Stock Options: Marketing and Merchandising Solutions

From the Road

1. Monitor body condition

According to USDA National Animal Health Monitoring Service (NAHMS) survey data, 42% of cows lost weight from just after calving (7 days after) until weaning time. This loss of body weight occurred primarily during the time of year when forages were most available and typically at their highest quality, which also occurred during the breeding season, Ahola points out.

"It is crucial for producers to monitor changes in both body weight and body condition score (BCS) in young females from calving through breeding to avoid weight loss during this time of elevated nutritional need," he says.

To avoid weight loss, he suggests supplemental energy and/or protein should be provided.

2. Develop and use a ration

Because of elevated nutrient requirements, Ahola says many young beef females would benefit from supplemental energy and/or protein from precalving through breeding since they become pregnant early in the breeding season.

He adds that, with current computer-based ration formulation programs, this strategy is relatively easy and very low-cost (several are free; check with your local university Extension).

"A properly formulated ration ensures that the nutritional needs of a female are met in order to optimize performance," Ahola says. "A ration also helps to reduce feed costs by reducing the amount of overfeeding, especially protein." Ideally, he adds, a forage analysis should be completed prior to ration development to ensure that the calculated ration is accurate.

Additionally, Ahola reminds producers that several trace minerals are important for reproduction as well. There is strong evidence that supplementation of copper, zinc and manganese can affect pregnancy rate early in the breeding season, compared to not supplementing these trace minerals, he says.

3. Use bull exposure

Ahola says the number of young females cycling at the start of the breeding season can also be improved via exposure to vasectomized bulls. "Exposing females to bulls beginning 30 to 45 days after calving can stimulate (or hasten) cyclicity in some females," he says.

Similarly, the use of commercially-available hormones — such as melengestrol acetate (MGA) or controlled internal drug release (CIDR) devices — to increase the percent of young females cycling prior to breeding have also been evaluated. However, Ahola says results have been inconsistent and the cost-benefit of using these products to stimulate cycling needs to be considered.

4. Consider weaning early

Lastly, weaning calves early from young females may have more of an effect on reproductive performance compared to all other strategies combined, due to its substantial effect on body condition, Ahola says.

However, Ahola says recent NAHMS data indicates that most beef producers decide their weaning time based on calf performance, and not on cow condition.

Ahola tells producers that improved reproduction can result if calves are weaned at the start of the breeding season (e.g., 90-100 days of age) or early in the breeding season (e.g., 110-120 days of age). In one experiment, a long-term improvement in reproductive performance in cows was observed when early weaning was done when the females were first-calf heifers, he reports.

He explains that removal of calves reduces the nutritional requirements of first-calf heifers by eliminating the energy demand from lactation. In addition, since suckling has an inherent negative effect on cyclicity after calving, females tend to begin cycling sooner if calves are weaned very early. Body weight and condition can also be added back to young cows during a time when forages are more readily available.

Ahola acknowledges that there are several increased costs associated with early weaning, including:

1. facilities to handle early-weaned calves;

2. labor to manage younger calves; and

3. a feeding program to maintain optimum calf performance and health from the time of early weaning until they are sold.

Thus, he says, this is a decision that will need to be evaluated by each individual beef operation.

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Peta and HBO

Industry News - Friday 24th of July 2009 01:45:56 PM

Archved From a past E-Newsletter

Craig Steck, cattlemen and employee with the Cargill Swine Management Team, and I happened to be sharing a motel room at a Bull Sale in Oklahoma when we first saw HBO's disgusting documentary "Death on a Family Farm." We both watched horrified as, i am sure all producers did. We discussed our desired outcome for the farmer featured on the show, and I was embarrassed to be from the same state! Real world, is not all producers are as caring as they should be, Parents are not as loving as they should be, Politicians are not as honest as they should be. However we should not generalize all because of one! Below is a article that everyone of us in the animal Industry can relate to. Please read, and asks where was PETA and HBO on that day.
Picked up from Ron Hays, Oklahoma Farm Broadcaster

written by, Cindy Young-Puyear, Farm Director, Brownfield Ag News.
Calving season is wrapping up at Rocking P Ranch. Although breeding season has begun (through artificial insemination) we have two cows that for one reason or another were scheduled to calve later than the others. One of the cows was due to calve Monday, so my husband vigilantly watched for signs that the cow was nearing parturition.

