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.
As University of Arkansas Logan County Extension Agent Lance Kirkpatrick noted, "The cattle industry is a global market, and even though we sometimes think of the industry as a rural, country market setting it is far from that." And it's not all gloom and doom, he added: "According to the latest reports it doesn’t look like beef prices will fall too much, cattle on feed are expected to continue to run below what they were a year earlier, and prices are expected to stay the same or slightly increase this fall.
"If you look at the price producers were paid for a 500 lb. heifer or steer 15 to 20 years ago, I think most people would agree that they were pretty close to the price calves are bringing today. That being said, the input cost, things producers utilize every day to produce calves and maintain beef herds, has increased. I think that producers need to look closely at production costs and know how much it costs to get a calf to market.”
Fall Calving Helps
There are steps producers can take to, if not stay ahead of the game, at least even out the bad times, and many producers have been taking those steps. One of those things is 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, in Carthage, Mo., 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.” And, he said, many of his customers have figured that out, “because you sure see a lot more calves and yearlings in the summertime than you did four or five years ago.”
But, Kirkpatrick warned, producers need to approach new techniques with caution and evenhandedness. "I think it is difficult for a producer to change his current calving season to match market peaks. I would recommend that producers make sure they have a tight breeding season of 60 to 90 days. A good set of uniform calves goes a long ways when it is time to send them to market."
Retaining 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. But it appears the 2009 corn crop will be a record, and Ron Plain, University of Missouri Extension agriculture economist added, “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.” 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.”
Backgrounding
"Producers have a lot to gain by backgrounding their cattle," Kirkpatrick said, adding, "it lets you market a healthy calf, and one that does better in feedlot conditions compared to those that are weaned and sold the same day."
He noted, however, producers should consider how many calves they have and how much it is going to cost to keep them to a determined weight. "It also depends on the amount of feed you have available; grass is the cheapest and will help you cut down on the amount of feed you will need to feed them," he said.
The grain markets also altered cattle marketing patterns off the Plains; Jackie Moore said usually, a big wheat crop will result in lightweight cattle bringing big premiums in the fall and winter. But the record wheat prices of the last two years discouraged wheat grazing and backgrounding, so calf prices have been under pressure.
The year 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, but he predicted, “At some point, with the way these numbers are, this cattle business is going to get good.”
