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July 7, 2017 CapitalPress.com 5 Market disruptions changing beef trade By CAROL RYAN DUMAS Capital Press Upheaval in Brazil’s beef industry, a new trade agree- ment between the U.S. and China and proposed bans on cattle slaughter in India have the potential of causing major shifts in global trade. In addition, reduced ex- port supply from Australia and New Zealand could cause ex- port trade shift back to a sup- ply-limited market. Those are the key findings in Rabobank’s latest beef quar- terly report. Brazil’s industry is being tested by turmoil, with its fed- eral police in March announc- ing an investigation into irreg- ularities in meat inspections. Now one of the country’s larg- est meat processors finds itself involved in a complex political situation. These events are reducing consumer and cattle-produc- er confidence, and the recent drop in cattle prices could lead to future reduction in produc- tion, the bank’s analysts said. The situation is also im- pacting exports, with beef ex- ports declining 10 percent year over year January through May — opening space in the global beef market. While exports in May increased from the fall- out in April, they were still 10 Carol Ryan Dumas/Capital Press Increasing supplies and slowing seasonal demand has Rabobank analysts projecting an end to the rally in cattle prices. percent below last year’s lev- els and recovery is likely to be gradual, the analysts reported. In addition, USDA on June 22 announced a suspension of imports of fresh Brazilian beef due to safety concerns. The volume is inconse- quential, but it exacerbates Brazil’s export issues because it sends a shock wave to other countries, given the integrity of the U.S. inspection system, said Don Close, Rabobank se- nior analyst. In India, the federal gov- ernment in June released a di- rective that would ban the sale of cattle, including buffalo and cattle for slaughter, in certain markets. No further informa- tion is yet available on how many Indian states would con- form, but any ban on slaughter would have an enormous glob- al impact, the analysts said. For other major exporting countries, the analysts report- ed restricted cattle supplies in Australia continue to be the main feature. Total exports for May declined 5 percent year over year, following reduced production through April. New Zealand’s export beef production for the 2016/17 season is expected to be down 1.8 percent year over year due to a 3.7 percent decrease in ex- port cattle slaughter numbers. Higher milk prices ending the dairy herd retraction over the last two seasons are the main driver. In the U.S., the cattle com- plex has recorded a rally since October price lows, with fed cattle recovering from $97 per hundredweight to a spring high of $145 per hundred- weight. Domestic demand has been impressive, and export demand has been exceptional, the analysts said. That export demand has been supported with growth primarily from Asian coun- tries, and the U.S. has been the beneficiary of the market dis- ruptions of several global beef competitors. “Based on price action in recent weeks, seasonal con- siderations and expectations of increased fed cattle supplies and seasonally increasing car- cass weights, it looks like this rally is coming to an end,” the analysts stated. Fed cattle supplies are ex- pected to increase during the second half of the year, and domestic demand is expected to slow seasonally. Based on historical data, fed cattle prices would be expected to decline to $120 to $125. However, due to increased supplies derived from feedlot placement pat- ters, the analysts are projecting summer lows of $110 to $115. Temperature changes raise falling number worries Researchers: Look at variety data when planning for fall By MATTHEW WEAVER Capital Press Rapidly changing tem- peratures have Northwest re- searchers worried about the possibility of falling number problems in this year’s wheat crop. Weather in late June was “getting closer to the sort of textbook conditions we don’t want to see,” said Michael Pumphrey, spring wheat breeder at Washington State University. Falling number is a test that measures starch damage in wheat that affects the qual- ity of baked goods and noo- dles. Farmers were caught off guard last year when roughly 44 percent of soft white wheat samples and 42 percent of club wheat samples tested re- ceived ratings below 300, the industry standard preferred by key overseas customers. The problem did not make its way to international buyers. The industry estimates the prob- lem cost more than $30 mil- lion in price reductions during the 2016 wheat crop, which was worth $662.2 million in Washington state and $1.27 billion in the Pacific North- west. A specific type of falling number problem is late-matu- rity alpha amylase, or LMA, an enzyme required for seed germination. It is caused by “violent” temperature fluctu- ations during grain develop- ment, approximately 21 days after flowering, he said. Pum- phrey pointed to temperatures in the high 90s during the day dropping to the 40s at night. “We’re not out of the risk yet, and we may have just ac- tually experienced some prob- lems,” Pumphrey said. He said it’s still not clear exactly which growing stages of the crop are most vulnera- ble. “Keep in mind it’s these really extreme temperature changes,” he said. “It’s not how hot it was one day and how hot it was the next day. It’s how hot and how cold over a few-day window the crop has experienced.” It mainly depends on whether the temperature shift coincided with a five-day window of susceptibility in popular wheat cultivars prone to LMA, said Camille Ste- ber, research plant molecular geneticist for USDA Agri- cultural Research Service in Pullman. “At this point, all we can do is keep our fingers crossed that we dodge the bullet this time,” Steber said. The crop is at different stages of maturity across the state. Most of the wheat at the susceptible stage is farther west, she said. If weather fore- casts proved correct, those temperature swings were not as extreme as they were in Whitman County, she said. Researchers are providing more information about wheat varieties that are less suscep- tible to falling number prob- lems, Pumphrey said. He urg- es farmers to look at WSU’s data when selecting varieties for next year and speak with their seed dealers. But farmers won’t have many options for the wheat currently in the field if falling number is a problem, he said. “Timely harvest — it’s easy to say, hard to do,” Pum- phrey said. “About the only thing they can do to control falling number right now is get the crop out of the field as quick as possible.” Pre-harvest sprouting and rain-induced falling number problems in the grain are still