now counts’

December was the second time last year Foster Farms ran so critically short on corn supplies that it turned to the board for help. In June, the company filed a petition for emergency service after months of struggling to get enough trains. Desperation began to creep into the communication between the railroad and its customer as animals went unfed. 

“We are about to kill millions of chickens,” said Phil Greene, vice president of Foster Farms, in a June 14 email to a Union Pacific executive. “Every minute now counts as we try to save lives. You have never put us in this situation 5 days late with no inventory and 40 to 50 million chickens to feed.”

The next day, Foster Farms filed its petition for an emergency service order. The railroad replied to the petition by accepting blame for poor service and proposed a plan to divert locomotives and crews to increase the trains. Chief Executive Officer Lance Fritz weighed in to spur action.

A Union Pacific locomotive at a rail terminal in California.

“Foster Farms is a vitally important Union Pacific customer. However, we have failed to provide adequate service to Foster Farms,” Fritz said in a June 16 letter to the regulator. “I am writing to convey Union Pacific’s firm and clear commitment to providing Foster Farms the service it deserves and the service we expect to provide.”

On June 17, the board unanimously granted Foster Farms’ petition, directing Union Pacific to supply the required trains and report on their status for 30 days. After the 30-day period, the board declined to extend the order. By October, Union Pacific again wasn’t providing enough trains to keep corn stocks fully replenished, Foster Farms said.

The winter storms in December exacerbated the problem and Foster Farms again had to truck in grain in attempt to feed its and customers’ livestock. This time Union Pacific blamed the weather. The board on Dec. 30 ordered the railroad to deliver five grain trains that Union Pacific said would arrive by Jan. 3.

“With the exception of one train, UP did not deliver the five trains on the schedule it represented to the Board and to Foster Farms,” the poultry producer said in a Jan. 4 letter.

© 2023 Bloomberg L.P.





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