N A T I O N A L CATTLEMEN
To be the trusted leader and definitive voice of the U.S. cattle and beef industry. JULY 2021 • Vol. 37, No. 10 • NCBA.org
MARKET SNAPSHOT
WEEK OF 6/21/2021 (prices vs. a year go) SOUTH CENTRAL 500-600 LB. STEERS $162.39
$100.78
9.6%
LIVE FED STEERS $112.31
21.9%
$122.85
CHOICE BOXED BEEF $220.34
49.6%
$329.72
OMAHA CASH CORN $6.32
98.3%
$3.19
IN THIS ISSUE
3
LEADERSHIP COMMENTS
4
POLICY
6
WEATHER
8
EDUCATION
An update on NCBA’s work on priority issues in Washington, D.C., and the importance of a strong state-national partnership. How beef is labeled and marketed has been a concern and widely debated topic in the cattle industry for many years and NCBA is taking action as directed by grassroots policy. U.S. moisture outlook through the end of summer.
Incorporating risk management strategies can provide a buffer with cattle industry price fluctuations.
12
MARKET MATTERS
Beef exports are looking up as the world re-opens and forecasting steer and heifer slaughter.
14
FEDERATION
NATIONAL CATTLEMEN’S BEEF ASSOCIATION 9110 E. NICHOLS AVENUE, SUITE 300 CENTENNIAL, CO 80112
PRSRT STD U.S. Postage PAID Denver, CO Permit No. 1673
State promotions are kicking into high gear for summer grilling season, connecting families with flavorful beef for gatherings and celebrations.
Markets Conversation Ongoing in Washington All too often, the priorities of lawmakers in Washington, D.C., seem not to align with those of cattle producers across the country. These days, however, that does not seem to be the case. The topic on everyone’s mind? Cattle markets. Volatility in the markets, a persistent disparity between the price of live cattle and the boxed beef cutout, and jarring “black swan” events like the cyberattack on JBS have thrown into stark contrast the threats that exist for our supply chain – and lawmakers are taking notice. “The challenges that are plaguing our producers are really coming into focus for members of Congress from across the country,” said NCBA Vice President of Government Affairs Ethan Lane. “There’s concern for how persistent inequities in the market impact not only producers, but also how that extends to consumers and the prices they are seeing at the meat counter. Rural America is often left out of the conversation in Washington — believe me, we have everyone’s attention right now.” Obviously, across cattle country, challenges to producer profitability are likewise dominating the conversation in coffee shops. The Agricultural and Food Policy Center at Texas A&M University and the U.S. Department of Agriculture (USDA) Office of the Chief Economist recently held a Cattle Markets Workshop in Kansas City, Mo. The meeting brought together researchers from Oklahoma State University, University of Arkansas, University of Wyoming, Kansas State University, Colorado State University, Mississippi State University, and Texas A&M to discuss current cattle marketing issues alongside industry leaders from NCBA and other organizations. Over two days, academics joined market participants from across the industry to dive into the dynamics of price discovery and price determination, how processing capacity impacts the market, the critical need for price reporting and market transparency, and what we can learn from past periods of volatility in the cattle markets. “Frustrations are high right now among cattle producers. This is understandable given the spreads we’ve seen between live cattle and beef,” said NCBA President Jerry Bohn. “Across all sectors of the cattle industry, there’s motivation to learn more about the factors that are going into these prices and a concerted push for more sustainable market conditions.” Attendees also discussed the value of alternative
marketing arrangements (AMAs) like formulas and forward contracts versus the decline in price discovery brought about by declining cash trade. The widespread consensus in the cattle and beef industry that something needs to change is translating to growing momentum in Congress. In the last month, nearly 100 lawmakers in the U.S. House and Senate have signed a series of letters to the U.S. Department of Justice, urging them to conclude and publicize the results of their year-long investigation into potential anticompetitive practices in the meatpacking sector. In March, Senator Deb Fischer (R-NE) introduced the Cattle Market Transparency Act. The bill, if enacted, would direct the Secretary of Agriculture and the Office of the Chief Economist at USDA to establish regional mandatory minimums for negotiated trade of fed cattle. It would also direct USDA to establish a library of cattle formula contracts, amend the definition of “cattle committed” to expand the delivery window from seven to 14 days, and clarify confidentiality rules for administering Livestock Mandatory Reporting (LMR). Also in March, Senator Chuck Grassley (R-IA) and Senator Jon Tester (D-MT) introduced a bill that would require a minimum of 50 percent of meatpacker’s daily harvest of fed cattle to be sourced from the cash market and delivered within 14 days of sale. Additional legislation has been introduced in the House, and multiple committees on Capitol Hill are likely to hold hearings specifically on market and supply chain challenges in the cattle and beef industry. Cattle producers have long witnessed the decline of negotiated trades in favor of AMAs in the fed cattle complex, and NCBA has been at the forefront of this conversation. While the use of formulas, grids, and other AMAs help cattle producers manage risk and capture more value for their product, these AMAs depend upon the price discovery that occurs in the direct, buyer-seller interactions of negotiated transactions. Current research has shown that more negotiated trade is needed to achieve “robust” price discovery within the industry, but each of the five USDA reporting regions contributes to this price discovery differently. To truly contribute to an environment with robust price discovery, policies must factor in the unique characteristics of each reporting region.
Continued on Page 7
Breathe Easy. Fight BRD in Your Herd.
Quellaxcin® 100 (enrofloxacin) Injectable Solution is used to treat and control respiratory disease in beef cattle. Relieve symptoms and breathe easy knowing Aspen has you covered.
A sterile, ready-to-use injectable solution that contains enrofloxacin, a broad-spectrum fluoroquinolone agent. Indicated for subcutaneous use in beef cattle and nonlactating dairy cattle and subcutaneous or intramuscular use in swine. Now available available in a 500 mL bottle. 21288984 Size: 100 mL
21288987 Size: 250 mL
21288988 Size: 500 mL
Order today at animalhealthinternational.com or by calling 800.854.7664 04/2021
3
www.NCBA.org
NATIONAL CATTLEMEN
Steadfast on the Road Ahead
Have We Lost Our Minds?! By Colin Woodall, NCBA CEO
By Jerry Bohn, NCBA President America the Beautiful” plan to conserve 30 percent of lands and waters in the United States by the year 2030, NCBA convened regional forums to discuss the administration’s efforts and receive grassroots producer feedback. We continue to work with the administration in an effort to help guide its conservation work and to ensure these large frameworks recognize and incorporate the good things cattle producers already do. It’s also critical that we’re at the table to avoid any unintended consequences for our businesses, lands, waters and communities. When looking at the continued challenges that plague the cattle market, we’re seeing additional dynamics come into play. The supply of fed cattle is greater than the available packing plant capacity coupled with issues packers are having getting the full workforce to come to work every day. NCBA has several items in the works on the Hill to address processing capacity, and it’s my hope that the fed cattle supply is going to get closer in line with As we look ahead to the 2021 Cattle Industry Convention available hook space soon. One and NCBA Trade Show, I’m looking forward to seeing of the caveats NCBA in action. This meeting is where our state-national to that hope is the fact that we partnership is most present and it’s a goal of mine to have quite a bit continue to forge a strong bond between our state of drought in the western half and national associations as we work to improve the of the country. I’ve heard from business climate for U.S. cattle producers. several producers that continued drought, especially in the West, is a serious Our friends in Florida were concern and we’ve already seen some encouraged by NCBA’s work on increased cow liquidation in places like transportation. Producers have to ship North Dakota. calves quite a distance to feedyards NCBA is hard at work addressing which is why NCBA worked hard to deliver much-needed regulatory these items and won’t let up in the fight flexibility for livestock haulers. The to ensure our members are represented. addition of the backend 150 air-mile As we look ahead to the 2021 exemption from hours-of-service, Cattle Industry Convention and NCBA crucial language pulled from the HAULS Trade Show, I’m looking forward Act, was adopted into the larger to seeing NCBA in action. This Surface Transportation Investment meeting is where our state-national Act of 2021 by a bipartisan vote. partnership is most present and it’s We strongly support efforts to give a goal of mine to continue to forge livestock haulers the flexibility they a strong bond between our state need to maintain the highest level and national associations as we work of safety for drivers on the roads, to improve the business climate for U.S. transport livestock humanely, and cattle producers. ensure grocery stores remain stocked We need our members to help with beef. We will continue to work on guide the association as we work transportation issues that will benefit through these tough issues. In our producers across the country. businesses, most of us make decisions Other issues discussed at events after considering all accessible I attended landed focused on two information, and then we chart a topics: concern about President course of action that we believe will Biden’s America the Beautiful Plan, and be of greatest benefit to us as we go concerns with packing capacity and forward with our operations. That’s labor issues. exactly what we accomplish with Following release of the the state-national partnership and administration’s preliminary report member-driven grassroots policy on their “Conserving and Restoring process during convention. The road ahead seems daunting for producers right now dealing with the challenging dynamic brought on by uncertainty in the market and black swan events, private property protection, tax issues and weather. While cattlemen and women are the ultimate optimists, running our operations can sometimes feel like the ultimate gamble. We understand your challenges and concerns at NCBA and we are steadfast, focused on the road ahead to protect our members’ interests in Washington, D.C. For the first time in what seems like a long time I had the pleasure, as did my fellow NCBA officers, to attend several state affiliate conventions and summer meetings over the past month. While challenges and concerns are always part of the discussion, I was encouraged by the positivity, appreciation for fellowship and great discussions I heard throughout the country.
