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.
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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