LSU AgCenter . Cowchip - January 31, 2008

Dates to Remember:

February 11-15 State Livestock Show, Gonzales

Marketing Strategies Need Changing:

Last year at this time, most market experts were predicting strong fall 2007 prices for calves. Even with the high cost of feed and the seasonally high numbers of calves offered in the fall, the thought was that low cattle numbers and demand would soften the normal reduction in prices we see every fall. No one predicted that wheat would reach $8/bushel and most of the wheat grazing land would be dedicated to grain production. The result was lower demand for 400-500 pound calves and much lower prices for these calves than predicted. Fed cattle traded in the mid 90’s most of 2007 yet 400-500 pound calves were bringing $1.00-$1.20 at local markets. Calves 600-700 pounds were bringing 95¢ - $1.05 for most of the fall. It’s obvious we are not capturing the full value of our weanling calves.

Grain markets are at record highs and no one is predicting a change anytime soon. Some are saying that world grain shortages are likely for the foreseeable future. Historically, most of our calves have gone to Texas and Oklahoma to graze wheat. In the last few years because of record high cattle prices and fairly cheap corn, many of our calves over 500 pounds were going straight to the feedlots. Now that corn is high and wheat land is being used strictly for grain, our weanling calves have lost some value even with strong fed cattle prices. The market is telling us to sell 700 pound feeder calves and not 400 pound stockers. If grain prices hold then it might be time to graze our weanlings to capture more of their value.

To accomplish this shift we need to plant ryegrass early into a prepared seedbed. Land chosen should be the best drained. Winter forage species are sensitive to pH. Pastures chosen for winter grazing should be limed to a pH of 5.8-6.2. Even with the high cost of fertilizer and seed, cost of gain would probably be less than 60¢/lb. at $1.00/lb. calf prices that’s a 40¢ profit for every pound we gain.

A producer who grazes calves needs to deal in trailer loads of calves. Seventy, 700 pound calves make a trailer load. So the minimum number of calves would be 70. At a stocking rate of 1.5 calves per acre, we could get good performance on 45 acres of ryegrass.

If you don’t produce 70 calves a year you could consider buying the rest of the load. Health concerns become more critical if you mix calves from multiple sources. If you purchase calves from someone else then we need to make sure we are paying attention to vaccinating our home grown calves and the purchased calves against the virus complex. We also need to be vigilante the first few days for sickness in these purchased calves.

Yes, there is risk. Drought in the fall, overly wet conditions during the winter, a break in the calf market all can affect profits in a stocker operation. But the stocker phase is on average the most profitable. Nine out of 10 years the stocker operator turns a profit no other (feedlot, cow-calf, packer) phase can make that claim. If grains stay high, the risk may be necessary.

Stockpiling Bermudagrass:

Bermudagrass is the most popular summer forage in Louisiana. It is extremely persistent, productive and is adapted to a wide range of conditions. However, it produces little growth in cool weather. Because of the lack of cool season growth, most producers have relied upon bermudagrass exclusively as a summer forage. Research in Arkansas shows that stockpiled bermudagrass pasture can be a valuable autumn pasture that can significantly shorten the hay feeding period.

Initiation of the stockpiling phase for bermudagrass must begin in August to produce acceptable forage growth. The optimum temperature range is 85º to 95º F. Getting the stockpiling process started in early to mid August takes advantage of warm temperatures and allows time for growth accumulation before cool autumn night temperatures slow the grass growth. Forage production can be variable due to sporadic late summer rainfall, but an early start date maximizes changes of getting rain on fertilized fields. In one Arkansas research study when stockpiling began in early August, yields ranging from 595 to 1,562 lbs. forage per acre were produced at two locations even during drought conditions followed by an early killing frost. However, dry matter yields up to 4,200 lbs. per acre were measured in the same locations the following year. That work also showed that delaying fertilization until early September cut yields by 61% to 85% compared to starting in August.

1. Remove old summer bermudagrass growth from the pasture by late July – early August to leave a stubble height of two to three inches.

Forage quality of stockpiled bermudagrass in extension Focus program demonstrations has been surprising. Crude protein levels ranged from 5.7 to 23.8% and TDN levels ranged from 54.3 to 77.9%. Most of the pasture samples had adequate quality for lactating beef cows in November and December but quality began declining rapidly in January.

Leaves of bermudagrass are not tolerant to freezing damage so amount of leaf material and palatability decline steadily after onset of freezing weather. In University of Arkansas research, true dry matter digestibility of stockpiled bermudagrass declined from 65% in October to only 45% in January.

