Dr. Corah LIVE!

It was my senior year at South Dakota State University and I was in Dick Pruitt’s beef production class. Walking in to the Animal Science complex that morning, Dr. Pruitt said, “Hey, you should stick around to meet our speaker after class. Sometimes his company looks for freelance writers.”

Paying my own way through college, I was never one to turn down the chance to earn some extra cash. But over the next hour as I listened, I realized I probably would have wanted to meet Larry Corah after class anyway. He was dynamic, thoughtful and compelling.

That class period probably changed the course of my life, as he encouraged me to apply for an open position at CAB, and the rest is history.

But what does this have to do with you?

If you’ve never had a chance to chat with Larry, this is your lucky week. We’re doing something we’ve never done before—hosting a live chat on Facebook this Friday at noon Central Time.

We’ll post a photo of Dr. Corah and a few words to kick off the chat. All you have to do is write your question in the comment field and Larry will answer you in real time. (And as a bonus, at the end of the hour we’ll put all of the participants’ names into a random drawing for a couple of CAB prizes!)

This is your chance to tap into some of his decades of experience, first in academia including a longtime gig in Kansas State University Extension, plus another 14 years at Certified Angus Beef.

To say he knows the beef industry would be an understatement. Experiences from his North Dakota roots to Canada to Australia (where he worked for 2 years), have given him a unique perspective.

Plus he knows data. My word. (And I know, because he finds the research. I write about it. Repeat.)

Larry continues to author scholarly papers to this day, but a recent tally noted 75 peer-reviewed publications and papers, 158 abstracts and 143 KSU Cattlemen’s Day Reports. A great collaborator, he co-authored many of those with students, peers and sometimes veterinarians. Yet speaking is his thing.

To the tune of 1,200 Extension presentations in Kansas alone. He has presented in 39 other states and six Canadian provinces.

While at K-State his research and study brought focus to the area of cow-herd efficiency, combining the disciplines of ruminant nutrition with reproductive physiology. Ask him about genetics. Ask him about feedlot performance or weaning or health. He knows it all but never comes across as a “know-it-all.” If you’re a producer, he’s one of us.

Larry has devoted the last couple of decades to pointing out the links between high-quality beef and profit. Because he believes in it. And he knows producers all over the country that will benefit from that knowledge.

So, join us over on our Facebook page on Friday. Park yourself in front of your computer or Smartphone and have your lunch with one of the most intelligent people I know. It could just change your course…

May your bottom line be filled with black ink,

Miranda

The Prime directive

Improved genetics, focused selection transform an elusive grade into a logical target

by Jill J. Dunkel

Breeding for high quality and retaining heifers over generations, Mike Kasten sees results. The Millersville, Mo., rancher has used artificial insemination (AI) for decades, finishing the progeny and collecting data.

Detailed records prove the herd does it all, from calving to breeding back, raising the calf on pasture and, increasingly, hitting the top rung on the premium beef ladder–Certified Angus Beef^® brand Prime.

“I work hard to reach that target,” he says. “We’ve used AI for 40 years and have tried to pick bulls to get us there.” His work spanned the years from when Prime was a “bonus” to these days when it is a realistic expectation for him and others who follow such a strategy.

Kasten feeds 200 to 300 calves each year at Irsik & Doll Feedyard, near Garden City, Kan., lately averaging more than 20% Prime. “As we’ve stacked three generations of high quality in our pedigrees, some cattle are running in the mid-to upper-40% Prime,” he explains. Those that don’t reach Prime still make upwards of 80% CAB.

That progress has not come at the expense of their ability to perform in the feedyard or grow in the pasture.

“I don’t do one-trait selection. We have to have cattle that will work in a pasture situation,” Kasten says. “But why not try to get it all if you can? We have the ability to make cattle that are very, very functional on grass, do very good in the feedyard and have Prime carcasses. We don’t have to give up anything.”

Jerry Bohn, manager of Pratt (Kan.) Feeders, says more and more producers are targeting upper two-thirds Choice and higher. “The premiums being offered for CAB and Prime certainly play a role. I think you’ve got more genetics that continue to improve towards cattle that grade higher.”

He also sees more feedyards focusing on quality. Pratt Feeders uses individual animal management to gain a further edge. “We get the big guys out of a pen early on so we can feed the rest a little longer, getting them to grade higher,” Bohn says, noting other advantages.

“We try to market every animal to its optimal end point; the cattle do better that way,” he says. “If you’re feeding the bulk of the pen to the same end point, some of those calves will get too big.”

Better genetics and management at the yard have led to CAB acceptance rates triple what they were 10 years ago at Pratt Feeders. “With the nature of grades being higher, we see a few more of those bumping up beyond Choice. Anything that kicks up to Prime is gravy on the top,” he says.

Tyler Brown, with JBS in Greeley, Colo., has seen a significant increase in the demand for high-quality beef over the last 18 months.

