Monday, August 31, 2009

In the USA we eat French Fries and Baby Beef - In France, they just eat "Fries" and Cow Beef

Excerpt of a great archived article from the Stockman Grassfarmer and Alan Nation.  If you don't have a subscription to this unique publication, you should put it on your to do list to subscribe - whether you are a meat producer, or a consumer, it's a pleasure to read and will help you understand just what is a healthy pleasure to eat.  Click the blog title link for the complete article.

The French believe beef from older cows is Choice grade

by Allan Nation

"When you think of French food what do you think of? Over fattened geese? Snails? Heavy sauces? Coq au vin?  Paris native, Jerome Chateau, said that a far more typical French meal would be steak and fries. (They aren't called French fries in France.) "

"He said the French are by far and away the biggest beef consumers in Europe and treasure a tender, flavorful, grilled steak. The only major difference between French beef eating tradition and North America is that the French tend to eat their grilled steaks rarer and are more lavish with the use of salt and pepper."

"Chateau said the wide-spread American belief that meat from older animals has to be tough strikes most Frenchmen as incredibly naive. In fact, given the choice - as they are - the extremely picky French actually prefer their beef to be from older animals."

"Only 11 percent of France's internal beef consumption comes from animals less than two years of age and only two percent is from young males (mostly as dairy veal).  Eighty seven percent of internally consumed beef is grass finished and 75 percent of French beef consumption is from culled cows - of both beef and dairy breeds.

"He said there were dozens of breeds of cattle in France. Each is bred to work in the highly varying climatic regions of the country. These adapted cattle traditionally take that region's name as the breed's name. For example, Charolais, Tarentaise, Normande (bull pictured above ;jlw), and Simmental."

"He said he believed the primary cause of beef toughness was stress on the animal. He said the French are very cognizant of this fact and genetically select for docile and quiet animals."

French dairy cows that are to be sold for beef are allowed to graze and fatten for at least 90 days after being dried off. He said a typical practice was to dry the cows off in the winter and sell them as beef the following summer after they had fattened on the lush spring grass.

"At the abattoir French cattle are individually penned and never mixed with strange cattle. Free choice water is available to them at all times including during road transport.  Many abattoirs play Classical music in their holding areas to calm the cattle handlers and possibly the cattle."

"He said the oldest labeled beef brand is the Normande breed label. This highly successful beef label is 95 percent from culled dairy cows. He said the average age of the cows used for the premium priced beef was six years. The Normande beef label requires:

1. The cattle have to have been on one farm for at least four months before slaughter.
2. The cattle must spend at least eight months of the year on pasture.
3. The cattle must not spend over four hours on the truck to the abattoir.
4. The cattle must not stand for over 24 hours at the abattoir before slaughter.
5. The cattle are to be kept in individual stalls with free-choice water.
6. The cattle must be handled with a minimum of disruption.
7. The beef must be aged for seven days as a carcass or for 12 days in plastic wrap as individual pieces."

Sunday, August 30, 2009

Pineywoods Cattle - Maybe we need a few of these in the East Texas Pineywoods

Follow the blog title link to the Pineywoods Cattle Association's listing of cattle for sale. Amazingly, there is a bit of a predominance of the white Park color pattern in this old American breed.

But perhaps I shouldn't be so amazed, after all this same color pattern is present in the Texas Longhorn. Every British White breeder in Texas is well familiar with their calves getting docked at their local auction barn for being 'longhorns'. If you don't ask to see the scribbles on the auction ticket when you drop your cattle off, you can be assured they designated your British White cattle as Longhorns. Even if you correct the fella checking in your cattle, the order buyers really don't care. They've been buying British White crossbred cattle at a low ball price for years, and no doubt they like it that way.  So stand up when your fat calves are on the auction barn floor and let the crowd know what they are. 

I bought my first British White, my old bull 'Doc', from the late Bob Stanley.  I recall Bob telling me how hard he'd worked to promote both his cattle and the breed at his local auction barn, and he was excited at the response to his efforts.  Bob Stanley had a good eye for cattle and no doubt brought first rate calves to the local barn.  The offpsring of Bob's herd of Britsh White cattle are important genetics in our breed today.
What are Pineywoods cattle??

Pineywoods cattle are an endangered breed of “heritage” livestock that are descended from the original Spanish stock left along the Atlantic and Gulf Coasts of FL, GA, MS & AL by the Spanish explorers in the early 1500’s. The cattle evolved naturally in the brushy wooded terrane of the Gulf Coast. They have evolved to be naturally resistant to most diseases and are able to forage on rough vegetation that commercial cattle will not touch. Pineywoods are also “dry land” cattle and have evolved to avoid predators by spending only a minimum of time at their water hole. This makes them very low impact cattle, as they do not contribute to bank erosion and fouling of streams like most domestic stock. (Source: )
Unfortunately, I was not able to provide a photo as an example of a Pineywoods cow with white Park markings; but, just follow the link to the their site.  And take note of the pretty horns of these Pineywood cattle!  Look familiar?