2021 NCBA Leadership President Jerry Bohn President-elect Don Schiefelbein Vice President Todd Wilkinson Treasurer Joe Guild Federation Division Chair Clay Burtrum Federation Division Vice-Chair Brad Hastings Policy Division Chair Mark Eisele Policy Division Vice-Chair Buck Wehrbein Immediate Past President Marty Smith Chief Executive Officer Colin Woodall THE OFFICIAL PUBLICATION OF NCBA
Senior Editors
John Robinson Jill Johnson
helps you succeed in getting what That is the response I you want. Did you know that the have received plan incorporated several ideas and from many provisions provided by NCBA’s team NCBA in D.C.? Did you know the Biden members administration has made it clear when they hear that we have been they want more of our input and working with President Biden and his feedback? That is how you make administration. It is time we set party things happen. affiliation aside and focus on the fact By now, you have heard that EPA that they are in charge and poised to Administrator Regan has announced set policy that will have far reaching his plans to replace the Trump-era implications for our industry. Just last Navigable Waters Protection Rule month, I talked about how the world which was the replacement of the belongs to those who show up, and original Obama Waters of the U.S. there have been many times where (WOTUS) rule. Again, the knee-jerk I have referenced former NCBA reaction is to get hopping mad. president J.D. Alexander’s oft-used Believe me, that was our reaction quote that “if you’re not at the table, behind closed doors, but given the you’re on the menu”. relationships we have built with EPA Both mindsets are applicable thus far, we know that Administrator to our interaction with the Biden Regan wants us at the table to administration. NCBA’s reputation develop his version of the rule. We in Washington, D.C., as being the are going to take him up on his offer trusted leader and definitive voice to make sure the new rule protects of the U.S. cattle and beef industry, both water quality and private comes from our ability to work with property rights. both sides of the political aisle. It Last month, USDA announced comes as a surprise to many of that the old GIPSA rule was going you when I talk about the number to be back up for consideration. We of solid supporters we have in spent years killing that proposal, but the Democratic party. Equally as like many of the “zombie” issues we surprising is when you learn that deal with, it has returned to life. Yet, we have many Republicans who this is another example of where our do not have our best interests in work in building new relationships mind. Given the state of politics in and renewing old ones with the Biden the United States today, it is easy administration will ensure that we to think the worst. It is important will also be at the table to discuss to keep in mind that it takes time how this rule might be constructed. for every administration to get to Before you get too mad about this, the point where their priorities are the discussion about revisiting the being passed into law by Congress GIPSA rule actually started in the or implemented through the Trump administration. The new team administrative rule making process. is just picking up where they left off. Now is Back the critical to the point headline where we It is important to keep in mind that it question can help takes time for every administration to of shape whether get to the point where their priorities are what we have being passed into law by Congress or these lost our actions implemented through the administrative minds in ultimately rule making process. Now is the critical trying to look like. work with point where we can help shape what A great President example is these actions ultimately look like. Biden. President No, we Biden’s have not, “America but we the Beautiful” plan, formerly known are also fully prepared to fight tooth as “30x30,” that proposes to and nail to defend our positions if conserve 30 percent of America’s we cannot steer these discussions lands and waters by 2030. Some in the right direction. Our mantra is have characterized this as a land to keep the government out of our grab and tried to get our industry business, but we are also good at up in arms about the plan. Let’s reading the political tea leaves. We take a quick breath before we let are employing all our strategies to emotion influence our response. The win and reminding policy makers in easy approach is to immediately Washington that when we engage cast stones at this plan and use in an issue, we can be your best the media to inflame the situation. friend and biggest ally unless you After spending two decades in ultimately infringe on our rights. Washington, I know that emotional response may provide some Then, we become your single immediate gratification, but it rarely biggest hurdle to success.
Contributing Writers Creative Director Graphic Designer
Wendy White Ashley Willits Don Waite Dancinee Jennings
For ad sales, Shannon Wilson 303-850-3345, Nicole Bechtel 303-850-3465, or Jill DeLucero 303-850-3321.
Contact NCBA: 9110 E. Nichols Ave., Suite 300, Centennial, CO 80112 (303-694-0305); Washington D.C.: 1275 Pennsylvania Ave. N.W., Suite 801, Washington, D.C. 20004 (202-347-0228). National Cattlemen’s Beef Association reserves the right to refuse advertising in any of its publications. National Cattlemen’s Beef Association does not accept political advertising in any of its publications. National Cattlemen’s Beef Association does not accept any advertising
promoting third-party lawsuits that have not been endorsed by the board of directors. ©2021 National Cattlemen’s Beef Association. All rights reserved. The contents of this magazine may not be reproduced by any means, in whole or part, without the prior written consent of the National Cattlemen’s Beef Association.
KEEP UP WITH THE LATEST NEWS www.NCBA.org Like Us. Follow Us. Watch Us. Hear Us
4
www.NCBA.org
NATIONAL CATTLEMEN
Leveraging Profitability with Source-Verified Labeling recognized that consumers want to know where their food How beef is labeled and marketed has been a concern and widely debated topic in the cattle industry for many years. comes from and how it is being produced. In June, NCBA filed a petition with the U.S. Department of “There is a growing desire among consumers to know Agriculture’s Food Safety and Inspection Service (USDA-FSIS) more about the origin of the food they purchase, and it is to eliminate the use of “Product of the USA” (POTUSA) and critical that producers are empowered with opportunities to other broad U.S. origin labeling claims for beef products that market their high-quality beef in a way that allows them to are potentially misleading to consumers. differentiate the source of their product from competitors and Filing the petition was a result of NCBA’s grassroots potentially increase profitability,” he said. policy process. In 2019, the Oregon Cattlemen’s Association For many years, NCBA has supported voluntary efforts brought forward concerns regarding “Product of the USA” that provide producers with the opportunity to capture more labels to NCBA’s International Trade Committee. Cattlemen value through origin labels and corresponding marketing were concerned with the possibility that imported beef was initiatives that are voluntary and source-verified. being improperly labeled as “Product of the USA” because it was being processed in a federally-inspected facility. This Contrary to claims made by some, nothing in the petition led to the establishment of the Transparency in Labeling would require packers, wholesalers or retailers to drastically Working Group. change existing production or packaging processes. If FSIS “The first thing we had to figure out in the working properly implements the solution outlined in NCBA’s petition, group was—is that really happening and is it a problem? there will still be an option for processors to apply a marketing Through our research we found out that it was happening,” label to the product. In lieu of the “Product of the USA” label, said working group member and Virginia cattleman Gene NCBA is advocating for a more appropriate generic label, such Copenhaver. “It’s a matter of what is right and what is as “Processed in the USA.” This will more accurately reflect wrong—and it is wrong for that label to be used on imported the product, while at the same time giving leverage back to meat coming into the country.” the producer. The producer-led working group spent several months The removal of the POTUSA label will incentivize investigating and researching the use and validity of the producers to label their product with claims that are more “Product of the USA” label and from that, recommended policy to address the concerns. In 2020, NCBA producer appealing to consumers and more effectively represent members approved the policy brought forth by the the production process. working group. The policy Capturing consumer strengthened NCBA’s demand is a critical step support for the use of in increasing producer voluntary source of There is a growing desire among consumers to know profitability. origin claims, and USDA “I’m all for labeling, more about the origin of the food they purchase, verification of any source of but I’m all for voluntarily origin claim or label. and it is critical that producers are empowered with labeling. I don’t think NCBA’s top policy opportunities to market their high-quality beef in we need a national, priority is to advocate for government-run marketing a business climate which a way that allows them to differentiate the source program for our beef. The increases opportunities of their product from competitors and potentially for producer profitability. labels we have that can be increase profitability. Broad marketing claims verified, I think are great,” that are not source-verified Copenhaven said. do exactly the opposite. In While processors still fact, the POTUSA label, the have the option to label way it is currently used, is a products, NCBA is focused on giving producers the tools disservice to both American consumers and cattle producers. to take advantage of source-verified labels. NCBA will work “The POTUSA label does not accurately represent the with USDA’s Agricultural Marketing Service (USDA-AMS) incredible dedication and trusted reputation of U.S. cattle to proactively educate cattle producers, processors and producers. Our producers raise high-quality beef, and the retailers about the various opportunities that exist to develop “Product of the USA” label makes a sweeping claim that can voluntary, verifiable origin marketing claims that deliver mislead consumers into believing they are buying a purely tangible benefits to cattle producers without violating rules American beef product,” said Senior Director of International and Market Access Kent Bacus. of trade. The POTUSA label implies that the beef product in One opportunity that exists is AMS’s process-verified the package is entirely of U.S. origin. However, in reality, programs (PVPs). Through PVPs, AMS auditors work with imported beef products are also eligible to be labeled applicants to certify product claims. PVPs can highlight “Product of the USA” as long as the product has been parts of the production process, but the claims being made minimally processed or repackaged in a USDA-inspected must be clearly defined, transparent and verifiable through facility. The claim is not subject to source verification, is not appropriate documentation. tied to any kind of food safety standard and is applied by Copenhaver agreed with this path forward and believes packers and retailers in a manner that does not deliver value that using source-verified labels will benefit producers around back to the cattle producer. the country. “POTUSA is a government marketing label that “Since we went through Covid, I think there is going to be undermines a producer’s ability to build a business plan to more demand for regionally and locally branded products,” market the origin of their cattle and capture more value for the unique aspects of their product. It is critical that he said. labeling used for marketing is accurate, trade compliant Eliminating the “Product of the USA” label is a win-win and ultimately differentiates our products in a retail for producers and consumers alike. The voluntary labels that environment,” continued Bacus. NCBA supports represent investments made by producers NCBA President Jerry Bohn agreed that producers should to continually improve their product and meet consumer be in position to capture demand for their product and demand. Marketing through sourceverification will provide a more accurate and truthful description of the product and will reduce the potential for consumer confusion, while increasing the ability for cattle producers to capture additional premiums for their product. “The Product of the USA label does not meet the expectations of today’s consumers and disincentivizes the use of voluntary, source-verified claims that allow cattle and beef producers to more effectively distinguish their product in the marketplace,” Bohn said. USDA-FSIS has acknowledged the receipt of the petition and may open a comment period for public input. NCBA will engage members in grassroots advocacy efforts during the public comment period. After that, the petition may result in formal rulemaking or USDA may initiate a rulemaking separate from NCBA’s petition. The NCBA team is dedicated to working on behalf of producers to preserve the integrity of the U.S. cattle and beef industry by advocating for marketing programs that accurately represent farmers and rancher’s ability to raise cattle in a way that encourages consumers to continue to purchase and enjoy a product they know and love— U.S. beef.