“It’s been even more pronounced in the last six to eight months,” says the JBS premium program manager. “And I don’t see it subsiding any in the near term. The market is sending a clear message, not just in the foodservice channel, but also in the retail channel. Consumers are demanding a higher quality eating experience.”

Brown says the demand for Prime-grade product has improved similarly to the high Choice market in those retail stores.

Indeed, the number of CAB retail partner stores selling CAB Prime is up 83% in the last four years, from 252 stores in 2008 to 463 in 2012. Nearly all licensed packers now sell the Prime brand extension.

“Beef costs so much now that it could pressure demand growth,” allows David O’Diam, CAB assistant director of business development. “But I don’t see the premiums to producers going down because Prime is becoming part of the sales strategy in more stores, especially with the end meats.

“The market wants at least a steady supply, but it’s becoming a struggle,” he says. “Packers were getting into 3% Prime for a while and that’s back to 2% of all cattle now.”

The mid-October Cattle-Fax Trends newsletter projects a $12 Choice-Select spread for 2013, which would be the fourth consecutive annual increase in the market indicator, and the second-highest ever.

Those are some of the reasons Brown says rewards for producing premium beef should remain robust for the next few years.

“Hopefully, that signal is getting to the ranch, to be producing as much high-quality product as possible,” he says.

The kind you want to be a part of

We like success. Who doesn’t?

Sometimes it’s easy to measure, like back-to-back-to-back record-setting sales years. Like $352 million in premiums paid to producers who succeed at hitting our brand standards. Like a CAB demand index that keeps pointing upward.

chef jeff (3) — Rebecca (left) and Loni (right) got in on the action. Pictured on stage with annual conference speaker Chef Jeff.

But some success is more of a judgment call, or a feeling. Members of the Black Ink Team who were at our recent Annual Conference said you could feel the success radiating from our two Colvin Scholarship winners, Loni Woolley and Rebecca (Tokach) Acheson. Named after CAB’s first CEO (Mick Colvin), the scholarship looks to both reward and encourage high-achieving students involved in the beef industry.

Mark says, “Every year when I’m sitting in the session where they address the crowd, the people around me say, ‘Where do you find these young people?!?’ They’re very impressed, to say the least.”

And why wouldn’t they be? It’s not every day you throw a 20-something, with no formal company training up on stage in front of 500+ partners to represent you. Rarer still when she not only knows what bovine satellite cells and preadipocytes are, but has spent several years of her life studying them. But earlier this month, Rebecca told the crowd about growing up in the Angus business, falling in love with the meat science side of it all and how she is now doing doctorate work in tenderness and nutritional composition of certain beef cuts.

Loni Woolley told about her many high school activities—including 4-H, FFA and volleyball–but that meat judging was always her favorite. So she studied it and studied it some more—now getting her master’s in that area and coaching the Texas Tech meats judging team she once participated on.

Even though these gals were in West Virginia as honored guests (and to help out a bit with the Colvin Scholarship Fund golf outing), they carried their student mentality with them, soaking up the experience.

“It’s great to interact with more people outside of producers and people that work in the packing plant,” Rebecca says. “How they use the product that my parents and my friends’ parents produce every day.”

From the Ohio chef to the East Coast retailers, Loni learned about the challenges that folks on the beef side of the beef business are facing.

“I was able to talk with many of the foodservice providers that were so passionate about what they do and seem to always be trying to get more CAB,” she says. (Hint, hint: Does that sound like opportunity?)

They sat down to dinner with everyone from further processors to CAB staff members, and both say they were in good company.

Loni says the producers relayed such an important message. “They were so positive about the future of beef and really told the story of a family business.”

That’s the kind of success that others like to be a part of.

“The cattlemen that don’t get to attend the conference should know that everyone else in the industry relies on them and they do care about you! They are interested in what you are doing and believe that you will keep producing the cattle they need to keep up with demand,” Loni says.

And Rebecca finishes that thought, “You have a group for 500+ individuals that meet every year who are passionate and excited to sell your product. You have this whole team of workers behind you trying to promote it. You’re not alone.”

May your bottom line be filled with black ink,

Miranda

PS—If you know a guy or gal that reminds you of Loni or Rebecca—the high achievers, the dedicated, the studious beef lovers, be sure to watch our website for more details on the next round of Colvin Scholarships later on this year.

Exactly what feedyards want

Grid, pen closeouts show contrasting values

By Steve Suther

Some cattle grow like weeds; some hit the high-grade targets. Some do both, some neither. That’s the way it goes in the world of commodity cattle. But cattle can be so much more, adding profit throughout the supply chain.

“Cattle that grow fast and grade well create exceptional value and profit potential at all points along the beef supply chain,” says Tom Brink, president and COO of J&F Oklahoma Holdings Inc. The cattle ownership arm of Five Rivers Cattle Feeding tracks the bottom line, from closeouts of feedlot pens in its dozen Plains and Western locations.