As her time drew near Sunday morning, Jim knew by the cow's behavior that something wasn't quite right. He called our veterinarian with a "head's up" that we might need his help if there were indeed complications with the birth. A friend who is also a cattleman came by to see if he could be of assistance. By 9:30am, it was time to stick an arm in to determine the position of the calf. When a tail was felt instead of front legs, it was obvious the calf was breech and we would need more help.

Doc got the message on his cell phone as he left church. He arrived at our place minutes later with wife and kids along. Leaving a basketball game to make a farm call or making a farm call on the way home from church is not an unusual occurrence for this dedicated animal doctor and his family.

Three hours later when all was said and done, two stillborn calves lie in the walking alley of the barn and a cow with a torn uterus lie in the stall, barely hanging on to life. Despite valiant effort by three grown men, the calves were lost and the cow drew her final breath Monday night.

I am certain that any of you who raise or have raised livestock have similar experiences in your life story. You know that it makes no difference how closely you watch and tightly you manage, the man or woman responsible for the care and well-being of the livestock cannot control every situation.

Replaying the Sunday afternoon scene in my mind, I have some mixed emotions. While animal agriculture in the country is under attack and vigilante vegetarians with video cameras slither into livestock farms, hoping to expose abuse and mistreatment of animals, there are so many of us out here doing the right thing.

Where was the video camera when those three men fought to save the lives of the calves and the cow for three hours Sunday? No video camera captured the obvious disappointment in the eyes of all three men as they walked out of the barn, heads hanging in defeat, physically and emotionally exhausted.

No video cameras were rolling when Jim carried buckets of water to the cow, talking to her in the soothing voice of a man who truly cares for his livestock. There were no pictures taken as he stroked the cow's rump and thanked her for all she had done for us, doing what he could to make her comfortable in her final hours.

While we mourn the loss of a good cow, we also take a sizeable economic hit. It adds up quickly when you figure in the cost of keeping the bred cow for a year, the cost of the drugs, the vet's farm call and the loss of the cow and her future productivity. As a man of husbandry, Jim did not once consider just letting the cow die or ending its life when it was confirmed the calf was breech and big enough that it's birth would probably take the cow's life as well.

My husband is trained and experienced in animal husbandry, but he also has this innate knowledge and connection with livestock that simply amazes me. He can diagnose a cow's condition from across the pasture and sense their needs as though they are talking to him. It is an awesome thing to see.

As HSUS and PETA spend millions of dollars to convince the unknowing public that those of us who raise livestock are irresponsible and barbaric, I ask again, where are the video cameras when we're checking cows in ten below zero temperatures in the middle of the night?

How do you want the world to see animal agriculture in this country? If you want them to know the truth - to know your story - you're going to have to tell it. Write a letter. Make a call. Take some pictures and shoot some of your own video.

We can't let them win.

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Genetic Testing

Industry News - Friday 24th of July 2009 01:30:20 PM

Archived from a past E-Newsletter

Below is a Email and letters that have been sent and forwarded to me from Parker Friedrich, I feel should past them on.
Angus Breeders,

Now is the time to voice our opinions! With the release of Hydrocephalus Genetic defect bulls by the A.I. Studs today and the way that the Angus Board of Directors has handled Arthrogryposis Multiplex, we need to voice our opinions on this matter so we don't devalue any more current Angus individuals and furthermore spend any more excess expense on testing animals. Remember, this is a simple recessive trait controlled by not mating two carrier animals together. Why should we devalue as well as test every potential carrier individual out there. All we need to do is test the sires we use and simply breed out of the situation like reasonable cattlemen and women.
I have enclosed a letter I sent to the Angus Board of directors a few months ago as well as a letter that Dudley Land has sent today to the Board of Directors. I urge each and every one of you to do the same and help our Board of Directors make a correct decision that protects the Angus Breed as well as its Breeders.