CORPORATE MEMBERSHIP DIRECTORY These are companies that have teamed with NCBA as corporate members, demonstrating their commitment to the beef industry. Their involvement strengthens our future. NCBA members are urged to support these partners in turn by purchasing their products and services. Those who would like to become corporate members with NCBA (securing premium booth placement at the annual convention and trade show as well as other membership benefits), please call the Corporate Relations team at 303-694-0305.
GOLD LEVEL SPONSORS (Minimum $100,000 Investment)
Animal Health International www.animalhealthinternational.com Boehringer Ingelheim Animal Health Inc. www.bi-vetmedica.com/species/cattle.html Caterpillar www.cat.com Central Life Sciences www.centrallifesciences.com Corteva Agriscience™ www.corteva.com John Deere www.deere.com Masey Ferguson www.agcocorp.com/brands/massey-ferguson. Merck Animal Health www.merck-animal-health-usa.com Micro Technologies www.microtechnologies.com Moly Manufacturing www.molymfg.com New Holland Agriculture www.newholland.com Purina Animal Nutrition LLC www.purinamills.com/cattle Ritchie Industries Inc. www.ritchiefount.com Roto-Mix www.rotomix.com Zoetis Animal Health www.zoetis.com ALLIED INDUSTRY COUNCIL Allflex Livestock Intelligence Bayer Environmental Sciences CHR HANSEN Elanco Animal Health Farm Credit Council
Huvepharma, Inc. Lallemand Animal Nutrition Norbrook, Inc. Rabo AgriFinance RAM Trucks
ALLIED INDUSTRY PARTNERS 44 Farms ADM Animal Nutrition, Inc. AgriPrime Insurance Agency Agri-Pro Enterprises of Iowa, Inc. AgriWebb Alltech, Inc. American National Insurance Anipro Arm & Hammer Animal and Food Production Arrowquip Bank of America Merrill Lynch Barenbrug USA Bass Pro Shops/Cabela’s Behlen Manufacturing Bimeda BioZyme Cargill Animal Nutrition Case IH Certified Hereford Beef CME Group DATAMARS Livestock Dell Technologies Diamond V ENDOVAC Animal Health Food Safety Net Services Furst-McNess Company Gallagher Gravely, an Ariens Company Greeley Hat Works Growsafe Systems LTD Hayden Outdoors Real Estate Hyundai Construction Equipment IMI Global International Stock Food Kent Nutrition Group Krone Kubota Tractor Corporation
Kunafin “The Insectary” Laird Manufacturing Meat & Livestock Australia, Ltd. Micronutrients National Corn Growers Association Neogen New Generation Supplements Noble Research Institute Novus International Parker McCrory PBS Animal Health Phibro Animal Health Priefert Ranch Equipment QualiTech, Inc Quality Liquid Feeds R&R Machine Works RFD-TV Roper/Stetson/Tin Haul Apparel and Footwear South Dakota State University Stone Manufacturing Superior Livestock Supreme International Syngenta Tarter Farm and Ranch Equipment The Hartford Livestock Insurance The Vit-E-Men Co. Inc./ Life Products Trans Ova Genetics U.S. Premium Beef Vermeer Vitalix Westway Feeds Y-Tex Zinpro Performance Minerals
PRODUCT COUNCIL American Foods Group Cargill Meat Solutions Certified Angus Beef Culver’s Darden Restaurants empirical Fareway Stores, Inc.
Five Guys McDonald’s Corporation National Beef Packing Omaha Steaks Performance Food Group Preferred Beef Group Tyson Fresh Meats
The only name in hay
that matters.
Call it swagger or bravado, but it’s a point of pride that’s bolstered by more than 125 years of invention and innovation. From first cut to last bale, New Holland hay and forage equipment helps you make top-quality hay and make it more productively. You’ll save time and money, all while maximizing quality and feed value. You’ll also work more confidently, knowing your local New Holland dealer is there with unparalleled service and support when it matters most. No one does hay better. To learn more, visit newholland.com or stop by your New Holland dealer today. NCBA Members qualify for exclusive savings on New Holland Equipment.
©2021 CNH Industrial America LLC. All rights reserved. New Holland is a trademark registered in the United States and many other countries, owned by or licensed to CNH Industrial N.V., its subsidiaries or affiliates.
6
www.NCBA.org
NATIONAL CATTLEMEN
Monsoon Season Arrives, U.S. Moisture Outlook Through the End of Summer By Matt Makens, Atmospheric Scientist
West
It is the time of year when the Southwestern U.S. typically sees the development of the monsoon, and this will be a critical one for the Four Corners Region that is hit so hard with drought. Although, the Southwest is not the only area currently seeing a significant shortage of moisture. A well-developed monsoon can also spread beneficial rains to the Central and Northern Rockies and can even help the Northern High Plains. So, this year’s monsoon will be critical to drought conditions and rainfall chances across a large portion of the country. For those across the South and Southeastern U.S., the moisture outlook is somewhat favorable regardless of how well the monsoon plays out this summer to the west. The North American Monsoon is a seasonal weather pattern that develops a persistent wind flow. That pattern brings tropical moisture into Mexico, Arizona, New Mexico, Utah, Colorado and west to south Texas. Further, Wyoming, Montana, the Dakotas, Nebraska, Minnesota, Iowa, Wisconsin and Illinois can also see an uptick in precipitation if the monsoonal flow establishes strongly enough. The development of the monsoon begins, on average, in early to late June across Mexico. From there, moisture increases across the Four Corners region throughout July – again, on average. The arrival of the monsoon means increased humidity and, therefore, a rainier pattern. For the Southwest, the monsoon’s development is critical for yearly moisture totals. For example, for parts of Arizona, Colorado and New Mexico, an average monsoon is responsible for one-third to one-half of the yearly total precipitation (based on climatology from 1981 to 2010 using PRISM precipitation data). Therefore, the Southwest is in a critical time of year for rain. Recently, this pattern has been a disappointment; the past few years have not seen the monsoon develop strongly enough to bring that much-needed water. This map indicates the percentage of average precipitation received in the past five years during July and August.
Near to drier than average conditions are most probable for the period. The hope of moisture will rely on the monsoon’s ultimate development and depends on a more western placement of the monsoon than what is currently forecast. However, the current drought likely creates a dome of heat and dryness that will remain present over this region. Active wildfires are probable in this zone as well.