There are a myriad of examples of the white Park color pattern historically present in some very old and respected breeds, including the Galloway, the Durham, the Welsh White (now only black), the Longhorn, the Highland, and the Shorthorn.

Friday, August 28, 2009

Global Economic Recovery or Chinese Stockpiling of Commodities?

To continue the blog thread here about the significance of the performance of the Baltic Dry Index, here are some excerpts from "Where's the Economy Headed? Insiders Watch This Key Index", Published: Wednesday, 26 Aug 2009, By: Jeff Cox, .

For some analysts, the shipping index's plunge is indicative that the slowdown in demand for shipping will mean more troubles for the US economy, despite its recent signs of growth that have led some to call the recession over. Thus, the increasing popularity of the BDI as a yardstick.   "The reason it's becoming more popular is it has been a very accurate indicator of recessions," says Tony Sagami, editor of Weiss Research's Asia Stock Alert newsletter.

Sagami sees the BDI drop as showing a fall in metals prices, which generally portends an economic slowdown; signal of a short-term correction in the Chinese markets; and a sign that the global economy remains in trouble.  "The US is headed for a Japanese-style recession," says Sagami, who recommends investors increase cash positions.
The rise in the U.S. stock market off it's scary March lows has been nothing short of phnenomenal.  Much of the increase that's been hailed as so promising is the bounce back of a lot of commodities, mostly not the agricultural kind, soybeans being an exception. Anyone could have thrown a dart at a group of steel stocks and had themselves a winner from April to August.  But is the rise in price of steel, copper, and other various hard commodities sustainable? 

As far back as at least June it was noted that China was actually stockpiling commodities, rather than buying them up for use in the normal course of the business of their once bustling economy. 
"Commodities and shipping executives describe Chinese stockpiling in recent months of a range of other commodities as well, including aluminum, copper, nickel, tin, zinc, canola and soybeans. Starting in April, China began stockpiling significant quantities of crude oil."  (Kieth Bradsher, The New York Times, June 2009)
There is lots of speculation as to why China is stockpiling these basic essential commodities.  The scariest reason proposed is that this hoarding of economic essentials is in anticipation of a drastic collapse in the value of the Dollar.  In effect, it is China's way of hedging against a possible collapse of the dollar.  If China, the largest foreign holder of our national debt, deems it prudent to hedge against the collapse of the dollar, it would be wise for the individual investor to take note and take care to have themselves hedged against the very real possibility.

But back to the Baltic Dry Index.  If you look at the chart of the BDI you see a blip upwards beginning early April and beginning to falter by the end of June, marking the beginning of a downward trend that continues today.  Despite this, the  Dow continued it's phenomenal run upwards, with only one barely noticeable blip down in July.  The HangSeng index on the other hand began a downward move toward the end of July, the beginning of which correlates well with that tiny little July blip down of the DOW.  Which market is living in the real world?  Your guess is as good as mine.

China's commodity stockpiling materially contributed to that blip up in the BDI.  Essentially, that makes it an articifical blip upward -- not a rise in shipping traffic and freight rates due to 'normal' rising global demand indicative of a recovering world economy.

Wednesday, August 26, 2009

The Agricultural Economy and the General Economy are Inversely Related

Thanks to an article written by Stu Ellis, University of Illinois, here is an answer to the puzzle of why the stock market is rallying on perceived economic recovery but the agricultural sector, including commodities and live cattle, is lagging or worse. The following are excerpts from his interview with Kansas State Economist Allen Featherstone:
Featherstone says the farm economy and the general economy do not always move together, since the linkage is an inverse one that has farm income low when the US GDP is higher. He points to the relationship between the US stock market and the Illinois corn price and says the correlation has been nearly neutral since 1960, "Therefore, while the general U.S. economy may be slow there appears to be little long term evidence that there will be major spillovers into the U.S. farm economy. In fact, based on history, it is more likely that the agricultural economy and the general economy are inversely related."

The Kansas State economist says the overall strength of the farm economy is as strong as it has been in nearly 20 years and . . . if farm income remains high, so will land values, but if incomes fall, there is a good chance for declines in land values, and he says USDA forecasts have a lot of uncertainty about future farm income.

Given Featherstone's warning about declining farm income and land prices, does he think farm income will drop? He says US agriculture has been reliant on trade, but the trade surplus agriculture enjoys will decline more than 50% this year due to reduced overseas demand. That will impact different commodities and will impact farmers who produce those commodities, "A reduction in agricultural exports may lead to a building of commodity surpluses (stocks) and a reduction in crop prices and ultimately net farm income." And he says the two prior "busts" in the land market were caused in part by a softer global demand for US farm products.

