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News
Value Of Gain Historically
High
“Historically, we’ve used a value of gain of about
50¢/lb. on growing cattle,” says Matt Poore, North Carolina State
University Extension livestock nutritionist. “With lighter weight
feeder cattle now priced similarly to heavier weight feeders, it
suggests value of gain in this new environment may be worth as much
$1/lb., which is what the feedlot cost of gain is currently.”
Cost of gain (COG) is obviously higher, too. Where he used to shoot for
$35/cwt. COG in rations, Poore says $65 or so is the new benchmark.
Still, the net between what was ($15-$20) and current possibilities
($35) is significant. Keep in mind, this is feed COG only; death loss
and morbidity can turn potential upside down quickly.
“The COG structure has been inverted,” emphasizes Dave Latta, Pratt
Feeders, LLC assistant general manager, Pratt, KS. “Every pound of
gain makes cattle cost more rather than being able to cheapen them up
with more pounds.”
Poore and Latta were on hand to help explain current industry transition
at the recent Tri-State Stocker Conference in Abingdon, VA.
This COG inversion is one reason placements of lighter weight calves
into feedlots has been less this year (though placements are also down
overall).
Latta shared an example in which 9-weight cattle placed on feed with $4
corn had a projected breakeven of $100.69 vs. $99.82 if the same steers
had been placed directly on feed at 600 lbs. rather than grown first to
900 lbs. (the lighter calves projected to hit a more favorable market).
At $7.25/bu. corn, though, before prices started to tumble – even
improving feed efficiency by 0.3 lbs – the projected breakeven for the
6-weight was $115.81, compared to $110.69 for the 9-weight.
Availability makes it impossible for feedlots to place only heavier
weight calves, but COG economics typically favor them more as feed
prices increase.
Moreover, this is one of those rare times in history when the common
definition of value of gain ends up being the same as the technical one.
Rather than value of gain being worth market price, it’s actually the
difference between buying and selling price divided by the pounds of
gain. With little or no price differential between weight classes, today
it’s basically the same thing.
In fact, Poore explains, “With costs and economics the way they are,
it may make sense to put a little more feed into growing cattle to
extend forage further than what we used to think.”
Though commodity prices have declined since July, it’s not like feed
is cheap. The bottom isn’t likely to drop out of it either, given
global demand.
Stocker News
National Stocker Survey
Completed
“There’s a treasure trove of information here, some
of it benchmarking what we’ve long believed about the stocker
industry, and other data offering new perspectives,” says Dale Blasi,
Kansas Sate University (KSU) Extension beef stocker specialist.
Blasi coordinated the involvement of 12 land-grant universities in
preparing and analyzing the recently completed National Stocker Survey
(NSS). It’s the first time that the demographics, management practices
and needs of the nation’s beef stocker and backgrounding industry has
been assessed so broadly and deeply.
Along with KSU, other industry partners included: Auburn University,
Iowa State University, Mississippi State University, North Carolina
State University, Oklahoma State University, South Dakota State
University, Texas A&M University, University of Florida, University of
Missouri, University of Nevada and Western Kentucky University.
“The stocker industry has always been a vital part of the U.S. beef
industry that allows us to remain more competitive with other consumer
protein sources than we otherwise could,” Blasi says. “As feed costs
and cost of gain increase it becomes even more essential that we
understand and serve that segment of the industry.”
Watch for detailed overview in the next issue of BEEF Stocker
Trends and in the October issue of BEEF.
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Stocker Management
Clover Is No Silver Bullet
Though forage legumes offer a valuable alternative to
high-cost nitrogen (N), they’re not a get-out-of-jail-free card
cautions Ray Smith, a Texas AgriLife research scientist.
Smith is a long-time advocate of using clovers and ryegrasses in winter
pasture to decrease winter pasture costs and supply N for warm-season
grasses.
"A healthy stand of arrowleaf or crimson clover over-seeded on
warm-season perennial grass pasture in East Texas will provide an N
input of up to 100 lbs./acre/year," Smith says. "However, this is only
accomplished through a grazing system with the recycling of animal
waste. You've got to be thinking in terms of (recycling through) animal
grazing."
It also pays to understand the limitations.
Smith explains one myth associated with clovers is that they will supply
N for the ryegrass it’s planted with.