risks, too, he said. “We just hope Mother Na- ture doesn’t bring us any rain at the wrong time,” Pumphrey said. Rains could be a concern, depending on whether the wheat was yellow and mature at the time, Steber said. USDA breeder Kimberly Garland-Campbell believes it’s too early for sprouting on the Palouse, but some fields in central and southern Wash- ington, near Connell or Walla Walla, may be mature enough to sprout if rained on. Feds investigate Spanish threat to U.S. olive industry Ripe olive processors claim Spain is undercutting prices By MATEUSZ PERKOWSKI Capital Press Federal trade authorities have launched an anti-dump- ing investigation of Spanish companies that are accused of flooding the U.S. market with ripe table olives. The U.S. Internation- al Trade Commission will determine whether govern- ment-subsidized Spanish ripe table olives are sold at arti- ficially low prices that have undermined domestic growers and processors. The investigation was prompted by a request from the last two remaining ripe table olive companies in the U.S. — Bell-Carter Foods and Musco Family Olive Co. — which claim that Spanish imports threaten to destroy the U.S. industry. “U.S. domestic processors invented the ripe olive product but without relief from unfair- ly traded imports, the U.S. in- dustry will disappear,” accord- ing to their petition to USITC. Ripe table olives, which are typically black, pitted and sold in pasteurized cans, are pro- duced from different varieties than those grown for olive oil. They’re also picked by hand, whereas olives for oil are often machine-harvested. Low prices in recent years have forced farmers in Cali- fornia, where most of the crop is grown, to reduce their ta- ble olive acreage from about 23,000 acres in 2013 to 17,000 acres in 2017, the petition said. Growers are instead convert- ing their land to higher-value crops, such as almonds. SEVENTEENTH ANNUAL SAGE Fact #144 Downstream from Boardman on the Columbia River, the John Day Dam contains 16 generators that produce enough electricity to power two cities the size of Seattle. State has struggled to make money from its rangeland State exploring strategies to yield larger returns By CLAIRE WITHYCOMBE Capital Bureau SALEM — The near- ly 600,000 acres of state rangeland leased to ranch- ers to graze livestock have struggled quietly to generate a profit for decades, even as similar management issues involving the Elliott State Forest are a higher priority and have erupted in public controversy. But state lands officials say they continue to explore strategies to yield higher returns on eastern grazing lands. In the 2016 fiscal year, it cost the state $1.2 million more to manage its rangeland — a term that can denote grasslands as well as Eastern Oregon’s iconic stretches of sagebrush — than it realized in revenues. The state holds a variety of trust lands, including for- ests, mineral resources and agricultural land. They’re required to generate reve- nue for the Common School Fund, an endowment for pub- lic K-12 education. Range- land is the largest trust land segment. Environmental regula- tions have restricted logging on state forests, causing the forests to operate at a loss. So the state land board — which oversees state trust lands — has been considering selling the Elliott, an 82,500-acre swath of forest near the southwestern Oregon coast. The possible sale of the Elliott galvanized the state’s environmental activists, though, who spoke of the state’s duty to protect pub- lic lands from privatization, turning the debate political in heavily Democratic Oregon. In May, the board — the gov- ernor, secretary of state and treasurer — decided to pull out of its planned sale to a timber company. By contrast, the state’s rangelands, concentrated mostly in southeastern Ore- gon, haven’t received much public attention. Returns from the range- land have varied. Between 2013 and 2015, each acre of rangeland gener- ated an average profit of only four cents. That means that rangelands did generate posi- tive net revenues some years, but the margin is thin. The state’s trust agricultural land had an average per-acre profit of $18.84 in that period. Much of last year’s loss- es were due to the costs of fighting wildfires. Fires cost the department $1.8 million in 2016, Department of State Lands Director Jim Paul said. The risks that trust range- land pose to the Common School Fund are not new. In the early audits, the problem caught the attention of Ore- gon’s chief public auditor. Back in 2004, after finding that state rangelands had lost money as far back as 1987, an audit by the Oregon Secretary of State’s Office made three main recommendations: that the state lands department sell some or all of the range- land in a competitive bidding process, exchange it for a “better performing asset,” or get market rates for leases. More than 10 years later, though, the state’s rangeland holdings remain relatively intact. In 2004, the state held 613,000 acres of trust range- land. In 2016, it held 596,784 acres. The department says the size of its holdings compli- cates the sale of rangelands. Putting a large share of it on the market could depress prices, meaning that sales have to be spread out over time. And the state’s trust for- ests, such as the Elliott, which are consistently losing more money quicker have present- ed a more immediate prob- lem, Paul said. “The bigger picture is just around the issue of prioritiza- tion and where do we need to focus now, versus which things are sort of in process and are going to take longer,” Paul said. He said you can look at the state’s trust lands like an investment portfolio. “An individual one-year loss or one portion of the fund that’s doing poorly isn’t necessarily the trigger,” Paul said. “It’s, are you tending to the whole and getting the performance that a prudent investor would with that kind of asset?” And since the 2004 au- dit, Paul said, the department has increased its lease prices, which means the department has brought in more revenue. The department’s most re- cent annual report on its trust lands also seems to indicate that the department wants to find other uses for rangeland, such as installing irrigation to convert it to agricultural use, which could improve the land’s money-earning pros- pects. Linn County Fair & Expo Center • Albany, OR TUE • WED • THU NOVEMBER 14 • 15 • 16, 2017 Equipment Show OVER 350,000 SQ. FT. OF DISPLAY SPACE ADDED 20,000 SQ FT OF INDOOR HEATED SPACE LIMITED VENDOR SPACE AVAILABLE! Ag Show Season Kickoff CALL TODAY! 1-800-208-2168 27-2/#6 Courtesy Department of State Lands The state of Oregon holds nearly 600,000 acres of rangeland such as this in trust for the Common School Fund. The state has long struggled to turn a profit. 27-1/#5
