Economics

The Impact of Basis in Fed Cattle

– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University

A relationship sometimes overlooked but important to the flow of cattle is the difference between the cash and futures price or the basis. For example, at the end of last week, the 5-area weekly weighted average cash price for all grades of live steers was $101.73. The nearby fed cattle futures price averaged $97.76 last week which was for the October contract. Thus, the average basis was +$3.97.

Changes in basis influence returns from hedging using the futures market. Hedgers swap price risk for basis risk and for those selling cattle, a Continue reading →

The Cull Cow Market is Looking Up

– David P. Anderson, Professor and Extension Economist, Texas A&M AgriLife Extension Service

Cull cow prices continued their slow increase into September. Prices in the Southern Plains reached their high of the year, so far, at $54.36 at the end of August. That was 12.5 percent higher than a year ago. There is some good reason to think that prices may continue to be above a year ago.

Cow slaughter hit some multi-decade highs in the first few months of the year, largely driven by dairy cow slaughter. After the surge early in the year, dairy cow slaughter has fallen back to year ago levels. Over the last month, dairy cow slaughter has been almost 1 percent below a year ago. For the last two months, only 900 head more have gone to market compared to last year. Normally, dairy cow marketings tend to move higher seasonally after July and that is happening this year as well.

Beef cow culling has lagged behind a year ago over the last two months. Beef cow slaughter over this time period is almost Continue reading →

Pricing Standing Forage in the Field

– Mark Sulc, OSU Extension Forage Specialist

Valuing a standing forage crop can be a challenge, especially when a variety of ‘cover crop’ species could be on the market this fall.

How to value a standing hay crop is challenging. Assigning an appropriate value includes the buyer and seller agreeing on the market value for the hay and then adjusting for harvest costs and other factors that contribute to the price of hay sold in the open market, some of which are challenging to quantify.

A new factsheet and Excel worksheet are available to help you arrive at a fair price. These resources consider just a single crop of forage that is ready to harvest as hay or haylage. The grower’s base price equals the price they could receive for the crop from the hay market less harvesting/storage/marketing costs. Hopefully, this covers production costs and generates a profit. During price negotiations, it must be recognized that Continue reading →

Cattle On Feed, August 1 Report

– Brenda Boetel, Professor, Department of Agricultural Economics, University of Wisconsin-River Falls

The United States Department of Agriculture’s National Agricultural Statistics Service (USDA, NASS) released their monthly Cattle on Feed report on Friday August 23, 2019. The latest numbers released by the USDA showed aggressive marketings and were neutral in total numbers on feed and placements. Total cattle on feed on August 1, 2019 numbered 11.1 million head, slightly above August 2018. Pre-report estimates expected cattle on feed numbers to be up 0.6%.

Placements in feedlots during July totaled 1.71 million head, down 2.2 percent from 2018. Pre-report estimates anticipated placements down only 0.5%. Poor pasture and range conditions helped contribute to Continue reading →

Weekly Livestock Comments for August 30, 2019

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

FED CATTLE: Fed cattle traded $2 to $3 lower compared to last week on a live basis. Live prices were mainly $103 to $107 while dressed prices were mainly $170 to $172.

The 5-area weighted average prices thru Thursday were $106.62 live, down $2.19 from last week and $171.62 dressed, down $3.40 from a week ago. A year ago prices were $107.17 live and $169.31 dressed.

The headlines are: The market is down one large harvest facility. Cattle feeders cannot feed the same animal for infinity and beyond. Availability of feeder cattle will increase in the near term. All of this information results in packers continuing to put the squeeze on cattle feeders as they appear to be holding all of the leverage. It is difficult to identify any leverage point cattle feeders control in today’s market, but this situation will Continue reading →

Why Consider Backgrounding a Calf?

– Stan Smith, PA, Fairfield County OSU Extension

The recent packing house fire in Kansas has the potential to cause a backlog in feedyards that pressures feeder calf prices this fall. Backgrounding calves for later sale is an alternative.

