You can’t blame cattlemen for feeling they’ve been victims of circumstances – from BSE scares that cut off export demand, to a recession that sapped domestic consumption, to droughts that have prevented herd rebuilding.
But there's still reason to be optimistic. As one of the Springfield Livestock Marketing Center's owners, Tonto Kissee, put it, "On the upside, we have been blessed with a fabulous year, weather-wise. This has directly attributed to a record corn crop and the third largest soybean crop on record. Most pastures have never looked so good, the hay pile couldn’t be better and ponds are spilling over. Even though the agriculture economy has suffered in many areas like grain, dairy and equine, the beef cattle industry is in pretty good shape. The downside is that cattle feeders have lost money for several years and are hesitant to speculate that red meat prices will be rising in the future."
But there are steps producers can take to, if not stay ahead of the game, at least even out the bad times. Kissee advised, "Continually try to genetically improve your herd with the best bulls you can buy. Keep your calves uniform in size, weight and color. In a tough market, the price gap between a good calf and an average calf widens."
Options in Calving Seasons
Another area to look to improve: Try to direct your calving season to a better market. Some experts advise a move to fall calving, because that’s where the better money is, and ranchers in this part of the country have the option of going against the grain. “In a lot of parts of the United States,” Jackie Moore, owner of Joplin Regional Stockyards, said, “it’s either too hot or too cold for those calves born in August and September and October, so there’s not nearly as many of them… When you get to October, November and December, all those calves that were born in February and March are hitting the market whether you’re in Wyoming or whether you’re in Montana, Missouri or Arkansas. It doesn’t really matter; those calves are coming to town, and there’s an oversupply of them.”
Ron Plain agrees. The University of Missouri Extension agricultural economist told Ozarks Farm & Neighbor, “It’s kind of a geographic thing, but yes, in Missouri it seems to be that we are getting more cattle herds that are producing fall-born calves than we did a number of years ago. It has the advantage of spreading the marketing season out, and being able to also even out the workload a bit.” Plain sees the price advantage as related to cost of production, rather than sheer numbers of cattle: “The cost of gain is cheapest on grass, and so we tend to bid up the price of feeder cattle that go on pasture in the spring and summer. As you start to get closer to winter months, the price of feeder cattle tends to decline as we start to run out of grass.”
Kissee added, however, "It’s hard to plan a calving season around a moving target like the market. The market is driven by several factors such as supply and demand, feed costs, red meat consumption, weather conditions and profitability for the cattle feeder. It’s hard to know which variable will be in control the next time you sell calves." And, he suggested it's wise to "Stay informed by keeping in touch with the guys at the stockyard where you market your animals."
Retained Ownership
A number of advisors promoted retained ownership a couple of years ago as a way to smooth out returns, but for many ranchers that proved to be a disaster because of the circumstances; the unprecedented run up in grain prices, and now reduced demand for meat, left feedlot close-outs in the red for most of the last two years. “There’s a lot of hope that the recession is nearing an end, and we’ll see a pickup in meat demand in 2010… there may be a good opportunity to retain ownership, and the numbers look fairly attractive now,' Plain said. But if the recession drags on, and an early frost nips the corn crop, retained ownership could remain an unprofitable option.
This year’s excellent grass supply would seem to offer further incentive to producers with spring-born calves to hold them a few months longer. As Plain noted, “Prices for 800 lb. feeder steers tend to do fairly well as you move into the tail end of the year, because those that are marketed in the fourth quarter tend to be available for slaughter at a time the fed cattle prices are peaking in the early spring… if you’ve got a lot of grass, there’s not much other way to market it other than to graze it off. So if you’re in good shape on forages then, yes, I would recommend postponing the sale date of at least some of those animals, graze them off before you send them to town.”
Kissee said that more pounds usually mean a bigger check. "But what does it cost to get them bigger?" he asked. "This year we’ve got a lot of things in our favor like adequate rainfall, an abundance of feed and cheaper interest rates at the bank It’s hard to get all those going our way at the same time, but this year they are, and could result in a great opportunity to get them bigger."
2009 turned out to be a somewhat better year than was predicted for ranchers; prices are much lower, but so are some input costs. As a result, said Moore, the cow/calf man is getting along all right. He predicted, “At some point, with the way these numbers are, this cattle business is going to get good.”