Northern Rockies and Plains As discussed in June’s National Cattlemen, this region should be watched closely for drought conditions to persist. The area is likely to remain drier than average for the period, and therefore see increased drought-related issues. The most promising area for potential moisture will be the eastern sections of the region. Active wildfires are probable here, too.
Southwest In order for this region to receive the amount of moisture needed, the monsoon will need to overperform what is forecast. There will be an uptick in rainfall frequency throughout this region, but the overall impact will most likely leave the region drier than average for the period. The most promising area for moisture will be the south, nearer that tropical flow of moisture close to Mexico. Active wildfires are probable.
South This zone will see quite a difference in weather conditions. The wettest weather is more likely for the eastern half of this region; a wet late spring and early summer here may continue through the next couple of months. The western half of this region will be drier than average, barring an unforeseen change to the strength of the monsoon. Of course, tropical systems will need to be watched closely for flooding along the Gulf Coast and Southern Mississippi. Historically, this region (in total) remains drier than average when compared to similar years.
The outlook for the monsoon in 2021 remains unfavorable, meaning it is unlikely we will see a well-established pattern capable of spreading the needed amount of rainfall from the Southwest to the northern states. This year may see the best rainfall in July for Arizona and New Mexico, with sporadically placed rainfall events in July and August from the Four Corners to the Northern Plains. Without a persistent stormy pattern, it is unlikely we see a significant benefit from a drought perspective. With that said, the most likely scenario this year is a drier than average outlook for the July to September timeframe across the classic monsoon areas. The drought, to date, is an element of the forecast. “Drought feeds drought,” and that is a challenge for the monsoon to be able to establish itself as a long-term benefit. A stronger than forecast monsoon would be of great benefit to the drought-stricken areas. Yet, that remains unlikely. As a quick aside: in addition to a strong monsoon, wet winters and springs are best suited to improve drought conditions for the West and that remains to be seen for next year. As we transition from this summer to fall, we will begin to focus again on the status of La Niña and its possible re-development as a factor in the colder months and what, if any, drought improvement we can expect. Currently, the outlook for the country from July to September includes drought growth in parts of the western U.S. and Northern Plains. Per region, this is the most likely scenario through the end of Summer:
Upper Midwest Likely to miss out on any well-established moisture this year, the western areas of this region are expected to be the driest and therefore, drought concerns continue. The eastern areas of this region, and those right near the Great Lakes, have a nearaverage precipitation expectation for the period. Historically, this region is much more frequently dry versus wet in similar years.
Ohio Valley Odds (historically and in model projections) support a drier than average period. Moisture may stay south and east of the region as well as just north of it. This area is placed between the best setup for moisture as is currently forecast. A stronger push of humidity from the South and Southeast regions may benefit parts of this zone, but that is of low probability barring an active hurricane season.
Southeast As discussed in June’s National Cattlemen, this region will see favorable summer precipitation. However, for the period headed into fall, the area is likely to see a drier trend takeover. Of course, tropical systems will need to be watched closely to reverse that forecast.
Northwest
Northeast
This region is to have drier than average conditions persist most of the period. Historically, a stronger push of moisture will develop late in the season and carry into fall for the extreme Pacific Northwest. However, that is dependent on a change to the Pacific Ocean which is less likely this year. Meaning, plan on a much drier than average period here. An active wildfire season is a safe assumption.
Much will depend on spreading moisture from the South and Southeast region into the Northeast, as well as tropical activity. Odds are a favorable flow will continue into fall, leading to a wetter than average forecast for much of the region. The moisture is more likely to increase later in the period and currently it is forecast that a wet fall will be in place to follow this increase in moisture late this summer.
NATIONAL CATTLEMEN 7
www.NCBA.org
Markets Conversation Ongoing in Washington Continued from Front Page Last July, at NCBA’s 2020 Summer Business Meeting, the Live Cattle Marketing Committee heard a wide range of different viewpoints from producers on this issue and spent hours in debate to arrive at a compromise. The resulting grassroots policy states that, “NCBA supports a voluntary approach that 1) increases frequent and transparent negotiated trade to regionally sufficient levels and 2) includes triggers to be determined by a working group of NCBA producer leaders”. The policy further states, “if the voluntary approach does not achieve robust price discovery…and triggers are activated, NCBA will pursue a legislative or regulatory solution determined by the membership”. While price discovery is a critical component of market transparency, many of the economists who presented at the Cattle Markets Workshop reiterated that the current adverse pricing conditions are largely a result of reduced leverage in fed cattle marketing negotiations. Much of this can be attributed to a shortage of
beef processing capacity at the meatpacking sector. “We have a high supply of cattle at one end of this equation and a high demand for U.S. beef at the other, but the middle is being absolutely choked by the lack of processing capacity,” said Lane. “It’s in the best interests of both producers and consumers for the Department of Justice to get to the bottom of the current market dynamics and assess why they seemingly always result in producers getting the short end of the deal. Cattle producers deserve to know whether or not the price disparity that has plagued our market is the result of anti-competitive or other inappropriate practices in the packing sector.” NCBA will continue to pursue strategies which increase opportunities for producers to capture more value for the cattle they raise. As part of the NCBA’s overall goal to increase opportunities for producer profitability, the organization will continue to advance policy priorities which align with NCBA policy.
ILD U S B RD! U LP HE E H UR O ldi
r
d
B
ui
e ng O ur H
RECRUIT 3 MEMBERS AND EARN TOP HAND STATUS TODAY
#1396 For more information on how to become a Top Hand Club member, call 866-233-3872 or visit www.NCBA.org/tophandclub.aspx
8
www.NCBA.org
NATIONAL CATTLEMEN
Navigating the Cattle Market's Perfect Storm Cattle producers are still feeling the effects of the substantial disruptions from the COVID-19 pandemic when shutdowns created a backlog of live cattle. As the industry continues to navigate through supply and demand reactions, producers are experiencing a sharp decline in prices. Incorporating risk management strategies can provide a buffer when the industry fluctuates. Tony Drake with DT Group LLC shared his thoughts on the current market situation and how producers can manage risk.
Can you provide an overview of what is happening in the cattle markets? We are still recovering from the COVID-19 effect that slowed our kill pace last year. Just like many businesses, finding enough workers is very difficult for the packing industry which also added to the slower slaughter pace over the past year. There are signs that we could be getting back to something close to normal on the kill pace, but the impact is already here and will take time to work through the system. At the same time our economy is reopening, and the demand pull is driving beef prices, as well as just about any retail price, higher. Our economy has never experienced something like this COVID-19 impact and recovery, thus prices are getting distorted.
How does a producer navigate this perfect storm of labor shortages, the bottleneck at packing plants, massive packer margins, high corn prices, and poor live cattle prices, coupled with record-high demand for beef? It does seem like we have had three years of perfect storms that have impacted all who raise cattle. We cannot predict events like packing plant fires, COVID-19 or ransomware attacks on our economy. But we can put a sound management plan into place for just these types of events. This plan involves knowing your costs, knowing your rate of return that allows you to profit from your efforts, and understanding the tools out there that help you mitigate risks from these events. This could involve Livestock Risk Protection (LRP) or futures, but producers need to take the time to learn about these tools. In all my years of working with producers to help them manage their risks, I can truthfully tell you that no one is smart enough to know when these type of market shocks will occur. This may sound a bit counterintuitive, but producers should either consistently hedge or not hedge. A plan where you are trying to guess where the market will go will not be successful. The market will always move when you least expect it. As they say, there is a paddle big enough for anyone who thinks they are smarter than the market.
How can cow-calf producers be educated, regardless of size? I would recommend that they reach out to good sources for education. One could start at the local university. Many of the state universities have very good resources for education around risk management. Another avenue is to talk to producers to see who they recommend for a competent futures broker. Network with other producers to see how they are managing their operations as well. Ag Extension agents also are a wealth of information.
Can you define hedging and briefly describe how producers can utilize it to their benefit? I typically think of hedging as transferring the exposed risk of your operation to someone else. By using the futures market, you would sell the appropriate amount of your production on the live cattle futures contract at the Chicago Mercantile Exchange. If cash prices move lower, the appropriate futures price would move lower as well. You lose money on the cash position, but your futures position would offset that amount of the cash loss, in a perfect world. A very intelligent cattle feeder I know put hedging into perspective for me, he said when you are hedging your production you play offense. When you do not hedge you are constantly playing defense. You cannot survive constantly playing defense.
Does hedging counteract the labor issue? If a labor issue means that packers must slow their kill speed down, which produces a bearish impact on prices, then having a hedging plan in place can help to mitigate that impact on your P&L.