Featherstone inadvertently provides part of the answer to why the Baltic Dry Index, normally a leading forward indicator to a period of rising economic bliss, has actually lagged markedly behind the current stock market rally. Featherstone indicates there has been a more than 50% decline in overseas demand for our commodities 'this year', and all those commodities would have been transported on various types of ships to many foreign ports. If demand for basic commodities produced in the USA remains 50% and more below normal, that would necessarily have a continuing material impact on freight rates as measured by the Baltic Dry Index.

While Featherstone doesn't address where he sees demand for our commodities in the coming year, the tone of the interview is on the negative side for a rapid global recovery and increased demand for our commodities in the coming months.

Click the blog title link above for the full text of the8/26/09  article by Stu Ellis.

Tuesday, August 25, 2009

Small Feedlots Up for Sale - Beef Demand Down 9%

Reconciling the up beat stock market returns of the last several weeks with any sort of economic reality just gets harder and harder. The American consumer is supposed to be looking at things from a positive perspective now and voila' the economy of the USA will be booming within the year. Or not.

The Baltic Dry Index (BDI), a reflection of demand for ships carrying a wide variety of materials and finished product to all ports around the world, is barely tug tugging ahead from its unprecedented lows of 2009. The BDI generally is something of a leading indicator to either rallies or routs, but not so in this current dazzling stock market rally.

Basic agricultural commodities are somewhat mixed, but as a whole generally are not far off their average basket price in 2007 prior to the last huge run up in oil, as reflected in the chart of DBA, an agricultural commodities ETF that reflects a basket of sorts of primary ag related commodities.

For the rancher with hungry bovines to feed, that's good news. We don't wish to see commodities prices jump up along with this crazy market. But then there's that inflation question? Just how will the expected gross inflation from irresponsible government spending and massive debt impact the price of commodities?

Not having the smarts to answer that question myself, I'll avoid it here. There are ample analysts with educated opinions about the direction of basic commodities in a staggering inflationary economy. I'm actually most curious as to why commodities have managed to stay out of the current rally, given that their basic demand is driven by the consumer and of course ethanol producers, whose business in turn is driven by basic consumption.

As I mentioned, for the cattle rancher, it's good news that so far commodities have at least maintained their average back track to 2007 levels, we have those hungry bovines to feed after all. What is really interesting to observe is that COW futures are tracking the bottom of the market, at least to my eyes. In addition to, or instead of, owning actual cows, investors can buy what some call an E-COW. COW is the symbol for an ETF that tracks cattle futures. Wow, take a look at that chart.

COW is even lower than it was in March of 2009 when all markets in general took a nose dive. COW just keeps getting lower and lower, the winner of the how-low-can-you-go Limbo game, but COW looks like the only major Limbo player.

If the US economy is rebounding so nicely, why is COW still playing Limbo? Has the American consumer decided that foregoing some beef for dinner wasn't so hard, and now they've lost their taste for hamburger? After all, the consumer is bringing our economy back. Right? Are American consumers becoming more 'green' oriented? Some of them deciding to do their bit to help global warming by not eating beef from a farting beast?

It looks like maybe 9% of them are perhaps doing just that. After all, we're told the economy is on the road back, folks should have been buying more beef in at least June and July when suddenly the economy of the country started looking rosy. Yet consumer demand for beef has dropped 9% in the last 9 months, per Cattle Max.

If you think this is the bottom for beef, maybe it's time to buy some momma cows for your pastures, or jump out there and buy an E-COW, or how about one of those small feedlots that are headed for bankruptcy and closure as discussed in the article below. After all, "the country has the lowest calf crop since 1999 and fewest cattle on feed since 1999".

“As a result of losing money, we have people in dire straits,” said Paul Hicks, a Fort Worth cattleman who works with feeders. “A lot of them are stuck with a lot of empty pens. A lot of feed yards are for sale —there's a world of feed yards available right now.” BARRY SHLACHTER, FORT WORTH STAR-TELEGRAM

Where is the government bail-out for those small feedlots? How about the Obamanomics gurus start issuing cash-back coupons for folks to buy a nice chuck roast? Oh yeah, they probably want to shrink the number of cattle feedlots cause of all that methane gas, have the common folk become vegetarian, and keep those really nice rib-eyes for those elite White House suppers.

Lightbulb! Maybe the White House would like to have a few hundred elite rib eyes from the herds of British White cattle? British White beef producers should work on that, the White House could literally consume all the beautiful grass fed British White beef produced. And it's fitting, the beef of old royalty on the dinner plate of new American royalty. I like that! Maybe that's a niche British White breeders should pursue.

As a side note, I am not fond of the seemingly nasty environment of feedlots. And my awesome cow, Bountiful, just closes her eyes in dismay at the mere thought of one of her babies ever stepping foot into their muddy pens. But, it is impossible to provide beef to the majority of American consumers without feedlots. Perhaps more people are choosing to buy beef direct from the family farm and that is contributing to the decline in demand for the industrial sort of beef.....but I imagine that is as much a pipe dream as believing the current stock market razzle dazzle of a strong economy just around the corner.