Cow-calf producers want top dollar for calves because they need profit to stay in business. Five Rivers data says the key is to ramp up management and genetic potential for both rapid growth and high quality grade in each calf.

“Feedyard managers and packers really like those cattle, and will bid aggressively to get them,” Brink says. “The double benefit of performance in the yard and on a carcass-merit grid adds real dollars to the bottom line.”

That may be basic intuition for most cattlemen, says Mark McCully, Certified Angus Beef^® brand assistant vice president for production. “But we don’t often see how big the dollar difference is between grid-marketed pens of cattle that do it all and those that don’t grow or grade well. An $80-per-head profit advantage on a whole pen of cattle is enormous,” he says.

Brink evaluated feedyard performance and carcass data on two groups totaling 63,000 yearling steers fed at Five Rivers last year. All were placed on feed at approximately 800 pounds(lb.), managed the same and marketed on a grid in the same recent time period. “Most of the difference in how these two groups performed has to be genetics,” he says.

Cattle from 151 pens (36,266 head) weighed 1,350 lb. or more leaving the yard and graded 65% Choice or higher at the plant. The other group, representing 113 pens (26,729 head), finished at less than 1,300 lb. and graded less than 45% Choice.

Aptly labeling them as High Growth/High Grade (HGG) or Low Growth/Low Grade (LGG), Brink says the top group “did exactly what they were genetically programmed to do, posting excellent results in the process. The [LGG] cattle also expressed their genetics via slower growth, lower quality grades and a poor financial outcome.”

Almost anybody can produce the LGG kind, although they probably cost about the same amount to raise as HGG cattle, McCully points out. He and Brink agree that the upper-percentile cattle do not just show up by accident.

“Those cattle were undoubtedly produced by people who care a great deal about the genetics they build into their herds, Brink says. “High-quality Angus bulls, emphasizing post-weaning growth and marbling ability, represent a sizable portion of their genetic inputs. The carcass profile of these cattle alone is evidence of that.”

The HGG steers spent 16 more days on feed, taking in calories beyond maintenance needs to add energy for growth. “They kept eating and had the genetic propensity to continue growing efficiently and reach a heavier finish weight,” he notes. “Feedyards appreciate that, especially when feeder cattle numbers are limited.”

The group of lower performing steers fell 0.29 lb. short of the HGG steers in average daily gain, or 8.7% over the whole feeding period. Equally critical, they gave up a 5% feed efficiency margin. “That’s especially important with today’s feed costs,” Brink says. “Besides saving money, the top steers were better stewards of the high-priced feed they consumed.”

You might expect cattle that gain fast and efficiently to have a relatively low cost of gain. “That is exactly what the High Growth/High Grade cattle did, beating their lower-performing peers by more than $5 per hundredweight (cwt.) of live weight gain or 6%. Cattle with lower gain costs are simply more profitable to feed, in this case producing a $25-to $30-per-head feed-savings advantage over the low group,” he says.

On the carcass side, the HGG had the weight, dressing percentage and quality grade advantage to beat the average live market price by $39 per head on the grid, compared to the LGG $13 discount. While the lower group did produce better yield grades, those premiums were more than offset by their lighter weights and quality grade discounts.

“You need pounds,” McCully says, “but it takes pounds with quality to get to this total value advantage of $159 per head.”

“The good news does not stop there for our top group,” Brink says. “They were more profitable by $80 per head, so half of that added top-line value they created worked its way right into bottom-line profits. Every cattle feeder in the business will take as many of those cattle as they can find.”

The cattle feeder adds that an Angus-specific DNA test, new from CAB this year, makes it easier to find and replicate those cattle in commercial herds.

“They chose two very important traits to emphasize—I would even say they chose the ‘right’ traits,” Brink notes. “GeneMax™ helps producers identify faster growing, higher grading cattle from within their own herds. It can be used to help select replacement heifers or test steer calves for sale to stocker producers or feedyards.”

That $159 per-head gross value difference seen in Five Rivers data amounts to $20/cwt. for 800-lb. feeder cattle, McCully says. “Cattlemen need ways to identify the high-potential genetics earlier so they can properly assign premiums and discounts on feeder cattle. DNA-based tools like GeneMax will give us that opportunity and give feeders some genetic risk management.”

Brink says over time, “Producers who use GeneMax will have a greater ability to build more growth and quality-grade genetics into their herds. We need many more cattle like the strong-performing steers profiled above. GeneMax can become a key tool to help commercial Angus producers accomplish that goal, and put more dollars in their own pockets at the same time.”

Uniform higher quality

Move toward consumer target boosts beef industry

by Miranda Reiman

Every auction barn study says the larger the group and the more uniform the cattle, the higher the premiums.

Work from Arkansas to North Dakota proves it’s true on individual lots, but what of that logic when it’s applied to the nation’s cowherd?