Typically, when feed prices go down, we see feeder calf prices begin to climb as a corresponding move. That is, unless fed cattle prices are unstable or declining. A fire in a Kansas cattle packing plant just before a report detailing that the U.S. might have planted more acres of corn than earlier anticipated caused the perfect storm that allowed pressure on feeder calf prices at the same time as declining feed prices. With the time of year when the vast majority of U.S. feeder calves are weaned and marketed quickly approaching, there’s little time to develop a plan that might preserve or even enhance some of the value and profit in feeder calves that simply may not be in as strong of demand now as they might have been just a few weeks ago.

However, less expensive feed combined with the thought that calf prices can rebound in the coming months once we are past the seasonal tendency for lower prices and the damaged Kansas packing house comes back on-line offer incentive for developing a strategy to hold on to this fall’s feeder calves while also adding value to them.

To recap the path that’s brought us to this point, on Continue reading →

Management Considerations for Backgrounding Calves

– Steve Boyles, OSU Beef Extension Specialist

Consider a number of factors before retaining calves for backgrounding.

Backgrounding is the growing of steers and heifers from weaning until they enter the feedlot for finishing.  Backgrounding and Stocker cattle are similar although backgrounding is sometimes associated with a drylot, and stockering cattle is thought of as pasture-based system.   However any system that takes advantage of economical feed sources can be investigated.

Why might someone consider backgrounding or growing cattle?

  • The producer has time and economical feed resources
  • The market at weaning is not as favorable and is investigating alternative marketing times
  • Some feedyards prefer buying/feeding yearlings. They can expect fewer health problems and can feed two turns of cattle in a year.
  • It could be a way of upgrading mismanaged cattle so as to add value.
  • Since the cattle can be on feed for several months, they can fit the preference by some feeders for preconditioned cattle

There are many Continue reading →

Investments for Animal Feeding: Fence vs Machinery

– Christine Gelley, Agriculture and Natural Resources Educator, Noble County OSU Extension

The more tools we have that maximize the days our animals graze while minimizing the days we feed hay, the better!

Years like 2019 can test farmers and ranchers to the brink of insanity. People in this profession have to be resilient to the unpredictability of the weather, the markets, and the general chaos of life. All year thus far, we have discussed many ways to adapt our animal feeding programs, pasture systems, and hay production to the far from ideal conditions we are facing.

By now, I hope you have read articles, listened to podcasts, watched videos, talked with your neighbors and your local ag educators about what to do next. Crop selection, site management, and soil health have been a huge topics addressed regarding cover crops for prevent plant acres, damaged pastures, weeds, poor quality hay, and feed shortages.

But, I’m going to take this article a different direction . . .

If you have Continue reading →

Weekly Livestock Comments for August 23, 2019

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

FED CATTLE: Fed cattle traded $3 to $4 higher compared to last week on a live basis. Live prices were mainly $106 to $109 while dressed prices were mainly $175 to $176.

The 5-area weighted average prices thru Thursday were $108.81 live, up $3.41 from last week and $175.02 dressed, up $4.56 from a week ago. A year ago prices were $109.08 live and $172.82 dressed.

The finished cattle market experienced a soft rebound this week following last week’s precipitous decline. A few dollars were gained back by cattle feeders, but they are still below where they were prior to the news of the Tyson fire. The story in all of this is what is happening in futures. The August live cattle contract has regained half of its losses but all the deferred con-tracts continue to be bottom feeders. The deferred contracts have failed to Continue reading →

Adding Value to Your Feeder Calves This Fall

– Garth Ruff, Extension Educator, Agriculture and Natural Resources, Ohio State University Extension, Henry County

A recent CattleFax survey indicates that calves weaned for 45 days return almost $100/head more.

As summer slips past us yet again and with fall rapidly approaching it is time to discuss how to maximize the value of feeder calves that will be hitting the market in late September and October. If you have been following the cattle futures both fed cattle and feeders have been on a roller coaster here as of late. With that in mind there are some things we can do management wise to capitalize on this year’s calf crop.

Weaning. Across the industry, feeder cattle sold in the fall tend to fit within one of three categories: 1) balling (zero days weaned) calves 2) calves weaned less than 45 days, and 3) calves weaned for at least 45 days. When we look at adding value, weaning calves for at least 45 days netted the highest average sale price of $916 per head, according to the annual Cow-Calf Survey conducted by Cattlefax. In the same survey calves weaned for 28 to 45 days averaged $836/head and calves shipped off the cow were valued at $829/head. The lowest value calves on average were those Continue reading →