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BEEF Cattle questions may be directed to the OSU Extension BEEF Team through Stephen Boyles or Stan Smith, Editor

Previous issues of the BEEF Cattle letter

Issue # 458

October 26, 2005

Udder Soundness is Important Culling Criteria - Glenn Selk, Oklahoma State University Extension Beef Cattle Reproduction Specialist

Every year at "preg" checking time, ranchers evaluate cows and make decisions as which to remove from the herd One criteria that should be examined to cull cows is udder quality. Beef cattle producers are not as likely to think about udder health and shape as are dairy producers, but this attribute affects cow productivity and should be considered.

Ranchers may be surprised to find that about 2/3 of the range cows tested experimentally were infected with one or more mastitis-causing bacteria in one or more quarters. Two previous studies (one in 1977 and another in 1983), indicated that the occurrence of clinical mastitis in the beef cows herds were 17.5% and 11.9%, respectively. These caused reduced weaning weights of 12.5% and 7.3%, respectively. A later study (1986) of beef cows found a higher percentage of clinical mastitis of 37%. The weaning weight loss of calves nursing infected cows was 9.6% and these researchers noted an economic loss of $31.43 per calf due to occurrence of mastitis in the dam. The presence of the organisms does not necessarily mean that the cow has clinical mastitis and her milk production will suffer. It is known that the incidence of dry quarters increase with cow age.

An experiment conducted several years ago at the Range Cow Research Center near Stillwater gives some indication as to the impact of mastitis on beef cow performance. Also the OSU scientists examined the effects of intramuscular treatment with "long-acting" oxytetracycline at weaning time and again at calving on the subsequent milk production and calf weaning weights. They found that cows with one or two dry quarters had calves with severely reduced weaning weights (50 - 60 pounds) compared to cows with no dry quarters. Treatment of cows at the previous weaning and/or after calving with the long-acting oxytetracycline did not influence calf weaning weight. Read the details of this study in the 1996 OSU Animal Science Research Report. This study is available on line at http://www.ansi.okstate.edu/research/1996rr/14.pdf The heritability estimates of udder characteristics are variable. Research with Hereford cattle reported heritability estimates for udder capacity and shape to be relatively low at .12 and .15 respectively. A study done in Brahman cattle for the heritability of udder soundness indicated indicated that progress could be made by selecting for udder soundess. They reported that 25% of the differences in udder soundness was due to genetics.

An evaluation system for udder soundess has been developed and used by some breeds. Teat shape and udder suspension are the two primary characteristics evaluated. Below are drawings representing sound udders on the left and unsound udders on the right.

The first two drawings are teat shape. The very "funnel" shaped teat may have been mastitic in the past. New born calves will find it difficult to nurse such a teat.

Teat Shape: Note the large "funnel-shaped" teats on the cow on the right

Udder suspension: Weak udder suspension leads to "pendulous" broken-down udders that also are very difficult for young calves to nurse.

Both cows on the right would be excellent candidates for culling this fall.

Plan Ahead: Make Income Tax Estimates Now - Donald J. Breece, Farm Management Specialist, OSU Extension Center at Lima

October/November is not only harvest season, but a great time to estimate the years income tax liability. With nearly two months remaining in 2005, adjustments for income and expenses may still be made with significant effects on tax liability. After January first, there is little room to maneuver these adjustments, other than choosing depreciation options or a contribution to an IRA. Some expenses, however, may not be pre-paid. Rent payments, for example, made in advance may only be deducted in the year to which they apply. The following is extracted from a Purdue tax management publication by George F.Patrick.

"Most farmers use the cash method of accounting. Farm expenditures are normally deductible when paid. Receipts are generally reported as income in the year in which they are received. As a result, farmers have the opportunity to review their year-to-date receipts and expenses, and make potentially money-saving adjustments for taxes. But that window of opportunity closes for all practical purposes with the end of a farmers tax year. So now is the time to review and adjust if necessary.

One's tax management goal should be maximizing after-tax income or wealth over time, not minimizing taxes in any one year. Some people get so concerned about saving a few dollars in taxes this year that they miss the big picture. Because of the new Section 179 expensing and additional first-year depreciation deductions, many farmers may simply assume that they will not have a tax problem, instead of viewing each year as a tax-planning opportunity.

Keeping taxable income relatively stable year-to-year has been a key to effective income tax management in the past, because of the progressive nature of income tax rates. Recent tax law changes have "flattened" tax rates, reducing the progressiveness of income tax. Wide swings in taxable income are likely to result in higher taxes, although farm income averaging may help. The amount of income that is "tax free" because of personal exemptions and the standard deduction has increased due to law changes and inflation. One should plan to report at least this "tax-free" amount of income each year. Self-employment taxes are larger than income taxes for many farmers and may be more difficult to manage because of limited exemptions and deductions.

As a minimum, individuals should tally their receipts and expenditures before the end of the tax year. This allows year-end tax planning. Depending on the income situation, additional sales may be made before December 31, 2005 or delayed into 2006. A part of the 2006 direct payments from the government for corn, soybeans, and wheat can be collected in 2005 or after January 1, 2006. Section 179 and additional first-year depreciation elections can have a major impact on taxable income, and these decisions can be made after the close of the tax year. However, the depreciable assets must have been purchased before the end of the year. December purchases of feed, fertilizers, and chemicals to be used in 2006 can also affect the taxable income. Although delivery of inputs purchased before December 31 is not required for a tax deduction, a purchase rather than just a deposit must be made in order to claim a deduction for prepaid expenses. This means that the invoice should list specific products, and quantities and the arrangement should not pay interest to the purchaser.