In a discussion on the merits of crossbreeding, Tom Troxel, University of Arkansas animal scientist,allowed, “A single-breed system would probably benefit the industry by improving uniformity of the herds, which could help marketability. It would remove that variability we created from the ’80s through the mid-’90s by participating in the sire breed-of-the-month club. Once the cowherd becomes more uniform, however, it is in a better position to realize the benefits of heterosis.”

It’s difficult to predict what more homozygosity would mean for the entire chain, but there are theories. As long as any move toward genetic sameness is focused on eating satisfaction, Missouri economist Scott Brown says it would be a boon.

“We continue to talk about the need to increase demand for beef,” he says. But what if the industry provides product so noticeably better that it shifts demand higher? “Then the possibilities are really very large.”

In the cattle cycle, the depth and length of a rebuilding phase depends on beef’s value equation. At these higher prices, the industry can’t afford to simply produce the same amount or more beef that disappoints.

“Providing consumers a product they are demanding is going to give producers a chance to expand the herd that otherwise wouldn’t have been there,” Brown said last fall. Increasing overall quality could improve beef demand by 10%, requiring 6 million more cattle.

A key turn toward consumer focus came more than two decades ago when variability in the beef supply was rampant and demand had tanked. High-quality beef and a “brand-like initiative” emerged as the way to lure back consumers in 1990s.

“Industry economics began to change toward reflecting the entire value chain,” says animal scientist Nevil Speer, Western Kentucky University. “That favored production systems that were increasingly responsive to end-user specifications.”

One reaction, arguably, is that nearly 70% of the nation’s cowherd is Angus-based today.

“Back then, within every rancher’s set of five calves there was a $200 difference in value by the time they got to the end point,” recalls Vale, S.D., producer Rich Blair. “It was too much money to be giving away so we needed to figure out how to move our bottom end up to the top end.”

Selling cattle on a grid for the first time in 1998, Blair realized a $16 per-head premium. “I thought wow, this is great: I can actually get paid for better genetics.”

Packer buyers told him their grids were set up to communicate demand signals.

“So I sat down and looked at U.S. Premium Beef grids and thought, what target can I hit? It didn’t pay enough on yield grade 1 and 2 to make it worthwhile, and I didn’t want those genetics in my cowherd. What it was really paying me for was Prime and CAB. How can I hit that? I started looking at the Angus sire summary and breeding to see how far we can go with marbling.”

The four National Beef Quality Audits (NBQA) point to the progress made. From 1991 to the 2011 report, the share of Choice and Prime grading carcasses increased from 55% to 61%.

“The first several audits underscored the industry’s weaknesses with respect to its primary competitors and the urgent need to shore up product quality,” Speer says. “The primary concern revolved around mounting deficiencies regarding consistency, uniformity and predictability.”

Today those are included, but are no longer the sole focus.

“Isn’t that a great comment about the strides we’ve made in the beef industry with respect to our end-product and production over time?” he asks. “And clearly that coincides with genetic changes that have occurred in the industry.”

Yet, the recent audit still called for an additional 14 points of premium Choice and Prime.

Jay Riscky, national sales manager with Dallas-based Freedman Meats, says marbling is just one of the beef characteristics his customers depend on accessing with greater uniformity.

“When you open up a box, you have a five-, six-, seven-pound variance in loins,” he says. “If the end users are having to cut 16-ounce steaks out of all those loins, one guy is going to get a piece of paper on his plate, the other guy is going to get a nice big steak. At banquets, they have to cook those all at the same time, so one guy is going to get a well-done steak and the other guy is going to get a medium-done steak.”

That matters more now than ever.

“They just don’t want meat on the plate,” Riscky says. “When they are paying extraordinary amounts of money for beef right now they want eating experiences they don’t forget.”

Those memorable meals drive demand.

“Success breeds success. I don’t mind paying a premium for good cattle, because I make more money on cattle that grade Choice than I do Select,” says Art Wagner, procurement chief at National Beef Packing.“I want every animal that comes in through my doors to grade Choice and Prime.”

“It’s kind of a self-fulfilling process,” he says, noting that the more high-quality beef he sells, “the more money that the consumer is going to spend.”

Feeding like cattle makes a feeder’s job less complicated, says Warren White, of Mc 6 Feeders, near Hereford, Texas.

“It’s easier to market a set of cattle if they’re fairly consistent across the pen, because you’re feeding to the average of the group,” he says, noting the difference 20 years makes. “More people understand the importance of genetics, which is one part of that consistency.”

He suggests cattlemen use a better defined calving season and similar bloodlines across their herd.

“We lose some uniformity as we introduce heterozygosity and try to obtain heterosis. Typical crossbred populations are less uniform than straightbred populations,” Speer says. “From a systems perspective, there’s that tradeoff as we deal with indiscriminate crossbreeding. That’s where we have problems. We have situations where animals are certainly hitting the target and then we get a whole lot more animals that are outside of that.