What are some tools producers can use to learn more about how to hedge? The Chicago Mercantile Exchange has a number of tools on their website that can walk producers through the process. Most of the tutorials are for beginners and include both text and videos. County Ag Extension agents can help with the process as well. The USDA also has a program called Livestock Risk Protection (LRP) which is limited in the scope but is another product that could help the producer. Their website is full of information on this approach.
What do you recommend a producer keep track of to help manage risk? Know your input costs, decide on what you want your rate of return to be and use it on your procurement decisions. Understand your cost of production and when you buy feeder cattle understand how much you can pay. Know what your typical basis is around your area and, when you pull the trigger on a hedge, know what you hope to get out of your cash sale.
How do you justify a producer investing in extra risk management tools when their profit margins are already tight? I would turn this question around and say how you cannot invest in risk management tools to mitigate these market disruptions. Just like someone who would buy life insurance in the event of their death, risk management allows some protection during turbulent markets like the past three years. Producers have so much to manage in their operations that it might seem investing in risk management is just too much time and money, but these tools do not have to be as complicated or expensive as one might think. I would suggest a potential first step could be to talk to a competent broker to help work through the different aspects of risk management.
What are some overall tips or action items for producers? Understand that a hedging program is a plan that is not something you just do every now and then. It is a program that needs to be executed every time you make a purchase or sale. Know your production costs and rate of return that makes sense for you. Execute the plan and constantly visit the plan as things change. Remember that no one is smarter than the market and playing offense allows you to make decisions when events crop up. This is really about investing in your operation so that you can sleep at night. With hedging, price risk is transferred, and cow-calf producers and feedlot operators can utilize this tactic to protect against declining prices. Drake will continue this conversation and take a deeper dive during NCBA’s upcoming webinar, Hedging as a Risk Management Strategy, on Thursday, July 8 at 7 p.m. CST. Risk management strategies are a hot topic with the volatility of cattle markets and unpredictable nature of the industry. Now, more than ever, cattlemen and women need to be equipped on how to stretch their dollar and protect their bottom line. To register, click on the Producer tab at NCBA.org.
TOUR COMING NEAR YOU! JULY 16-17 ELKO, NV AUGUST 27-28 DURANGO, CO SEPTEMBER 10-11 DANVILLE, IN OCTOBER 8-9 ONTARIO, OR OCTOBER 22-23 BOWLING GREEN, KY STOCKMANSHIPANDSTEWARDSHIP.ORG
NATIONAL CATTLEMEN 9
www.NCBA.org
NCBA Welcomes New Study Highlighting the Negative Impacts of Transfer Taxes The Texas A&M Agricultural and Food Policy Center recently released a report quantifying the negative impact imposing new transfer taxes will have on U.S. cattle and beef producers. The conclusions of the study support NCBA’s position on tax policy for rural America that creates a viable business climate for family-owned businesses, including farms and ranches. This study, requested by Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry John Boozman and Ranking Member of the House Committee on Agriculture GT Thompson, reveals the significant impact two proposed bills would have on longstanding provisions in the tax code. The STEP Act would eliminate stepped-up basis at the time of death of an owner. The 99.5% Act would, most notably, decrease the estate tax exemption from the current $11.7 million per individual and $23.4 million per couple to $3.5 million per individual and $7 million per couple. The study proves that, because of their unique structure, family-owned businesses are particularly susceptible to changes in the tax code. In fact, if both bills were implemented 98% of the representative farms used in the study would have seen an average tax increase of $1.4 million. “This study supports what NCBA has long advocated for—tax policy for rural America that encourages generational transfer, instead of acting as a barrier for the next generation of agriculturists to contribute to a safe, reliable and abundant food supply chain. From the results of the study, it is clear that these proposed bills would have significant and, in some cases, devastating effects on family-owned businesses,” said Senior Executive Director of Government Affairs Danielle Beck. “We appreciate Senator Boozman and Representative Thompson taking action to preserve
sound tax policies and ultimately supporting the businesses that are the backbone of rural economies across the United States.” With more than 40% of farmland expected to transition in the next two decades, Congress must prioritize policies that support land transfers to the next generation of farmers and ranchers. When doing this, it is imperative that lawmakers take into consideration the complexity of the implications of taxes on family-owned businesses. In the case of farms and ranches, the United States Department of Agriculture (USDA) reports that 91% of assets are illiquid. This means that to pay off tax liabilities at the time of an owner’s death, surviving family members may be forced to sell off land, farm equipment and sometimes parts of the operation. If farmland is lost, and therefore transitioned out of production, the environmental benefits that come along with the deliberate stewardship done by farmers and ranchers will be lost as well. “Farmers and ranchers conserve nearly 900 million acres of crop and rangeland in the United States. The vital work done by cattle and beef producers to deliver an array of environmental benefits such as restoring wildlife habitat, sequestering carbon, and protecting and improving water quality, depends on their ability to stay in business. Federal tax policy that facilitates generational transfer and allows the next generation of producers to build upon the environmental and economic benefits of today’s farmers and ranchers is just as important for fifth-generation producers as it is for first-generation, veteran, and minority community producers who are breaking into and establishing a foothold in the industry,” Beck said.
JULY 29-30, 2021
UNITED WIRELESS ARENA | DODGE CITY, KS
Cattle U and Trade Show is a two-day event full of educational opportunities for producers. Whether you are a cow-calf producer, a stocker or a feeder, there will be sessions and networking opportunities with vendors and industry leaders to provide you with practical and useful information.
REGISTRATION
100 Standard Rate 125 Onsite
$ $
Event highlights • 16 Breakout sessions • 2 Industry panels • 2 Day trade show • 1-Year subscription to High Plains Journal
• BQA certification or renewal • Bull & Brews event social • Unlimited networking opportunities
FEATURED SPEAKERS
Now Offering:
Meat Processing
Earn your degree in less than a year! Also featuring a wide selection of other quality ag programs/degrees including ag education, equine studies, agribusiness, & more!
FORRIE J. SMITH Actor, Stuntman, Real-Life Cowboy, and Cast member of Yellowstone
TROY & STACY HADRICK
LANE NORDLUND
5th Generation Ranchers
Ag Broadcaster – Emcee
Director of Commercial Industry Relations, American Angus Association
CLAY P. MATHIS
ROSSLYN BIGGS,
TARA VANDER DUSSEN
JOHN CAMPBELL
Environmental Scientist, New Mexico Milkmaid
Winter Livestock, Inc.
Director, King Ranch Institute for Ranch Management
DVM Beef Cattle Extension Specialist/Director of Continuing Education-Oklahoma State University College of Veterinary Medicine
TROY MARSHALL
View the official speaker lineup at cattleu.net.
Online and on-campus options available.
milescc.edu
VISIT US AT cattleu.net • FOLLOW US ON FACEBOOK 800.541.9281 I 2715 Dickinson I Miles City, MT
10
www.NCBA.org
NATIONAL CATTLEMEN
NCBA Delivers Progress on Backend 150 Air-Mile Exemption for Livestock Haulers
BACKGROUND Current hours-of-service (HOS) rules allow for 11 hours of drive time, 14 hours of on-duty time, and then require 10 consecutive hours of rest. When transporting livestock, there is a real need for further flexibility beyond the current hoursof-service. Unlike drivers moving consumer goods, livestock haulers cannot simply idle or unload their trucks when drive time hours run out without jeopardizing animal health and welfare. The HAULS Act language adopted today into the Surface Transportation Act would add a 150 air-mile radius exemption under HOS regulations to the backend of hauls for those transporting livestock. NCBA is working with Members of Congress from across the country to ensure that any infrastructure and transportation spending bills reflect the unique needs of rural communities
NCBA recently delivered progress on muchneeded regulatory flexibility for livestock haulers. The addition of the backend 150 air-mile exemption from hours-of-service (HOS), crucial language pulled from the HAULS Act, was agreed to by Senator Deb Fischer (R-NE), Senator Jon Tester (D-MT), Committee Chair Maria Cantwell (D-WA), and Ranking Member Roger Wicker (R-MS) in the Senate Commerce Committee and adopted into the larger Surface Transportation Investment Act of 2021 by a bipartisan vote. NCBA spearheaded introduction of the larger HAULS Act in both the Senate and House this spring, and worked hard to get the backend 150 air-mile exemption included in the Surface Transportation Investment Act that will be sent to the Senate floor. Livestock haulers are a critical part of the supply chain keeping grocery stores stocked with highquality U.S. beef. The upheaval of the pandemic
and ongoing market volatility has only underscored the need for further flexibility in livestock hauling regulations to keep the supply chain strong. "When one-size-fits-all government regulations fail to account for expertise on the ground, livestock haulers are put in the impossible position of either complying with regulations or doing what they know is best for the humane and safe transportation of live animals," said NCBA Executive Director of Government Affairs Allison Rivera. "We strongly support this bipartisan, commonsense effort to give livestock haulers the flexibility they need to maintain the highest level of safety for drivers on the roads, transport livestock humanely, and ensure grocery stores remain stocked with beef. We thank Sen. Fischer, Sen. Tester, Sen. Cantwell, and Sen. Wicker for their leadership on this legislation, and we will continue working with Members of Congress to move this language across the finish line.”
and cattle producers. Throughout the COVID-19 pandemic, NCBA successfully fought every month for a renewed emergency declaration which provides an exemption from hours-of-service for livestock haulers, while also working with Congress to maintain the ELD delay for livestock haulers until Sept. 30, 2021.