Deferral of income and income taxes can still be an effective tax management strategy. If income taxes are deferred, even for a year, this is an interest-free loan from the government. Although the estimated tax payments required to avoid penalties have been increased to 90 percent of the tax liability, farmers continue to have an exception. If two-thirds or more of gross income is from farming, farmers can pay the tax due by March 1 and avoid estimated tax penalties. Although farmers must pay by March 1, the due date of their return for many other purposes, such as retirement plan contributions, is April 15.

Tax implications of major decisions should still be considered before the transactions are finalized. Installment sale contracts often have tax benefits because the taxable gain on the sale is spread pro rata over the tax periods in which the contact payments are received, with certain exceptions. Tax-free or like-kind exchanges, such as the trade-in of machinery and equipment, may reduce taxes, but farmers need to consider both income and self-employment tax impacts. Because of the complexity of the tax laws and regulations, competent professional tax advice is generally a very worthwhile investment."

Cattle Market Absorbs Canadian Cattle - Chris Hurt, Extension Economist, Purdue University (released 10/24/05)

The cattle market has outperformed expectations this fall. Prices for choice finished steers dropped to the high $70s in July and August as Canadian live cattle were allowed to move south. There was a general concern that these added supplies would result in weak fall prices. That has not occurred as cattle prices have moved to the higher $80s and futures markets remain optimistic that prices they will push into the low $90s this winter.

So far this year, finished steer prices have averaged near $86, about $1.50 higher than for the same period last year. Prices for 500-550 pound steers on the Plains have averaged a record $1.32 per pound, compared to $1.21 per pound during the same period last year. While finished cattle prices are about 2 percent higher than last year, calf prices are 9 percent higher, reflecting the lower feed costs. Beef supplies so far this year have been slightly below the same period in 2004. Modestly lower supplies with somewhat higher prices suggest that beef demand continues to remain about as strong as it was last year.

There remain several foggy issues for the cattle market in coming months. The first is the still growing imports of Canadian cattle. In September, the number of live cattle imported from Canada was about 3 percent of slaughter. However, the October numbers are closer to 4 percent of slaughter. In the last year before the restrictions beginning in May 2003, the U.S. imported nearly 5 percent of its slaughter as Canadian live animals. A second point is that the feeder animals that have been imported since mid-July have not come to slaughter yet. These feeder animals have represented 45 percent of the total Canadian live imports so far.

Clearly, feeder animals from Canada are just beginning to show up in feedlot numbers. The latest USDA on-feed inventory showed that 10.5 million head of cattle were in feedlots, virtually unchanged from a year-ago, but more than expectations prior to the report. The number of heifers that were on-feed, which were down 11 percent, continues to reveal a preference for retaining females for breeding herd replacements. The number of steers, on the other hand, was up 6 percent. Placements at 99 percent were at the high end of expectations, and marketings were also somewhat lower than expected.

Some of the recent price optimism is related to the potential to open U.S. beef exports. The Japanese have mentioned the possibility of opening their market yet this year. Thailand , a small market, has apparently ended its restrictions on our beef imports which had been in place since the first case of BSE in December 2003. Optimism is friendly to cattle prices, but the beef industry has had other optimistic moments in the past two years just to see hope fade.

Prices for finished steers are expected to be in the mid-to-higher $80s this fall and in the lower $90s this winter. Calf and feeder cattle prices are expected to be near record high this fall as well. Steer calves weighing 500 to 550 pounds are expected to average $125 to $135 per hundredweight this fall, while feeder cattle are expected to average $110 to $115 per hundredweight.

The U.S. cattle market seems to have quickly integrated Canadian live cattle back into the feedlots and into the slaughter mix without major bearish implications. Returns for brood cow operations remain strong and are causing additional interest in heifer retention. Potential for opening the world's markets to U.S. beef appears more likely than at any time since late 2003. Cheap corn and soybean meal, especially in the western Corn Belt , are making cattle feeding, and heavier weights, an added attraction.

"Why throw your oats from a perfectly good airplane" . . . another update

Many continue to ask, "what do your oats look like?" The photo below shows the result from 100 pounds of oats flown onto standing corn on August 23, 2005. Katrina delivered about 3 inches of rain 7 days after the seeding, and corn silage was harvested 4 days later. These oats are ~23 inches tall today (see photo), have not been offered any supplemental fertilizer, and on the day of the photo (10/24/05) would have yielded about 3200+/- pounds of dry matter at a total cost of $23 per acre.

This link will show you what these oats looked like a month ago: http://fairfield.osu.edu/ag/beef/beefSep28.html#linkd This link will take you to photos from back at the beginning of the project: http://fairfield.osu.edu/ag/beef/beefSep7.html#linka

Visit the OSU Beef Team calendar of meetings and upcoming events

BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status. Keith L. Smith, Associate Vice President for Ag. Admin. and Director, OSU Extension. TDD No. 800-589-8292 (Ohio only) or 614-292-1868

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