Here are the e-mail addresses for the Angus Board of Directors:

Jarold Callahan(callahan@expressranches.com); Phil Trowbridge (phil@trowbridgefarms.com); 'svrealty@cin.net'; 'bschumann@angus.org'; 'rolnrok@hughes.net'; 'joe@backcreekangus.com'; 'eafherd@centurytel.net'; 'joe@backcreekangus.com'; 'sg_olson@live.com'; 'rob.thomas@thomasangusranch.com'; 'beaver-ridge@att.net'; 'ngar2@yahoo.com'; 'angus21@mchsi.com'; 'James.Rentz@Yahoo.com'; 'abcattle@huntel.net'; 'schroederangus@msn.com'; 'jimsitz1@gmail.com'; 'silveirabros@msn.com'; 'gordon@stuckyranch.com'

Thank You for your help,

Parker Friedrich
566 Hillcrest Dr
Stephenville, TX 76401
254-413-2420
parkerfriedrich@earthlink.net

Letter 2
April 13, 2009

Open Letter to the American Angus Association
Board of Directors and Members

In reference to the report posted today on the American Angus Association website regarding the Hydrocephalus Genetic defect, I am compelled to communicate some of my concerns.

To date, I suspect that millions of dollars have been spent by all of us in the Angus Association testing for AM. I cannot help but fear we are about to embark upon another genetic defect testing regimen and I for one am standing up to say hold on! We all followed like lemmings on the AM testing without the following:

·   No research or funding support from the Angus Foundation

·   No effort that I am aware of, to own the rights to the genetic testing

·   No statistical analysis related to the genetic defect, (i.e. Occurrences per 100,000 births). Furthermore, how does this occurrence frequency compare with other natural occurring events, such as still born births, breach births, etc?

This breeder is not going along on the next genetic defect "witch hunt" without first having my voice heard.

Does the Board of Directors expect us to blood test our animals again for this new genetic defect? If so, can you not see how this provides fuel to those who stand to gain from discovering the next genetic defect? Until we own the testing of these genetic defects why wouldn't those who do own the rights not seek to discover yet another genetic defect and another and another? All this, and we still have yet to be presented with any statistical sampling on the occurrences!

Let it be known that this breeder wants answers to the questions posted here before he will go merrily along.

W. Dudley Land
Suzi Q Cattle Company

Letter 3
               Parker Friedrich                                   cell:     254-413-2420
              566 Hillcrest                                       home: 903-521-7907
              Stephenville, TX                                            Fax:     254-968-8162
                              76401