NCBA Region II Report By Fred Smith, NCBA Policy Division Region II Vice President Region II is comprised of the states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. “If you don’t know where you are going, any road will get you there.” At NCBA we know where we are going, and that place is a commitment to our member producers to create an environment where they can be profitable and sustainable; especially the cow-calf producers in Region II. All NCBA policy should be guided by the vision to add value to the lives of our producers and should inform our strategy and tactics to implement the vision. This purpose is the fundamental reason for NCBA’s existence. In these uncertain times, we need to move forward with courage to affect positive change to make our producer members profitable and sustainable. How do we accomplish our mission? 1. Build relationships with those who can help. 2. Stay true to our core values to represent the producers in the marketplace. 3. Be resilient in our actions and self-correct to keep on the road to success. 4. Most important, NCBA must continue to secure commitments from its members to pursue its vision to help producers be profitable and sustainable. While there are many issues facing our members, several are at the forefront:
Expand Beef Producer Capacity Actions being taken by states in Region II to address the major challenge of the lack of sufficient beef processing capacity: Mississippi: By the end of July, Mississippi will have doubled its in-state USDA beef processing and bring it up to around 600 head per week. North Carolina: Has worked with the NCDA and NC Cooperative Extension to effectively utilize pandemic related resources to increase capacity at over 50 facilities across the state. Florida: Focus on legislation to help local processors and local meat sales. Tennessee: $12 million of COVID-19 stimulus funds have been used to provide grants for meat processing and has added or will be adding eight more USDA inspection plants in the next six months.
Increase Transparency in the Cattle Markets For cow-calf producers in Region II, market transparency is an important issue. Georgia: GCA has supported and worked with NCBA to address this issue as addressed in the recent meeting hosted by LMA. Mississippi: MCA has led an effort to assist one of its
ll
U.S. House members in gaining signatures to a letter requesting an update to the Department of Justice letter. MCA continues to have great interest from its membership on solutions to live cattle markets and finding a way to capture more dollars for its cowcalf producers.
Improve the Business Climate for Producer Profitability Mississippi: MCA continues to work to preserve the agricultural exemption in the state tax code. The state legislature is intent on making some changes to state income tax structure to reduce/eliminate the state income tax. Alabama: The legislature passed a bill that will stimulate rural economic development thanks to tax credit incentives. Also, ACA continues to work on its policy process by updating its approved policy handbook. Tennessee: The governor put about $200 million in his budget for rural broadband initiatives. He also placed $50 million of COVID-19 stimulus in a Tennessee Department of Agriculture grant fund. Georgia: GCA has been working to secure a Democratic sponsor for a bill that would address Special Use Valuations as a part of Section 2032A in the tax code. This should help provide an alternative that would provide a degree of relief for family-owned businesses who may be subject to federal estate tax. This would allow for producers to commit to passing their land to a qualifying heir who is a member of the descendant’s family, said land must be in materially owned for five of the eight preceding years and be committed to a 10-
year production commitment that the land will not take it out of production or if transferred will be continued in ag production or otherwise be subject to estate tax recapture. If Section 2032A is elected, the land basis is only adjusted or stepped up to the alternative special use value. This section of the tax code could provide an outlet to combat against the removal of the step-up in basis. The bill in question would shift that exemption from $750,000 to $11.7 million and would be more in line with the current fair market value of the land. As many producers are land rich and cash poor, this would allow the flexibility for producers to be able to limit their tax liability and prevent the land from being sold to pay the tax bill upon the inherited asset being transferred to the heir. They continue to have conversations in Sen. Warnock’s office to encourage him to cosponsor the bill. Florida: Secured $750,000 in their budget to renew funding for research and promotional projects to advance the Florida cattle industry. Florida also passed a new and improved “Right to Farm” bill to strengthen the private property rights of farming operations. They have also passed a law that protects agricultural farms for water permitting requirements and allocation.
Upcoming Member Conventions & Events: South Carolina: Aug. 6 convention and Trade Show with Youth Junior Beef Round Up and Youth Livestock Show Louisiana: Regional Events in June and July Tennessee: Summer Convention in July Georgia: Summer Convention in July
Premium Features. Right-Sized Tractor. The Redefined 5M Utility Tractor. Improved productivity and easier gear shifting with new transmission options. Integrated AutoTrac™ guidance and other technologies. Pull heavier implements with up to 125 HP. Do it all in the tractor that best fits the needs of your operation.
Contact your John Deere dealer or visit JohnDeere.com/5M to learn more.
80261-4_10.38x16.indd 1
6/16/21 12:29 AM
12
www.NCBA.org
NATIONAL CATTLEMEN
Beef Exports Heating Up By Katelyn McCullock, Director, Livestock Marketing Information Center Beef exports are already looking better than 2020, rebounding past 2019 levels and then some. As the world re-opens, U.S. beef is primed to capitalize on consumers returning to restaurants, travel and other hospitality. Beef exports in 2020 through April were just beginning to post declines. The second quarter of 2020 saw the largest pandemic-related declines, but in January through April data, last year was ahead of 2019’s, by about 6.5 percent. This year, it appears international demand for U.S. beef picked up right where it left off and March 2021 posted the single largest month ever. April data showed a small pull down from March, but January through April data is up 8 percent from 2020 and 15 percent above 2019. One of the huge wins for beef has been exports to China, which recently has broken into the top three for export destinations ahead, at least for the last couple of months, of Mexico and Canada. The March and April data both showed beef exports to China topped 40 million pounds, double Canada’s purchases of U.S. beef in each of those months. For a market that has not been open to the U.S. for very long, that volume is a success story in itself. African Swine Fever (ASF) hitting China’s pork industry was thought to accelerate the use of U.S. beef into Chinese consumer diets. That is likely a contributing factor and for now the trajectory for beef into China is steep. As a new market, it has yet to plateau where we can begin to talk about the “normal” level of purchases. This too will be complicated by ASF. South Korea has been the only
other market to increase over the prior year in January through April data, up 17 percent year over year. Other major export destinations are all still struggling to keep up, and many are behind 2019 as well. Taiwan, Mexico and Vietnam are among those that fit that bill, while Canada is behind 2020 but above 2019’s figures. The release date for May carcass weight trade data is July 6 from USDA-ERS. This will give us a more complete look at the first half of 2021. The weekly trade gives a preliminary look at May data and shows promise for strong exports continuing. The percent change versus last year is expected to be very large because of the very low volumes last year. The weekly export data suggests beef cuts may be down from 2019. The weekly totals, although not the official USDA beef export number for May, were down 1.5 percent from 2019. The current LMIC forecast for annual beef exports in 2021 is a 3-5 percent increase over 2020 numbers, and a 1.5 percent increase from 2019. This forecast assumes continued strong growth from China as well as Canada and Mexico stepping up purchases. The boxed beef cutout value started climbing the end of March of this year, and has likely been helped by re-opening in the U.S. as well as high demand from the export markets. High beef prices may eventually turn off some customers in the short to medium term. Larger exports are generally supportive for live cattle prices, however, the constraints to capacity at the packing level may limit their upward mobility. LMIC is expecting average fourth quarter prices to be the highest quarter of 2021.