“That becomes a cost to everybody because we have to somehow fix that or work with those,” he says. As beef business stakeholders contemplate the ideal genetic makeup and what that means to the whole, the NBQA serves as the guide in stating: “The fundamental efforts of the beef industry must focus on protecting, defending and continuously improving eating satisfaction and product integrity.”

Beef: bigger and bigger

By Steve Suther

Cattle feeders don’t like $7 or $8 corn, but they know what to do at those higher prices. Most of them feed cattle longer to heavier weights and sort them to market on a grid.

Maybe not all cattle feeders see it that way, but in the big picture, that’s what is happening, says Shawn Walter, president of Professional Cattle Consultants (PCC). He presented “How big can we go?” at last month’s Feeding Quality Forum in Grand Island, Neb., and Amarillo, Texas.

“Every few years we talk about it, can we make carcasses any bigger? Well, we keep doing it,” he said, noting one of many graphs. “This is never a straight line, but we’ve had an upward trend for carcass weights since the 1960s all the way through the current year.”

You might wonder why,unless you think about how the market gets what it pays for. Packers have been paying for more pounds.

Walter studied historical carcass-weight data for steers and cows and surmised the first wave of steer increases came from crossbreeding.

“During the ’60s and ’70s, we had those increases in steer carcass weights without changing our cow size much,” he said. “However, as we got into 1980s, we saw more of the Continental crosses retained as females and in that decade, cow weights increased faster than steer weights.”

The next decade saw a boom in growth technologies in the feeding sector, especially trenbolone acetate (TBA) implants. Grid marketing developed a weight range that discounted outliers – but the upper limit has stair-stepped as both cow and steer weights keep trending higher.

From 1990 to 2010, the heavyweight carcass limit moved from 900 lb. with 5% of steers heavier at the start, to 1,000 lb. and 4.1% exceeding those limits by 2010. Some U.S. grids have moved up to a 1,050-lb. limit now.

“We have increased the production, the genetics and the growth in our cowherd,” Walter said.“This train is headed down the tracks with a pretty good head of steam and to just turn that around is not likely. Bigger cows equal more dollars per calf, but profit? That’s an operation-by-operation question.”

Feedlots have economic pressure to maximize weight potential from those calves, once they cross the threshold to grade-and-yield pricing. Gridded cattle tend to push up against the heavyweight discount limit, while cash cattle find their way to market at the earliest possible date to cut down on feed costs.

That’s because of the differing profit dynamics between cattle in those two marketing channels, Walter explained. Using a PCC model based on cattle placed at 750 lb. this February, live cattle sold on cash bids start losing money before 130 days on feed or 1,200 lb., but cattle could be fed for a couple more months to add 180 lb. for value-based marketing.

“The incremental cost of gain on a carcass-weight basis towards the end of the feeding period is more efficient than live-weight gain, with 80% of it going to carcass gain by then,” he said, noting that phenomenon is known as “carcass transfer.”

As more cattle feeders realize this, fewer sell cash live cattle and demand increases for the kind of feeder cattle that will grow and grade. Pressure also mounts for the use of more aggressive growth technologies and strategies that can help improve feed efficiency, Walter added. “Sorting to top off pens for the grid and putting the rest on a beta-agonist ration can result in more pounds with less heavyweight discounts. When the corn price doubles, the ROI on these strategies doubles,” he said. The beef industry may be approaching a practical limit on carcass size, but that is not so much driven by the concern over ribeyes too big for a plate. Innovations in beef merchandizing have stepped up to that plate, and larger size is actually an advantage for some cuts. Boxed beef offerings may adjust to better sort for similar size cuts. Rather, the limit has to do with plant equipment, human labor and how much weight the workers can easily handle in fabrication and processing, Walter said. Still, packers have incentive to increase average weights as the number of carcasses declines, he added. “I don’t know that we have seen the economic signals telling us to limit carcass weights, so we’ll keep making cattle and carcasses bigger to be more efficient.” The meetings were sponsored by Pfizer Animal Health, Certified Angus Beef^® brand, Purina Land O’Lakes and Feedlot Magazine.

Light at the end

Survive nine months of bad news, better days follow for feeders

by Miranda Reiman

Don’t expect corn values to get dramatically lower….this year.

Feeding Quality Forum attendees were probably not surprised to hear Dan Basse, Ag Resource Company, say that pricing inputs would be their top challenge in the last quarter of 2012. But the fact that those costs could normalize in the latter part of next year surely piqued their interest.

The market analyst addressed feeders, allied industry and educators at the seventh annual meetings held in Grand Island, Neb., and Amarillo, Texas, last month.

“There aren’t too many years in my career that I’ve talked about surety of supply,” Basse said. “I want all of you to not only think of the cost of feed, but making sure you that you have it.”