Dear Members of the Angus Board,

              I hope you, as well as our Association and Board, have learned something from our recent clash with Arthrogryposis Multiplex as we face the challenges of future genetic abnormalities such as Fawn Calf & Hydrophlis syndrome that is heading towards us in a big way. The most important thing to do is to first protect the integrity of the American Angus Association! We need to preserve our cattle and the breeders of our cattle and not make hasty, irrational decisions because we are scared of threats or litigeny. We must make decisions that are best for all members of our Association - small or large, rich or poor, popular or unpopular.
              I realize the decisions you have made were with good intention, and I appreciate and applaud the time and dedication each of you give to American Angus Association. We absolutely cannot devalue our cattle for presence or absence of simple recessive traits. No matter how our association chooses to deal with disorders, we still must breed around these! The best way to handle a recessive trait is to control it through sire selection. We should not allow any bulls to reproduce if they are a carrier of any recessive trait in commercial or registered programs. However, in no way should we discount our females in any way as they are the true foundation of our herds and great breed! We will control any recessive trait through using clean sires in registered and commercial operations and many awesome carrier females will remain the seedstock foundation they have been selected to be.
                It takes true dominance in contemporary groups to be a great cow. Many foundation donors have been thrown by the wayside along with pathfinders as well for a single recessive trait. This is quite appalling and for both herd building and financial suicide to breeders. The AM gene is not dominant, nor have we proven its overall penetrance. No matter what you decide, as breeders we will simply breed out this recessive gene like others before. We never need to weaken our breed through negative media, which has happened through the Arthrogryposis Multiplex incident. It is not right to implicate one single sire and then have every commercial cattleman you meet across the country tell you he doesn't want a Precision son or grandson, no matter if he is clean or "dirty" now in their eyes. Negative media is hard to overcome, and it has allowed and even empowered our competitors to creep closer towards the dominance Angus has had over all cattle breeds. We as a breed have earned that over time. To give it away so quickly, I find it not only irrational but irresponsible! To have many historic Angus bull buyers tell me they are planning to use another breed for this calf crop at least is truly catastrophic! It is not too late to change your decision and correctly allow females of recessive traits to register their female progeny. Otherwise, you as the board may be responsible for the demise of many progressive Angus breeders. Don't go down a long and difficult road of progress just to throw it off a cliff. This can and must be fixed. AM is not caused by a dominant gene!
             This is a very difficult problem, but the time to fix this AM travesty is now. I know that I as a breeder and marketer can trust you and the members of the American Angus Board to act quickly and decisively to correct this unprecedented decision to disallow future female registration for carriers of a certain recessive genetic trait. Please fix this ruling and protect our interests in future matters.
             If there is ever anything I can do to help, please feel free to contact me. I promise to give an honest opinion on my views of the situation and relay those of my contacts. These views may not be yours, but maybe they can be blended to help you the Board reach the proper decisions that all breeders can live with. Thank you for your time and consideration in advance. Please don't take this letter out of text, I only wish to give my views for the future of our great breed!
                                                                                  Sincerely,