"Clover will not directly provide N for the ryegrass in a
ryegrass-clover mixture. It will provide N to the warm-season grass
(that comes later) through recycling,” says Smith. He adds that the
amount of N fixed from the air by legumes is dependent upon the amount
of N already in the soil; Ryegrass needs N before the clover can provide
it.
However, Smith also explains, “If a clover-ryegrass mix is planted and
fertilized, then the N-fixation process will be slowed or turned off.
The ryegrass will do great, but the clover will not contribute very much
to the mix."
Therefore, he says timing is everything when it comes to applying
fertilizer. In East Texas, for example, he suggests not fertilizing at
planting (typically in October in these parts), but waiting a couple of
months.
"This will give the early advantage to the clover, which will start
fixing N," Smith explains. "A low rate of N at 50-60 lbs./acre can be
applied to the clover-ryegrass mix in late December or January. This
will increase the ryegrass growth and allow the mix to efficiently fix
and use N."
Markets
Calf Demand Perks Up
For the first time in more than two months, the national
yearling price trend was lower last week, say analysts with the
Agricultural Marketing Service (AMS).
“Several markets noted that buyer demand for calves was
actually better than the yearling feeder demand for the first time in
recent memory,” say AMS reporters. “Heavy rains across the Southern
Plains have perked up the late grass that many backgrounders will use to
warm-up lightweight calves before turning them out on early wheat
pasture, which should have a good start this year from ample subsoil
moisture. Farther north, farmer feeders are in the market for
top-quality middleweight calves from 500-700 lbs., pushing steer prices
over $130/cwt. and heifers close to $120 at some upper Midwestern
auctions.”
All told, yearling cattle traded steady to $2 lower last week, while
calves were called unevenly steady.
Fed-cattle prices dropped $1 on a live basis last week; $2-$3 in the
beef. According to the Texas Cattle Feeders Association market report
Friday afternoon, “Cattle feeders were willing to sell the long-day
and plainer quality cattle at the weak to lower price level. The
shorter-day and better quality cattle were all priced firm to higher.”
Though Friday’s Cattle on Feed report could be regarded as bullish
longer term – placements were down compared to what most analysts were
expecting – it’s neutral in the short term as marketing and cattle
on feed inventory jibed with common pre-release estimates.
AMS analysts also pointed out how volatile the corn market remains:
“The CBOT September corn contract has settled with more than a 10¢
move on every August trading session but one this month. This has
feedlot owners shaking their heads in confusion on when is the best time
to secure feed inventories. At the same time, cattle feeders can’t
seem to maintain a fed-cattle rally as the cash market continues to find
fierce resistance at the $100 level.”
The summary below reflects the week ended Aug. 22 for Medium and Large 1
– 500- to 550-lb., 600- to 650-lb. (calves), and 700- to 750-lb.
feeder heifers and steers (unless otherwise noted). The list is arranged
in descending order by auction volume and represents sales reported in
the weekly USDA National Feeder and Stocker Cattle
Summary:
| Summary Table |
| State | Volume | Steers | Heifers
|
| Calf Weight | 500-550 lbs.