Slaughter: The Moving Target By Lance Zimmerman, Manager, Research, Analysis and Data, CattleFax Forecasting steer and heifer slaughter since spring 2020 has been like trying to hit a moving target. CattleFax has used more of a shotgun approach to interpreting its supply models. Front-end fed cattle supplies have never been lacking, but capacity challenges have been endless. That created two consistent questions for analysts to answer
regarding fed cattle slaughter during the past 12 months. How many steers and heifers are available for slaughter? And how many fed cattle can processors realistically slaughter? At the beginning of the year, CattleFax knew there was excess market-ready supply. Feedyards were beginning to market cattle that came as a flurry of placements from June to September 2020. Analysts also believed fed cattle slaughter capacity was relatively stable around 93,000
US BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly
Mil. Pounds 100 90 80 70 60 50 40 30 20 10 0
2013
2014
2015
2016
Japan
2017
Canada
2018
2019
Mexico
2020
2021
South Korea
Data Source: USDA-ERS & USDA-FAS
I-N-35 06/09/21
Livestock Marketing Information Center
US BEEF EXPORTS TO CHINA (MAINLAND) Carcass Weight, Monthly
Mil. Pounds 60 50 40 30 20 10 0
JAN
FEB
MAR
APR
MAY
JUN
Avg. 2015-19
JUL
2020
AUG
SEP
OCT
NOV
Data Source: USDA-ERS & USDA-FAS
06/09/21
Livestock Marketing Information Center
head per weekday, and that it could grow slowly and steadily throughout the year. The Feb. 1 forecast for steer and heifer slaughter was built on those assumptions. That was before a major winter storm crippled processors in February, stimulus checks undermined the dependability of the labor force, upgrades and maintenance idled plants, and hackers held a major processing company hostage. Actual USDA slaughter has been 70,000 head below CattleFax’s winter expectations from February to May. Considering 8.5 million steers and heifers were slaughtered through that period, that is only a difference of 0.8 percent. The error is small, but it represents something bigger. USDA-reported placements implied that the available fed cattle supply from February through May was the largest in 10 years, and the turnover rate through that period was below average. That means plenty of cattle remain in feedyards that are ready to be processed. Packers processed a 2021 weekly high of 537,477 steers and heifers two weeks ago. That was essentially the weekly average forecast for June prior to the recent slaughter obstacles and, in three
DEC
2021
days, the JBS cyberattack has created a shortfall of around 40,000 head compared to that target. A more reasonable slaughter expectation for June and July may be closer to 525,000 head/week, but the implied turnover rate at that pace remains mostly average. Typically, it takes months of above average turnover rates, or year-over-year cattle declines to create a supply-led market rally.
Bottom Line: The fed cattle market remains front-end loaded, and that situation is not going to change significantly in the next 60 to 90 days. CattleFax still expects cattle supplies to improve gradually throughout second half of 2021, but each time a major packer faces a new processing setback, the sights will need adjusted. The target for processing capacity continues to move.
NATIONAL CATTLEMEN 13
www.NCBA.org
Transition, Change and a Critical Crossroad By Don Close, Senior Animal Protein Analyst with Rabo AgriFinance Over the last 15 years, the percentage of cattle grading choice or better has increased from a low of 55 percent in 2006 to consistently higher than 80 percent today. And it continues to get better. That improvement in beef quality has led to substantially better demand for beef and has positioned the industry for a much brighter future than was the case just a few years ago. One irony of this improvement in grading is that end sellers of product both at retail and HRI have focused on beef quality and freshness as a differentiator to explain how their product could be better than their competition. With grading rates at the 80 percent and better level, all beef offered to consumers is very good. The 15 percent of select-graded product is largely absorbed by institutional and prepared food and is readily absorbed into the system. As a result of the consistently high product quality, end sellers are going to have to find a new set of differentiators to set their product apart from their competition’s products. The differentiators they appear to be going to are: NHTC, Natural, Grass-Fed, Antibiotic-Free and Traceability. Of course, there are probably additional attributes or stacked attributes that I have failed to mention. In today’s market, virtually all these value-added characteristics are paid for with a fixed dollar value paid at the ranch or at the beginning of the feeding period. As demand for these value-added characteristics as differentiators becomes more prominent, and as consumer demand for them grows because of a perception of food safety and environmental or animal welfare concerns due to promotion from end sellers as differentiators; product with those characteristics will, in turn, find growing demand. As a result of the growing demand for products with these added characteristics, the industry will need to transition the fixed premiums for those attributes or practices into the price per hundred weight of cattle in order to more quickly transmit supply and demand signals into the marketplace. It should be expected that the importance of the premium and discount schedule will increase over time and that more characteristics will be added. It will be interesting
KEEP UP WITH THE LATEST NEWS. www.NCBA.org
LIKE US FOLLOW US WATCH US HEAR US
to watch consumers’ willingness to pay for these additional attributes when they don’t provide measurable differences in eating attributes versus the conventional product. Here comes the complication: there’s more and more talk in the market today about government intervention in marketing practices and either 30/14 or 50/14 base of cash fed cattle sold each week. If either of those mandates were to become law, it would make the transition to incorporating the additional carcass characteristics other than quality grade and yield grade an even more difficult challenge because of the share of cattle required to sell in the cash market. The U.S. cattle and beef industry is at a critical crossroad. Recovering domestic demand and the growth of export sales as well as increased public scrutiny in everything the industry does means that it is critically important that any changes in marketing rules be viewed in the context of what will best position the market and the industry for the next 25 years. This can’t be done if rule changes, and government intervention are implemented that sets marketing practices back 25 years. If you are interested in additional insights into the beef industry, find the closest Rabo AgriFinance office on www.RaboAg.com.
Rabo AgriFinance is a leading financial services provider for agricultural producers and agribusinesses in the United States. Adding value through industry expertise, client-focused solutions and long-term business relationships, Rabo AgriFinance offers a comprehensive portfolio of services that gives producers the right products to prepare for and take
advantage of market opportunities. This comprehensive suite includes loans, insurance, input finance and effective risk management products. Rabo AgriFinance is a division of Rabobank, a premier bank to the global agriculture industry and one of the world’s largest and strongest banks. Rabo AgriFinance is an equal opportunity provider.
You asked for BIGGER... We can deliver.
New rotary feed mixer with 1220 cu. ft. capacity.
Roto-Mix
Stationary Feed Mixers & Ration Delivery Boxes The new Roto-Mix 1220-20 rotary stationary can quickly fill a Roto-Mix RDB for rapid bunk delivery. Combine the feed mixing capabilities of Roto-Mix feed mixers with the feed delivery efficiency of the Roto-Mix RDB with rubber floor or the CFB with chain floor and you have the perfect combination. Blend uniform feed rations and deliver to the bunk in a short amount of time.
www.rotomix.com Call for more information! 620.225.1142 R1220/RDB
14
www.NCBA.org
NATIONAL CATTLEMEN
T H E F E D E R AT I O N O F S TAT E B E E F C O U N C I L S Building beef demand by inspiring, unifying and supporting an effective state/national Checkoff partnership.
Keeping Beef at the Center of the Plate State beef council promotions are kicking into high gear for summer grilling season, connecting families with flavorful beef for gatherings and celebrations. And, with many restaurants fully re-opening after COVID-19 closures, consumers are clamoring to get out and enjoy in-person dining once again. Through retail and foodservice programs, states are working hard to keep beef at the center of the plate.
Good Life Great Steaks Beef Passport The Nebraska Beef Council (NBC) launched the Good Life Great Steaks Beef Passport program on May 1 in celebration of Beef Month. The program urges people to visit participating restaurants this summer where they can order beef menu items, earn stamps and be entered to win prizes. Passports are free and can be obtained at www. GoodLifeGreatSteaks.org or from any of the participating restaurants. Passport holders who earn at least one stamp are eligible for beef grilling prize packages and those acquiring at least six stamps are eligible for a $250 beef bundle. The grand prize winner of $500 in beef and a customized Beef. It’s What’s For Dinner. Cabela’s cooler will be drawn from those who obtain at least 11 stamps.
"Our goal with this program is to highlight Nebraska’s beef industry while also helping to support local restaurants throughout the state," said George Cooksley, board chairman for the Nebraska Beef Council. "It's clear that Nebraska consumers enjoy beef and look forward to eating great beef meals at their favorite restaurants." The NBC is using social media to promote and drive the program. The Good Life Great Steaks Nebraska Beef Passport Facebook group has more than 500 members who share their experiences while completing their beef passport stops. Members can gain access to additional information about the featured restaurants, share their photos with other members and even become eligible to win additional prizes throughout the summer. “NBC utilized the Federation Services team at NCBA to help us put this program into action. Creative services designed and developed the promotional materials and the web team helped build and launch the website, which also acted as our main source for receiving passport requests,” said Adam Wegner, NBC director of marketing. “It was a true team effort and a great example of the effectiveness and efficiency of the state and national Federation partnership.” Since the program’s initial launch, over 12,000 passports have been distributed to consumers in 30 different states and in more than 500 communities across Nebraska. For more information, visit www.nebeef.org.
Diners on a Quest for Beef
From the mountains to the coast, North Carolina restaurants serve delicious beef across the state. Taking a journey to discover incredible beef meals gives diners a chance to win great prizes. On June 21, the North Carolina Beef Council (NCBC) launched the North Carolina Beef Quest, which runs through Sept. 6, 2021. To participate, diners visit restaurants across the state, choose a beef entrée to enjoy then share a photo/social media post to document their experience. The more restaurants visited, the more chances for prizes. NCBC will award the first 300 diners who visit three restaurants a meat thermometer. Visiting five or more restaurants will secure an entry for one of five grilling prize packs and visiting eight or more restaurants will secure an entry to win one of two stainless tabletop grills.