He expects the U.S. corn crop to drop substantially from USDA’s estimates, which have not reflected any reduction in harvested acres. Ag Resource puts the average corn yield at the lower range of industry estimates, but their numbers are based on actual field research. If the average falls to 113 bushels per acre, it would move corn prices to above $11 per bushel.

That average is around 28% to 30% below trend, Basse said, also noting that ending stocks will be tight.

“I can’t show deficit stocks,” he said. “Someone has to go without. What is that last residual bushel of corn worth? I don’t know. I don’t know how high is high.”

Corn stocks will likely settle around 650 million to 700 million bushels. They’ve only been that low about 3% of the time since 1973. “Historically, this is unprecedented,” Basse said.

That doesn’t necessarily mean the beef business will have to deal with back-to-back record corn-price years.

Regardless of the status of the renewable fuels mandate, Basse says the “ethanol monster” is not the factor it has been the past five years.

“He’s not dead, but he is at least in hibernation. Ethanol has reached its zenith,” Basse said. More efficient cars and driving fewer miles, along with the lower ethanol exports, make that a reality.

“This will be the first year since 2005 in which the world per-capita grain use will decline,” he said. “That’s why this year was looking promising until Mother Nature dealt us this big blow in terms of heat and dryness.”

Digging into historical data, there have never been two consecutive years of widespread drought in the central U.S.

“Even in the 1930s, we had drought in 1934 and 1936, but in 1935 we had average rainfall,” Basse said. “So if I’m in the cattle feeding business, I’m very hopeful that next year’s weather will be normal.”

If farmers ratchet up corn acres to 98.5 million and get an average yield of 160 bushels per acre next year, that puts corn in the $4.50 to $5.00 per-bushel range.

“Won’t that be nice?” he asked. “But that’s three or four quarters away.”

To add to the immediate stress, hay production is forecast at 120 million metric tons, or the lowest level since 1976.

The poor corn crop may provide one saving grace: “The only good news for you is that this is really bad quality corn. There might be some nice discounts offered relative to poor quality.”

Low test weights and aflatoxin issues are some of the widespread concerns.

Herd liquidation is another factor as feeders look to source calves, but Basse says crop insurance might help. Some Midwestern farmers are looking to chop poor-quality corn and invest their payout in cows.

“What does that mean for the cowherd in the United States? I’m not quite certain, but I do believe it will allow it be more withstanding than I’ve seen in other drought years,” he said.

As the domestic population ages, beef demand is down slightly, but the worldwide trend contradicts that.

“When I look at consumption, it is still moving up, so the story of being a livestock producer is still relatively bullish longer term,” Basse said. “We’re also finding from our overseas customers that importing beef is less costly than importing the grain itself.”

That bodes well for trade.

Individual balance sheets are based not only on costs and inputs, but on getting the highest possible revenue. Supporting a branded program is one option: “That’s good for the farmer, and everybody up and down the chain gets the most value,” Basse said. “It helps everyone, including the consumer because he knows he’s getting a high-quality product, so I’m big on branding, going forward.”

Another thing he’s big on? Foresight.

“I want every cattleman to think forward, at least for three quarters, and then we can plan for the good times which will probably happen nine months from now.”

The forum was co-sponsored by Purina Land O’ Lakes, Certified Angus Beef^® brand, Feedlot Magazine and Pfizer Animal Health. Watch for more information in the weeks ahead at www.cabcattle.com.

High-quality beef grilled

Certified Angus Beef brad partners enjoy record June

As Labor Day ushered in the fall grilling season, with a nod toward the season’s more traditional pot roast, some in the beef trade were stewing over supply concerns. While all beef costs more this fall, those selling the best can maintain confidence in consumer acceptance, as seen in June sales reports announced this month.

Partners with the Certified Angus Beef^® brand sold 74 million pounds of steaks, roasts, burgers and other products in June, 4% above a year ago and the highest monthly volume in the brand’s 34-year history, said Mark Polzer, vice president of business development.

“We’ve been fortunate to continue growing in spite of the declining overall beef supply,” he said, noting the result of recognized value for the money. “As beef prices in general have had to go up, that created an opportunity for our brand to set itself further apart. If you have to pay a bit more for beef, you certainly want an enjoyable experience, and I think that is what we deliver.”

Promotions such as the retail “Steaks of Summer” and the foodservice “Middle Meat Smackdown” helped lift sales, especially among licensed restaurants.

“Foodservice business has been up all year, and June sales of 23.5 million pounds in that sector accounted for 31.8% of the total,” said David O’Diam, CAB business development assistant director (see Table). It didn’t hurt to have eight new foodservice distributors sign on this year, he added.

“Retailers had a harder time keeping CAB at a ‘hot price point’ on front-page flyers, the ads that drive about 70% of their sales, so they were down slightly,” O’Diam said. “But they are rolling out some new strategies this fall to hit those price points.”