After a rough couple of weeks, stocker and feeder prices appeared to be mostly higher at auctions around the country this week. At Oklahoma City, prices on all classes were called $1 to $3 higher. At Lexington, Kentucky, feeder steer and heifer prices were steady to $2 higher. Stocker steer prices were steady to $2 higher, and stocker heifer prices were steady. At West Plains, Missouri, calves in the 400 to 600 pound range were called $4 to $6 higher, with some heifers in that weight range as much as $6 to $8 higher. Prices on other classes were $1 to $3 higher. At Arkansas auctions, all classes were called firm to $5 higher, with most of the trade at $1 to $3 higher. At Georgia auctions, feeder steer prices were steady to $2 higher; feeder heifer prices were $1 to $2 higher. Stocker steer prices were $2 to $4 higher, and stocker heifer prices were $2 to $3 higher.

As noted, corn futures jumped around a great deal this week. The limit-down move (on all contracts except the nearby March, which was less than a cent from being limit down) on Wednesday shows the significance of outside market behavior to the corn market right now. Corn was down Wednesday because equities (stocks) were down. More specifically, a lower stock market (both in the US and abroad) led to speculation of a widespread economic downturn. Fear of a recession, in turn, pushed down a broad range of commodity futures, notably energy and grain futures. Strong gains on Thursday and Friday, however, put corn futures back to about where they finished the week last week. In fact, March corn futures closed on Friday at $4.98 ¼, unchanged from last Friday’s close.

Live prices were mostly $91 to $91.50 in Texas and $90 to $91 in Kansas – in both cases, off about $1 from the week before. This week, through mid-afternoon Friday, USDA reported very light business. Prices in Nebraska and Iowa were called $1 to $2 higher at $144 to $145 dressed. Business in the South was too light to establish a trend, but a steady undertone was noted, suggesting that the bulk of trade this week will come in at steady or better prices. Last week’s 5-area price worked out to $90.09 live and $142.92 dressed. Both cattle and hog slaughter remain above year-ago levels. Cattle slaughter is estimated at 640,000 head –up from last year’s 631,000 head. Hog slaughter is estimated at 2,311,000 head this week compared to 2,074,000 a year ago.

- Packer Ban: Remove the ban on packer ownership of cattle that exists in the current Senate version.

- Conservation Programs: Ensure adequate funding for cost-share conservation programs, such as EQIP, similar to the language in the House version of the bill; Remove payment limitations and AGI caps, which make many ranchers ineligible for programs.

- Tax Incentives for Conservation Easements: The language that exists in the Senate-passed version must be included in the final package.

- Interstate Shipping: Allows for interstate shipment of beef from state-inspected plants.

- Country-of-Origin Labeling: Include the compromise language which resolves many problems with the current law.

- Disaster Assistance: Create a permanent disaster assistance program as defined in the Senate tax title.

“The COOL law is Full speed ahead, implementation of COOL starts midnight September 30 2008. Further delays in implementation are unlikely at this point, but the proposed language in the current farm bill should ease compliance for livestock producers, meat processors, and retailers. Retailers have to prove country of origin by a label on the package or be fined $1000.00 per item. They have to comply with an audit which establishes a three-label system for meat products that would differentiate completely domestic products from completely foreign products.

The changes in the rules will make segregation, labeling, and record-keeping easier with RFID tagged animals and changes to the audit verification and enforcement rules further specify what business records may suffice for country of origin labeling. The easy way is to use commercial databases built for the task. Even produce farmers will need audit records to comply with COOL.

Perhaps most important among the changes for cattle producers is a grandfather clause that considers all animals in the U.S. on January 1, 2008 to be of U.S. origin. But sheep, swine, veal, goat, poultry, fish will need immediate recordkeeping to manage the COOL law as they come to market in a shorter time frame. The easy way to survive an audit of born, raised, processed in the USA is to have records and RFID tagged animals except poultry. Poultry flocks, peanuts, and produce buyers will need to pass records of origin on to the retailers in the form of traceability records.

Still, cattle producers will need to maintain documentation of origin by RFID tagging and branding (using their existing business records) from birth to slaughter and move those records thru stockyards intact from this point forward and or by using a commercial database where animal RFID tag records can be searched by processors and retailers. USDA will seek to enter into partnerships with States having existing enforcement infrastructure to assist in the administration of this law.

USDA will determine the scheduling and procedures for the compliance reviews. Any person engaged in the business of supplying a covered commodity to a retailer, whether directly or indirectly, must maintain records to establish and identify the immediate previous source (if applicable) and immediate subsequent recipient of a covered commodity, in such a way that identifies the product unique to that transaction by means of a lot number or other unique identifier, for a period of 1 year from the date of the transaction.”

It is the policy of the Louisiana Cooperative Extension Service that no person shall be subjected to discrimination on the grounds of race, color, national origin, gender, religion, age, or disability.