Parker Friedrich

Letter 4 and my favorite.
              4/13/09
Dear Members of the Angus Board,

     It is with dedication and concern for fellow Angus breeders that I write this letter. I hope all Association and Board members have learned valuable experience from our handling of the genetic defect, Arthrogryposis Multiplex. We most definitely will face challenges of future genetic abnormalities and are now dealing with our newest concern, Hydrocephalus syndrome. The most important ideal for the elected Board is to protect the integrity and stability of the American Angus Association! We must preserve not only our cattle but also our registered breeders and not make further hasty or irrational decisions due to pressure, anxiety, threats or litigeny. Fair and unbiased judgments that are best for all members of our Association must be made.
    I appreciate and applaud the time and dedication each of you give the American Angus Association and realize the decisions concerning AM were conceived with good intention. However, those rulings have absolutely devalued our cattle simply for the presence of a simple recessive trait of unknown penetrance. No matter how our association chooses to deal with these and future disorders, as progressive cattleman we still and must breed around these!
    The best way to handle and eliminate any recessive trait concern is to control it through selection. We should not allow any bulls to reproduce if they are a carrier of any recessive trait in our registered or highly Angus influenced commercial programs. However, in no way should we discount our females as they are the true foundation of our herds and great breed! Cattle like 2536 and 4206 among countless others have risen to the top of stringent data collection, and these matriarchs are responsible for improving cattle operations and act as foundations for building herds across the country and around the world. It takes continued dominance in contemporary groups to become a great cow. Many foundation donors and pathfinders have been thrown by the wayside for presence of a single recessive trait. All animals carry recessive genes, often for good reason. For instance in humans, the presence of sickle cell trait prevents millions across Africa from getting malaria as the sickled red blood cells cannot be infected nearly as easily as normal red blood cells. We have no idea of the true penetrance of AM or Hydrocephalus expression or why those genes have survived and existed for years. These diseases are found in humans too, and genetic testing is utilized for the good of these families, not to wipe them from existence. Much of the fun in breeding cattle is to balance all the genetic and phenotypic testing available and to continue moving forward, each in our own way. We must control any recessive trait through using clean sires in registered and commercial operations and many awesome carrier females will remain the seedstock foundation for which they have been selected through years of intensive breeding. They are like us - all carriers of something. Let's start trying to be sensible and keep these females inside the breed and appropriately registered where we can follow our progress. Trying to kill them out may be as foolish as selecting an Aryan race.
    This Board's decisions concerning the treatment of carrier registered females has been historically inconsistent, if not truly both herd progress killing and provoking financial suicide. The AM and Hydrocephalus Syndrome genes are not dominant, and we have not even started to prove their overall penetrance and historical importance. If all carrier calves died or were amazingly sick, many of us could understand your logic. Still, no matter what we decide to do with present and future carrier females, as breeders we will simply breed out this recessive gene like others before. We must never assist in weakening our breed through further negative media, which has happened with how we have handled Arthrogryposis Multiplex thus far. It is not right to initially implicate a single sire, especially one of the most dominant of our time like 1680, and then have commercial cattleman across the country tell you they don't want any Precision son or grandson, no matter if he is clean. They are all "dirty" now in their eyes. If these cattle didn't do lots of things right, ranches like Gardiner's may have never become prominent with and sought out by feedlots across the country. We need to get back to balancing our cattle for contemporary group performance through personal breeding decisions, using clean bulls to control our future as our fathers have taught us. In the media, commercial cattlemen see our breed as guilty until proven innocent, and we have some major clean up to do from our poor handling of AM. Just because we can test for the presence or absence of a certain gene, misuse of this technology and new information makes decisions based off limited knowledge quite dangerous. Negative media is hard to overcome, and it has allowed and even empowered our competitors to creep closer towards Angus dominance in commercial industry. We as a breed, including many of our fathers and grandfathers have worked hard to earn that status over time. To give it away so quickly is both irrational and irresponsible. To be a consistently progressive Angus breeder with multiple cow families and have many historic Angus bull buyers tell me they are planning to use another breed for this calf crop at least is truly catastrophic! It's not too late to change your decisions on both of these as our Board and correctly allow females of recessive traits to remain registered as we always have. Otherwise, our generation may be responsible for the demise of the Angus breed as we know it along with many carcass - oriented Angus breeders. Let's not go down a long and difficult road of progress just to jump off a cliff. The AM nightmare can and must be fixed by allowing carrier females of all recessive traits or diseases to remain registered. Diseases of significance found to be secondary to genetic defects found to be dominant can and should be dealt with similar to how you have thus far chosen to deal with AM.
   This is a very difficult problem as it presently stands, but the time to fix this AM and Hydrocephalus problem for registered females and our Association's reputation problem is now. The registered carrier bulls that breeders now have should make feedlots quite a premium given the progressive genetics affected thus far. We as an organization should be making every effort to find consistent markets for these and future animals found to be positive by our new testing efforts. Should the Angus Foundation use our donated resources for a portion of the testing costs and development, then I might not feel as if further rapid disease genetic mapping were simply to ensure a profit. DNA is so vast that thousands of recessive traits exist in us and our cattle. We are put on this earth to be good stewards, not to change all of God's selection process anyway. If we had studies to see why less than 25% of the calves died from the crossing of 2 carriers to find out the real penetrance of why "some bulls seem to be hotter than others" as well I might feel more at ease. I hope several universities are chasing this because we are missing a golden opportunity to watch this be bred away and prove to commercial cattlemen that we truly are the dominant breed not only for our cattle and marketing ability, but also from the resolve of Angus breeders to make our animals fit for any crossbreeding program. Appropriate teaching and advertising to commercial cattleman should be started at once to limit the damages accrued from how we have dealt with AM and even Hydrocephalus syndrome thus far. For us to not allow any known recessive carrier to be registered encourages us to make them commercial where they can be lost to appropriate follow-up. My commercial cattlemen don't plan to test all of their bulls and trust me to get them cattle that will work. Failure to monitor these animals appropriately by allowing them into the commercial market, I find completely irresponsible and a source of potential litigeny of class action proportion. We most certainly would not only lose that case, but also the respect of all commercial cattlemen. I know that I as a breeder have a responsibility to test, report, and progressively breed out these recessive genetic disorders. For the sanctity of this great breed and as breeders of registered Angus cattle, I hold you to that same standard. As a marketer as well, I trust you and the members of the American Angus Board to act quickly and decisively to correct these historically unprecedented decisions to disallow future female registration for carriers of a certain recessive genetic trait. (Why wasn't E161 banned for the dwarfism gene? Let's not even go back to "mule foot." Are we really that much smarter than our ancestors with our newfound testing methods?) Please fix these rulings and the arbitrary AM date selected as many of us have eggs in the tank from our best donors that were not able to be implanted and can't feasibly be born by January 1, 2010. Please protect our interests in similar future matters if we truly want to remain the predominant breed. Otherwise, I fear this dominant organization is destined to splinter, with other breeds set to take its place until another Angus organization with more progressive thinking can be instituted.
     Many others feel the same and have voiced their immediate and future concerns. Can I trust my Board to support my continuing to be a progressive breeder or could my embryo transplantation program simply be adding to potential future financial compromise. I truly apologize for the inflammatory nature of this letter, and only wish you to act quickly. It takes character and courage to change a course already set. I fear we won't have to wait long to watch the consequences of our present recessive genetic defect rulings such as AM as they slice away many pathfinder matriarchs, contemporary group winners, and fellow breeders from our great Angus family. If there is anything I can do, don't hesitate to call. A formal Board response is requested and would be appreciated. Thank you for your time and urgent consideration in advance.