International business was brisk and on pace for a new annual record. The 11.5% of June sales as exports to 54 countries compared to 10.1% of the smaller 2011 month and 9.6% of June 2010, Polzer reported.

Sales by primal cut favored the chuck and round, and grinds–drawn mainly from those end meats–were up most of all.

“We’ve seen that people are a little more adventuresome and willing to try more of the new cuts like the flat iron, teres major and boneless short ribs,” Polzer said. Sales of those cuts were up 26.7%, 17.8% and 47.6%, respectively, June over June volume, the short ribs nearly doubling to 1.34 million pounds.

Fewer cattle have been accepted for the brand in fiscal 2012 to date, and overall USDA-inspected harvest was down 2.5% through June. Yet Certified Angus Beef^® brand sales are on pace to match or exceed last year’s annual record.

Carcass weights averaging 15 pounds (lb.) more for the year at 836 lb. help explain that, O’Diam said. “But it’s more than that. Demand has been significant on the declining national beef cattle harvest,” he said.“Our brand drives demand and packer profitability as shown by their willingness to put more pounds from each carcass in a box.”

That average carcass utilization number was 248 lb. sold this June compared to 211 lb. the previous year.

Volume is only part of the story, added CAB Vice President Larry Corah. “We not only are selling a lot of pounds but at a significantly higher price point.

“The spread between CAB and Choice is twice what it was last year and individual cuts are as much as $1.50 higher per pound,” he noted. “Grinds are 21.7% higher than last year—all of this is telling us consumers are willing to pay more for a great eating experience.”

Summer months tend to be among the heaviest in Certified Angus Beef^® brand commissioned sales, O’Diam said. Over the past five years, June, July and August have accounted for 8.92%, 9.08% and 9.19% of annual sales, while other months range down to 7.4%. Given that trend, the next monthly record could be waiting in the late-summer reports.

Polzer assigned credit beyond the brand’s marketing team: “It’s our licensed partners who really do all the heavy lifting, getting the product into the proper channels. That it is paying off with these positive results.”

Feeding forum finds way forward

Cattle feeders face many challenges, but quality target remains best option, experts say

by Miranda Reiman

From drought and high feed prices to the shrinking cowherd and beef demand, there’s been a lot weighing on cattle feeders’ minds lately.

Producers gathered at last week’s Feeding Quality Forum in Grand Island, Neb., and Amarillo,Texas, to discuss these topics and get ideas for dealing with the ongoing industry challenges.

The seventh annual meetings were co-sponsored by Pfizer Animal Health, Purina Land O’Lakes, Certified Angus Beef LLC (CAB) and Feedlot Magazine.

Market analyst Dan Basse, of AgResource Company, started with a dose of reality.

“When I look at profitability, our biggest problem is the cost of feed going forward,” he said, calling USDA’s corn yield estimates high. “If we lose another billion bushels of corn, which I think is more and more likely. Somebody will have to go without.”

Yet, cattle feeders may have a slight advantage due to the poor quality of much of the crop, both in terms of low test weights and Aflatoxin problems. Cattle can use that more readily than other species and feeders may get some relief in terms of discounts.

“We are not in the camp that this corn crop is getting better,” Basse said. “The only good news we have for all of you is that this is really bad quality corn.”

Data from Professional Cattle Consultants continues to show that higher feed costs may be recouped, in part, by feeding cattle longer and selling on a carcass weight rather than a live price. Analyst Shawn Walter predicts those economics will drive carcass weights even higher, reinforcing a trend that’s been on the upswing since the 1960s.

“As we think about increased carcass weight, we assume once it gets past the feedlot that it’s all negative,” he said, but the packers and distributors feel the effects of smaller cow numbers, too.More pounds overall is a positive, and “as carcass weight increases, you see quality grade increases as well.

”It’s the really big outliers that create the “nightmares,” Walter said. “They slow the chain speed…and if they stop the chain, it can take a whole day’s profit out of a factory.”

Phil Bass, CAB meat scientist, demonstrated how those end-users are dealing with larger primals by fabricating a beef rib into cuts. Knife in hand, he walked the crowd through creative cuts like a rib filet and cucina steak that have helped mitigate the challenges of portion cutting in heavier carcasses.

“It takes a little more craftiness, it takes a little more experience, a little more time, but the value is there,” he said. “It’s a big Titanic we’re going to have to turn if we’re going to make this catch on.”

CAB works with its partners on education and marketing with these new cutting styles.

“We’re using what you folks are producing and try to make that connection and that balancing act, because if they don’t eat it you’re out of business,” Bass said. “Carcasses aren’t getting any smaller.”

High final weights will be a main factor keeping beef tonnage up.

Mike Sands, with Informa Economics, said, “The total size of the cattle industry has been shrinking and shrinking rather abruptly for the last couple of years.”

January 2012 numbers stood at 90.8 million cattle.