The goal is to help foodservice operators sell more beef and have diners enjoy a great eating experience at fantastic restaurants. There is a North Carolina Beef Quest Facebook group to share the excitement in visiting restaurants and encourage participation. The pursuit of savory steaks and mouthwatering burgers will keep everyone going all summer long. For more information and to see the list of restaurants, visit www.ncbeef.org.
Multi-State Collaboration Engages Consumers in Stores State beef councils in Iowa, Illinois, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin are joining forces to bring summer grilling recipes to Hy-Vee stores in their states to highlight beef on the grill. Hy-Vee grocery stores will feature in-store signage at the meat case and disseminate a custom recipe brochure. The unique brochure includes eight grilled steak recipes that highlight excellent beef cuts for grilling, combined with grilling tips and a QR code that consumers can scan with their smartphone for more information about beef production. Each QR code takes consumers to a state-specific webpage to learn about cattle producers in each of the eight states where Hy-Vee stores are located. “This project demonstrates the power of collaboration among state beef councils,” said Sharla Huseman, director of marketing for the Kansas Beef Council. “When we work together, we can effectively leverage Checkoff dollars and expand reach.”
Retail Partnership Promotes Beef Year-Round Retail has driven a lot of beef business during the pandemic and continues to see great success. The Minnesota Beef Council (MBC) has developed a great relationship with the registered dietitians for Coborn’s grocery stores. This relationship has allowed MBC to think beyond the meat counter to promote beef to shoppers. Coborn’s vision is “Be remarkable! Inspire happiness, healthy living and simplicity, one guest at a time”. This partnership between the retail dietitians and MBC is a logical fit as beef is a great option in a healthy lifestyle and drives business for retailers. Over the last year and half, MBC featured beef through several of the retailer’s marketing channels. MBC sponsored Facebook posts on Coborn’s page in September and October 2020, helping consumers navigate the beef case, encouraging them to try different cuts and providing information on how to make Beef Sushi. Beef was highlighted for a week on Coborn’s e-commerce site in September and December, and in November the retail dietitians offered a “Kids Cook at Home” virtual cooking class showcasing beef. Then for the holiday season in December, the dietitians promoted tips
and tricks to prepare beef for holiday gatherings and provided instruction on pairing beef with wine. For May Beef Month, Coborn’s showcased how beef is a dietitian’s choice in a healthy diet. Beef was showcased in two Facebook posts, two Instagram posts and an Instagram story as well as an in-ad recipe. Beef was also featured for one week on Coborn’s e-commerce website to kick off the summer grilling season. These posts shared nutrition information as well as grilling recipes while encouraging guests to pick up beef next time they are at the meat counter. The partnership between MBC and Coborn’s has proven to be very successful. Continued targeted promotions with the grocery chain will be discussed as the Beef Checkoff continues to drive beef demand among consumers. For more information, visit www.mnbeef.org.
NATIONAL CATTLEMEN 15
www.NCBA.org
NEWS Program Fills Chefs’ Desires for Continuing Beef Education
NCBA, a contractor to the Beef Checkoff, promoted beef to chefs through a partnership with Chef’s Roll, a peer-to-peer network for working professional cooks, chefs and foodservice decision makers. In May, beef took center stage on Chef’s Roll’s new social sharing platform, “Ask the Butcher,” where a different cut of beef was featured in recipes each week and shared with social media followers.
Subscribers also had the opportunity to ask Bridget Wasser, NCBA’s senior executive director of product quality and education, questions about the different cuts, recipes to use them in, and beef in general. “While chefs are extremely educated about food, and meat, they always want to learn more,” said Wasser. “This was a great way for us to connect with chefs and explain how
Pediatrician Outreach Extends Beef in the Early Years Content The American Academy of Pediatrics, the Women Infants and Children’s Program and now for the first time ever, the Dietary Guidelines for Americans recommend introducing solid foods, like beef, to infants and toddlers, in order to pack in every bite with protein, iron, zinc and choline. Yet, many physicians lack awareness of the latest science, and many parents still need practical tips for how to introduce beef safely and nutritiously into their young child’s diet. “Parents rely on their pediatricians for nutrition guidance for infants and toddlers,” said Executive Director of Nutrition Science, Health & Wellness at NCBA, Shalene McNeill, PhD, RDN. “When we provide health professionals with science-based information about beef as an early complementary food, physicians then share that information with parents.” Beef in the Early Years is a campaign that is focused on educating physicians and other health professionals on the importance of feeding beef to babies as an early complementary food and providing them with tools to support parents with the introduction of beef. With support from the Federation of State Beef Councils and several individual state beef councils, NCBA, a contractor to the Beef Checkoff, is providing an educational toolkit and parent resources to a nationwide network of pediatrician offices and childbirth centers. The toolkits include the Beef in the Early Years research brief, detailing beef as an important complementary first food, and a new consumer brochure that highlights the beneficial role of beef’s nutrients during the early years. These toolkits also offer simple infant and toddler feeding tips, providing practical takeaways for parents and caregivers. The toolkits will be delivered to over 2,300 pediatrician offices and childbirth centers in more than 20 states across the country. To develop deeper relationships within the network of health
to utilize beef in different recipes, and we found the audience really enjoyed that.” The unique program provided an opportunity to directly engage with foodservice professionals. The Chef’s Roll platform allowed Wasser to interact with chefs and culinary students who were interested in learning how to showcase each cut in their restaurants and for larger consumer audiences. Wasser’s detailed description of the various cuts and explanation of carcass fabrication allowed the audience to imagine new ways to feature beef on their menus and promote dishes to customers. Following the presentation, participants requested cooking tips and methods for specific cuts, inquired about the anatomy location and
differences of cuts and wanted to know where to find featured cuts. Videos featuring ribeye filet, ribeye cap, strip steak and outside skirt steak were viewed on Facebook, Instagram and the Chef’s Roll community. Overall, the monthlong promotion reached more than 765,370 and resulted in 16,503 total engagements.
TRENDING IN FOOD & BEEF ENVIRONMENTAL SUSTAINABILITY Mentions of beef sustainability in traditional media decreased 19%, but major stories like Epicurious’ decision to ditch beef continued to pop up.1 A study about negative impacts on air pollution from animal agriculture was covered nearly 300 times in media but did not have long-term media impacts.1
GOOD NEWS FOR BEEF Media efforts from NCBA, a Beef Checkoff contractor, aggregated an audience of more than 5 million.1
PLANT-BASED DIETS & ALTERNATIVES
professionals, participating offices will receive follow-up communications offering future educational opportunities from the Beef Checkoff. Following the effort, results, including estimated traffic and impressions along with market coverage, will help evaluate the program’s reach and success. An independent audit of participating locations will also collect information about the usefulness of materials and help evaluate whether health professionals are more likely to recommend or discuss beef with their patients. To further extend educational information to health professionals, an advertorial entitled “Make Every Bite Count with Nutrient-Dense Foods” will also be placed in leading physician magazines, including the American Academy of Pediatrics and the American Academy of Family Physicians. For more information about Beef in the Early Years, visit www. beefitswhatsfordinner.com/nutrition/ beef-in-the-early-years. If you would like to share the latest science and best practices on feeding beef in the early years with a health professional you know, visit the Beef Nutrition Education Hub at https:// beefnutritioneducation.org/.
Eleven Madison Park, a worldfamous New York City restaurant, shifted to a plant-based menu. Mentions in traditional and social media topped 17,000.1 Interest and investments in cell-based meat2 led to a 26% increase in tradititional media mentions in May.1
GOOD NEWS FOR BEEF With 56,000 mentions, National Beef Burger Day showed consumers still enjoy beef-centric meals.1
NUTRITION & HEALTH OUTCOMES A new study pointed to red meat as a cause of colon cancer, which was covered in oulets like Yahoo! Lifestyle and MSN.1 Mentions of beef nutrition and health outcomes tied to beef increased 64% in May.1 Studies that showed negative health outcome led the increase.1
GOOD NEWS FOR BEEF A Checkoff-funded study of Mediterranean diets with beef was covered in outlets like Yahoo! Lifestyle.1
#061121-14 1. National Cattlemen’s Beef Association. (2021). Traditional and social media listening dashboards. Retrieved from Meltwater: www.meltwater.com 2. Shanker, D. (12 May, 2021). Whole Foods founder Mackey invests in producer of cultured meat. Bloomberg. https://www.bloomberg.com/news/articles/2021-05-12/whole-foods-founder-mackey-invests-in-producer-of-cultured-meat?sref=ttNloz1Z
Introducing Purina® Plus, an all-new preconditioning program made to move operations forward. Combining Purina’s research-proven nutrition with vaccine and deworming protocols, Purina® Plus calves are preconditioned to perform. And perform they will. Reputation that stands strong. Value that adds up. purinamills.com/purinaplus ©2021 Purina Animal Nutrition LLC. All rights reserved.