Dates to Remember:
April 17- Beef Advisory Committee Meeting, 5:30 p.m.
Attention to Pastures Pay:
Cost of production is the talk in all agricultural industries, but has become more important in the cattle business with the recent softening of our calf market. When input costs for fuel, fertilizer and feed are high, pasture management becomes even more important.
High feed costs have feedlots cost of gain sky high. Projected cost per pound of gain for February placed cattle are at 88¢ for steers and 95¢ for heifers. With live fed cattle trading at 89¢/lb. you can see why calf prices are suffering. The need for cheap gains on calves and for efficiency in the cow-calf sector are best realized by depending on the bovine animals ability to harvest and utilize forage.
As forage becomes more valuable and other inputs become more costly then weed control is more important and a better investment. LSU budget estimates a $5/acre cost for shredding a pasture. It would take at least two passes per year to keep pasture weeds under control but shredding does little to control nutrient and water loss to weeds and in dry years removes valuable available grazing.
Timely treatment of broadleaf weeds with fairly inexpensive herbicides can dramatically improve perennial grass stand and performance. Timing is critical, summer annual broadleaf weeds are germinating in April and May and though they make your pasture look pretty and green May is the most effective time to treat them. Young, fast growing annuals are easy to kill. 2,4-D is effective on most of these type weeds. With a recommended rate of one quart per acre, an application would cost $3.45/acre in chemical cost. However, there are usually some hard to kill perennial weeds involved. Blackberry, Cherokee Rose, Dogfennel and Horsenettle are not acceptably controlled with 2,4-D. Cimmaron-max and Grazon P+D would be the most cost effective products to use on these hard to kill weeds. Cimmaron-max would be the choice if Blackberry was the primary concern. Grazon would be my choice for the others.
Grazing management can also help in increasing production on the same acreage. Dividing pastures could allow you to extend the grazing season of your brood cows reducing hay usage. You might be able to graze some weanlings to heavier weights. The market is rewarding heavier calves.
With these rapidly changing economic conditions, we need to reevaluate our management practices. Things we ruled out as too costly in the past may be the most prudent now.
Feeders Pressured by Corn and Fed Market:
The Prospective Plantings report that came out Monday confirmed that farmers will plant less corn in 2008. A 7.6 million acre decrease according to the report. Based on that news, corn futures rallied, lending pressure to feeder cattle futures. In hind sight, it’s important to remember that CattleFax encouraged feeder cattle producers to take advantage of the opportunities the futures market was presenting from mid-January through the end of February. We discussed the struggling economy, the potential for fewer acres and higher corn prices, the abundance of competing proteins hampering beef demand, a contra-seasonal fed cattle market, and probably most important to feeder cattle producers – the significant losses that have developed in the fed cattle sector. The market allowed opportunities to protect some equity. Obviously, now with the market action the past few weeks, those producers who took advantage of the opportunity are in a decent position as it relates to marketing feeder cattle this fall. Those who didn’t are scrambling to get back at least some of what has been lost in the futures market, and likely will be able to do so at some point.
The market, right or wrong, has done a pretty good job of bailing producers out of a hole the last several years. But, quite frankly the profitability of the fed cattle sector of the business is currently a mess. It’s only a matter of time before that trickles down to feeder cattle and calves. If the number of comments over the past four or five months from cattle feeders stating that feeder cattle are just too high in order to make a profit isn’t indicator enough that prices will cheapen up, the fact that most are presently losing on top of $150 per head should open plenty of eyes. Cattle feeders cannot and will not sustain that much loss for very long. Yes, there is too much bunk space and over capacity. That in and of itself has been a major contributor sustaining feeder cattle prices up to now.
Bottom Line: There is no doubt the market will rebound. The price of fed cattle per pound will eventually go back above the cost of gain per pound. But it may take a while. This will be the Achilles heel of the feeder cattle market near term. It may be mid-to-late summer before much strength is found in prices. All is not lost however, due to the fact that feeder cattle supplies going forward will be tight. Competition to fill pens will be fierce and fed cattle prices will improve. The downside risk to the feeder market, basis the Index, remains at the mid-$90’s. Upside potential will be severely limited near term both in the cash and futures.
Stockering/ Pay Attention to Health:
With high cost of fertilizer, fuel and feed, capturing more dollars per cow per year becomes critical. Grazing calves (stockering) over the winter and into the spring is an option some producers should consider. It takes a minimum of 70 calves to maximize marketing options in a stocker operation. So, most producers would have to purchase some calves in addition to their own to make this work efficiently. Purchased calves present a health risk and death loss is the most important determinant to stocker phase profit.
Buying calves with an unknown health background is a manageable risk if we take the proper precaution. Vaccinations against pneumonia causing disease must be carried out early in purchased cattle from unknown sources. Use modified live vaccines. Identification of sick calves is critical during the first two weeks after arrival. Keep purchased calves in dry lot for the first two weeks with hay and fresh water and 1-2 pounds of a high protein supplement per head per day. Dry lots allow for close observation, limit fence walking and keep calves closer to feed and water. Treating cattle at arrival with a de-wormer is recommended. Young growing cattle are highly susceptible to the negative health and performance from internal parasites.
Nutrition is as or more important to the health of newly arrived calves as is vaccinations and antibiotic treatment. Getting calves to eat as close to arrival as possible is a challenge. The way these cattle are handled and observed can affect performance. Use of low stress methods are best. Try to visit http://managingwholes.com/--lowstress-livestock.htm or http://extension.usa.edu/files/publications/beef6stress.pdf for more information. Calm cattle eat and drink more readily. Make sure to provide a 16-18% crude protein supplement with good quality hay and fresh water. Running water in a water trough will often encourage drinking. Provide two feet of trough space for each calf.
According to Extension Veterinarian Dr. Christine Navarre, “cow nutrition before calving and parasite control affect growth and health all the way to slaughter. The longer we keep these calves the more benefit we get from proper cow management.” So, if we’re planning on stockering our own calves, we need to manage our cows well and if we purchase stockers look at your source’s management practices.
USDA Planting Report Forecasts Gloomy Future for Cattlemen:
Mondays annual USDA Prospective Planting report provided the first look at 2008 crop acreage, and it wasn’t good news for cattlemen. Although it is simply a survey of what farmers expect to plant, the report indicated that corn acreage is expected to decline eight percent from last year to 86 million acres; it also indicated soybean acreage will be up 18 percent to 75 million acres.
As has been the case since about 1980, 161 million acres held as the apparent cap on the level of U.S. acreage dedicated to corn and soybeans combined. For the grain markets, the acreage projections suggest a future supply and demand situation for corn that is definitely too close for comfort. The quick result this week was $6 per bushel corn futures as the market scrambled in an attempt to buy acreage back from soybeans.
For the cattle industry, this could be a culmination of our worst fears," said NCBA Chief Economist Gregg Doud. We saw this storm developing 18 months ago primarily because of rapid development of the ethanol industry. But, we still hoped that corn acreage would hold its own amid tremendous global oilseed demand and historic fertilizer prices.
Cattle feeders are reportedly seeing losses as high as $150-200 per head. With 525,000 head of steers and heifers going to market each week, that amounts to an average industry loss of approximately $79-105 million per week. The $6 corn, a staggering amount of pork and poultry production, a lack of market access to our key Asian export markets, industry overcapacity and a struggling U.S. economy are all factors combining to create historic economic turmoil for U.S. cattle producers and cattle feeders, said Doud.
Sincerely,
Andrew Granger
County Agent
Vermilion Parish
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