| 600-650 lbs. |
700-750 lbs. | 500-550 lbs. | 600-650
lbs. | 700-750
lbs. |
| MO | 25,700 | $120.40 | $119.25 |
$114.78 | $109.24 | $109.99 | $105.99 |
| KY* | 24,300 | $110.07 | $108.93 |
$106.90 | $99.92 |
$100.48 | $97.71 |
| OK | 23,500
| $119.95 |
$116.41 | $115.25 | $107.54 | $107.49 |
$109.97 |
| TX | 15,700 | $108.92 | $107.62 |
$111.46 | $103.07 |
$103.12 | $109.36 |
| AL | 14,700 | $106-111 | $102-109 |
$97-1035 |
$93-101 |
$91-98 | $86-945 |
| NE | 11,800
| $127.53 |
$123.97 | $123.45 | $117.39 | $115.16 |
$112.29 |
| KS | 10,700 | ** | $119.42 | $117.27 | $115.41 | $111.51 |
$110.41 |
| GA*(***) |
9,900 | $84-107 | $88-106 |
$84-105 | $82-98 | $80-97 | $88-88.25 |
| Carolinas* |
9,000 | $90-110 | $87-105 |
$87.50-101 |
$80-99 | $80-93.50 | $74-89 |
| AR | 8,300 | $111.89 | $108.76 |
$105.58 | $99.82 | $97.12 | $96.204 |
| MS* | 8,300 | $99-1091 | $96-1083 | $95-1055 | $90-991 |
$85-963 | $85-905
|
| TN* | 7,000 | $107.21 | $102.61 |
$102.36 | $96.66 | $92.92 | $91.74 |
| IA | 5,700
| $126.06 |
$121.67 | $118.45 | $115.112 | $114.21 | $111.40 |
| LA* | 4,400 | $95-112 | $98-109 |
$94-106.754 |
$90-105 |
$88-99 | $88-99.754 |
| VA | 4,000 | $110.18 | $103.14 |
$102.21 | $94.63 |
$94.55 | $90.62
|
| SD | 3,400 |
** | ** |
$119.14 |
** | $114.35 | $111.166 |
| FL* | 2,900 | $92-106 | $89-106 |
$88-994
| $86-95 | $86-96 | ** |
| NM | 2,300
| ** |
$96.44 | ** | $99.15 | $97.022 | ** |
| WA* | 2,300 | $102.532 |
$104.074 |
$104.676 | $92.782 |
$98.064 |
$99.677 |
| WY | 1,800
| ** |
** | ** | ** | $112.03
| $109.114
|
| MT | 500 |
** |
** | $109.097 | ** | ** | $103.206 |
* Plus 2
** None reported of the same quality at this weight or near
weight
(***) Steers and bulls
(?) As reported, but questionable
NDNo Description
1500-600 lbs.
2550-600 lbs.
3600-700 lbs.
4650-700 lbs.
5700-800 lbs.
6750-800 lbs.
7800-850 lbs.
Crops/Weather
Crops Slightly Off The Pace But
Looking Good
For the week ending Aug. 17, according to the National
Agricultural Statistics Service:
Corn – 97% of the crop has reached the silking
stage, compared to 100% last year and 99% for average. 49% had reached dough stage, 28% behind last
year and 19% behind the five-year average. 14% has
dented, compared to 38% last year and 30% for average. 67% is rated Good or Excellent, which is 9%
ahead of last year.
Soybeans – 94% has reached bloom, which
is 3% behind last year and average. Acreage was blooming at or behind
the normal pace in all states except Kentucky, Michigan and Ohio. 75% is at the pod-setting stage, compared to
89% last year and 87% for normal. 62% is rated Good
or Excellent, compared to 54% last year.
Winter wheat – 95% has been harvested,
4% behind last year and 3% behind normal. Harvest was complete or nearly
complete in all States except Idaho, Montana and Washington, where 30%
or more of the crop remained unharvested.
Spring wheat – 35% is harvested, 32%
less than last year, and 19% behind the average pace. Harvest progress
was most advanced in South Dakota, where nearly two-thirds of the crop
was harvested. 56% is rated Good or
Excellent.
Barley – 42% has been harvested, which
is 33% behind last year and 17% behind average. All barley-producing
states were between 11 and 35 points behind the average pace. 52% is rated Good or Excellent.
Sorghum – 75% of the acreage is
heading, which is 11% shy of last year and 5% behind average.
40% of the crop is coloring, which is 6%
behind last year and 1% behind normal. 26% is
mature, the same as last year, but 2% ahead of normal. 54% is rated Good or Excellent, compared to 64%
last year.
Oats – 74% has been harvested, which is
14% behind last year and 8% less than average. Progress was
significantly behind the normal pace in Minnesota, South Dakota and
Wisconsin.
Pasture – 40% of the nation’s pasture and range
is rated as Good or Excellent, 5% more than at the same time
last year. 29% is rated Poor or Very
Poor, compared to 38% a year ago.
States with the worst pasture conditions – at least 40% of the acreage
rated Poor or worse – include: California
(100%); Colorado (48%); North Carolina (43%); North Dakota
(48%); Oregon (54%); South Carolina (46%); and Texas (50%).
More lush conditions – at least 40% rated Good or better – exist in:
Arizona (46%); Arkansas (50%); Florida (50%); Idaho (40%); Illinois (69%); Indiana (58%); Iowa (59%); Kansas
(59%); Maine (48%); Maryland (45%); Minnesota (41%); Mississippi (48%);
Missouri (62%); Nebraska (65%); New Mexico (62%); New York (83%); Ohio (50%); Pennsylvania
(46%); South Dakota (73%); Utah (53%);
West Virginia (74%); Wisconsin (41%);
and Wyoming (42%).