                                                      Sincerely,
                                               William Evans, M.D.

Evans Farms

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Fall Breds

FOR SALE - Friday 24th of July 2009 01:29:00 AM

Have a great group of fall pairs for sale check back for more info.

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Social Networking

uncategorized - Thursday 23rd of July 2009 10:36:00 AM

Well Facebook and Twitter seem to be the "NEXT BIG THING" in the world of information overload. well we are out there also, feel free to check us out on either site. www.facebook.com/kevinmears or www.Twitter.com/kevinmears

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Ard Ridge

Around The Ring - Wednesday 22nd of July 2009 07:41:00 PM

I am pleased to announce that Stock Options will be handling the marketing duties for Ard Ridge's fall sale. "The Look" Volume 1 will take place on October 10th, 2009 and be held at the ranch near Nancy, KY.

I am very excited to work with the men at Ard Ridge on this event. They are offering for sale the "88" donor that has produced over $100,000 in prodigy sales… She is still young and very productive, it could be exciting what her new owner could get done….

Keep checking back for more on this fall’s schedule.

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Cattle Fax -- State of the industry

Industry News - Tuesday 21st of July 2009 03:42:00 PM

The U.S. economy remains on extremely shaky ground which has dramatically impacted the beef industry. Forecasts suggest that GDP will fall by an estimated 2.8% in 2009 and will grow by less than 1% in 2010. Unemployment is nearly 10% and will most certainly exceed that level by late 2009. As a result of the continued uncertainty, consumers have tightened their belts and spending levels have declined.

Economic news is not expected to improve until at least late 2009 and it could well be 2010 before there is any significant improvement. Developed economies globally are forecast to decline by 4% in 2009, holding steady in 2010. Inflation will not likely be a potential issue until credit loosens and demand improves. Overall, expect flat to slightly negative economic growth for the foreseeable future. The loss of beef demand has been the “story” for 2009. Beef demand at the wholesale level has averaged 8-9 percent lower for the past 9 months. This loss in demand has been equivalent to nearly $90/head lost value on fed cattle. The poor economy has impacted the value of cattle in other ways as well. Hide and offal values have only recovered about $15 per head of the $80 per head loss from the summer of 2008 to early 2009. This decline lowers the value of all cattle in the supply pipeline.