“And that’s not the bottom,” he said. “If we started today, the earliest I see this inventory turning around is 2015.”

For cattle feeders, that means there will be fewer of them, calves will cost more and managing risk is a must.

“The margin operator is going to have to run a pretty sharp pencil,” Sands said.There is no room for waste at any level of the food business, and that includes the packing plant forward.

Brad Morgan, Pfizer meat scientist, said in the U.S. annually we throw away 242 pounds of food per person, or about 1,400 calories per person per day.

Looking to feed 9 billion people by 2050, he said, “We’re going to have to come up with technology to double this food production,” he said. “But we’ve also got to become less wasteful.”

Lunch featured the 2012 Industry Achievement Award honoree, Kenneth Eng. The longtime feedlot consultant gave remarks and received a customized branding iron.

“Ken was an early pioneer in feedlot nutrition,” said Larry Corah, CAB vice president. “And he recognized the importance of giving back.”

More information will be available in the weeks ahead at www.cabcattle.com.

Eng honored at Feeding Quality Forums

Nutritionist consultant wins 2012 Industry Achievement Award

By Laura Nelson

A man of many firsts will add another to his long list in August. Kenneth Eng will be the first feedlot nutritionist to be honored with the Industry Achievement Award at the 2012 Feeding Quality Forum.

After earning his PhD at Oklahoma State University, the Nebraska native went on to Texas A&M to create the nation’s first graduate program in feedlot management. Then, it was time for Eng to embark on another budding industry–the feedlot nutrition consulting business.

“One of the very important pioneers in the early years of large-scale cattle feeding was Kenny Eng,” said Larry Corah, vice president for supply development with Certified Angus Beef^® brand. “As the feedlot industry began to develop to 20,000-and 50,000-and then 100,000-head yards and more at that time, the piece that really made it work was this small group of consulting nutritionists and veterinarians that learned how to keep cattle healthy and adapt to that environment. Kenny was one of those guys.”

The Industry Achievement Award was created in 2010 by the sponsors of the Feeding Quality Forum – Pfizer Animal Health, Purina, CAB and Feedlot magazine–to honor individuals who “have had a real impact on the feedlot industry and have affected how it looks and runs today,” Corah said. Eng will join the ranks of cattle feeding legends Paul Engler and Max Deets at the sixth annual event.

While still teaching classes at Texas A&M in 1969, Eng started a private feedlot consulting business. As one of only seven in the profession at the time, he said, “It was an easy way to make a hard living.” Easy because there were so few other consultants to compete with for business; hard because of the growing number of feedlots scattered across the country with managers thirsty for technical knowledge on how to improve performance in their yards.

“I was just lucky to be a part of a very talented group of people then who got to be a part of an exciting time in the feedlot business,” Eng said. “I think the seven of us did the nutrition work for about 65% of the cattle on feed in the United States. Not 65% of the feedlots but 65% of the cattle. There was a lot of workout there.”

Eng slowed the pace of his consulting business in the late ’80s to focus more on his beef production businesses, but not before leaving his indelible mark.

“Kenny was one of the original independent consultants, and he moved a lot of rocks for the rest of us to get involved in this business,” said Dave McClellan of McClellan Consulting Service. “He’s been a great mentor to an awful lot of people in our business, and not just nutritionists–feedlot managers, feedlot owners, stocker operators, you name it.”

A resource and source of practical application knowledge to the masses, Eng also spent years writing a column for Feedstuffs magazine. Fellow consultant David Hutcheson, of Animal Agriculture Consulting Inc., said Eng’s knack for data and willingness to share information has made him a fixture at industry conferences, meetings and in the field.

“Ken’s an excellent interpreter of research and he’s given many, many talks over the years that have contributed to the advancement of nutrition in feedlot cattle,” Hutcheson said.

Continuing his dedication to the advancement of the cattle industry, Eng recently established a foundation to help fund new research at the University of Nebraska, Oklahoma State University and Texas A&M.

“Ken’s been very successful in his business career, and he’s one of those rare individuals who really understands the concept of giving back to the industry,” said Bill Dicke of Cattlemen’s Nutrition Services.The research will focus on confined cattle feeding, a concept Eng said he hopes will eventually help the industry expand the cowherd and move forward.

“That’s something special about Kenny,” Corah said. “Here’s a feedlot guy, once again thinking about how to help the cow-calf guy for the larger good of the whole supply chain. He’s still pioneering and leading with information in this industry.”

Eng will be honored at the Feeding Quality Forums Aug. 28 in Grand Island, Neb., and Aug. 30 in Amarillo, Texas. Other topics of discussion at the Forums will include a market outlook by Dan Basse, president of AgResource Company; the impact of increasing carcass weights by Shawn Walter of Professional Cattle Consultants; and dealing with declining inventories amid excess feeding and packing capacities by Mike Sands, Informa Economics. For more information or to register, visit www.cabcattle.com.

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