Event Spotlight
Wheatland Stocker Conference
For 22 years now, the folks at Oklahoma State University
(OSU) have hosted this stocker-specific conference, featuring experts
from across the country. This year’s conference is Aug. 29 at the
Cherokee Strip Conference Center in Enid. Topics and speakers for the
8:30 a.m.-2:30 p.m. conference include:- How High Market Prices
Impact Stocker Management – Gerald Horn and Derrell Peel, OSU.
- Cattle Markets and Issues: Will This Ride Continue? – Jim Robb,
Livestock Marketing Information Center.
- Can I No-till and Graze, Too? – Jeff Edwards, OSU.
- Managing Health Issues in Your Stocker Business – Tom Hairgrove,
Texas A&M University.
- Information for Value: Where are We? – David Lalman and Chris
Richards, OSU.
To register for the conference and complementary lunch, contact Greg
Highfill at 580-237-7677 or greg.highfill@okstate.edu.
Registration deadline is Aug. 25.
KSU Stocker Conference
This year’s Kansas State University (KSU) Beef Stocker
Conference – Oct. 2 – promises a dynamic mix of insightful
presentations focusing on the stocker business, specifically, as well as
hands-on demonstrations of the latest technologies available to stocker
operators.
Presentations include:- Key Findings of the National Stocker
Survey.
- New Realities in the Stocker Business.
- Current Concepts in Medicated Feed Additives.
Breakout sessions
include:- Making rational choices for stocker therapy.
- What is the importance of temperature in diagnosing sickness?
- Use of byproducts to exploit efficient performance.
- Implications of heavier cattle being fed fewer days.
- The real cost of cutting bulls.
- Injection-site considerations for quality beef.
- Pneumonia Progression – a Visual Tour.
Demonstrations
include:- Ultrasound applications for earlier detection of quality
cattle.
- Latest innovations in data collection and scale-head technologies.
- State-of-the-art cattle handling facilities.
The conference
begins at 9:30 a.m. at KSU’s Beef Stocker Unit, located just west of
Manhattan. Following the afternoon breakout sessions, participants can
stay and enjoy a Rocky Mountain Oyster Fry.
Registration is $25/person by Sept. 15, or $35 after that date. For more
info or to register, call 785-532-1267 or visit www.ksubeef.com and click on "2008
Stocker Conference."
Events
Calendar
Aug. 27 – Southwest Iowa Feedlot Shortcourse,
10 a.m., Iowa State University Armstrong Research farm, Lewis, IA;
712-769-2600 or www.iowabeefcenter.org.
Aug. 29 – Wheatland Stocker Conference, Enid, OK; 580-237-7677
or greg.highfill@okstate.edu.
Sept. 16-19 – Lost River Grazing Academy, University of Idaho &
American GrazingLands Services LLC; 208-896-4104 or scottj@uidaho.edu.
Sept. 23 – 2008 Beef Bash Field Day, University of Kentucky
Research and Education Center, Princeton; ces.ca.uky.edu/beefirm/bash.
Oct. 2 – Kansas State University Stocker Conference, KSU
Stocker Unit, Manhattan; 785-532-1267 or www.ksubeef.com.
Oct. 3 – KY-TN Cow/Calf Conference, Western Kentucky University
Agriculture Expo Center, Bowling Green, KY; 615-446-2788 or www.dicksoncountyag.com/.
Oct. 30-31 – 5th Annual HOLT CAT Symposium On Excellence In
Ranch Management, “Transitioning Ranch Ownership & Management To The
Next Generation,” Texas A&M University-Kingsville, Kingsville, TX;
361-593-5401 or krirm@tamuk.edu.
Nov. 6-7 – “Quality – A Solution To Rising Costs,” 2008
BEEF Quality Summit, Antlers Hilton, Colorado Springs, CO; www.beefconference.com.
Contact
Send Questions &
Comments To...
Wes Ishmael, Contributing Editor, BEEF Stocker
Trends, at wesleysink@aol.com
Joe Roybal, Editor, BEEF magazine, at jroybal@beef-mag.com
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