The beef cow herd continues to contract and is forecast to be smaller on Jan 1, 2010 for the fourth consecutive year. Even though beef cow slaughter has slowed, it remains at an elevated level. Assuming the economy begins to recover in 2010 and 2011, the beef cow herd is expected to reach more stable levels in 2011 and 2012. The dairy industry continues to liquidate cows and should be in a better position to see profitability return in 2010 and 2011.

Cattle Price Outlook
Fed Cattle — Prices for the first half of 2009 have averaged $83.80, as compared to the first half average of 2008 at $91.85. Softer beef demand along with sharply lower hide and offal prices have accounted for the lower values. Although it is a bit of a rarity, expectations are for fed cattle prices to average higher in the second half of the year than the first half of the year. This will be primarily a function of much tighter supplies as compared to a year ago, especially in the fourth quarter.

Look for prices to spend July and August in the low to mid $80s, September in the mid $80s and October and November in the upper $80s, possibly reaching into the low $90s for a top late fall. This would result in an average fed cattle price of $84.25 for 2009.

Fed cattle supplies and beef production will tighten again next year. Exports and imports are anticipated to increase moderately. These factors should result in a net beef supply decline near 2 percent. Demand is still expected to decline but at a slower rate than experienced in 2009. The result would be an average fed cattle price of $88.

Calves — The recent break in the corn market will be supportive to calf prices going forward. Forward contracted calves sold on the videos or private treaty are expected to garner more dollars than calves sold in the spot market this fall. One other factor that should be supportive to calf price is supply. The U.S. calf crop has declined 1.2 million head during the past two years. Calf backgrounders have been able to carve out a respectable profit over the past several years by selling them as feeder cattle. Overall feed prices are expected to moderate significantly compared to the past couple of years. There are currently a lot of positives pertaining to the calf market; however, the upside potential will continue to be limited by the lack of profitability in the feed yard and the limitations of premiums in the deferred live cattle contracts. 550 pound steer prices in the Central Plains are expected to trade in a wide range, but quality genetics with performance history and quality management should garner prices in a range of $108 to $115, with the lower end of the range during the fall calf run.

Feeder Cattle Outlook — The U.S. average price for 750 pound feeder steer in 2009 was originally forecast to average near $100/cwt. The first half of 2009 they have averaged $96.16. Historically, the average increase of feeder values from the first half of the year to the second half of the year is a 3 percent increase. With an increase of 3 percent feeder cattle would average roughly $97.50 for 2009. Feeder cattle values will be well supported in the mid-$90’s the remainder of the year and find resistance in a $104-$105 range, with an average near $100 for the second half of 2009. Looking into the first quarter of 2010, the odds are 75 percent that feeder prices will be par or lower during Q1 of 2010 than the average of the third quarter of 2009. At this time, expect a seasonal market for 2010. The steer to heifer spreads are likely to stay wide near the 3-year average.

Risk Management Opportunities
For most of the past two years, deferred live cattle futures contracts have carried premiums compared to the nearby contracts. In other words, if the December live cattle futures contract is trading $10/cwt above the current cash market, then in order for these premiums to be justified, the cash market has to prove itself by rising towards these premium levels. As a result, cattle feeders have spent more time “betting on the come” and margins have remained negative. On a “cash to cash” basis, the cattle feeding industry has lost 7 billion dollars since November 2007. However, the premium structured futures market has also given cattle feeders the opportunity to protect a large portion of their equity using hedges and/or options.

The premiums in the deferred contracts are still historically large. Until the spot futures are premium to the deferred contracts, equity protection will be necessary. When the spot futures contract becomes the highest price relative to all deferred contracts, cattle feeding margins will start to improve. During this transition, cattle feeders will need to utilize more options strategies to keep from capping the topside of the market.

Corn risk management must be assessed continuously, and end users must recognize that the current supply and demand forecasts from the USDA do not support corn values moving back into the old trading range of $2.00 to $3.00 per bushel for a sustained period of time. Thus, end users should evaluate strategies to assist in taking ownership of corn for late 2009 and into 2010.

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