Opportunities, even necessity, to add weight beyond the weaning pasture and before the feedlot continue to grow.
Even with record corn yield predicted, and corn prices projected to hover around $3/bu. — substantially lower than last year — forage still wins the race for cost of gain. That should be more pronounced this year with bumper hay and forage crops across much of the nation.
Plus, it's not like calf prices are all that enticing to sellers; and that was before the fall run began.
Despite heady average cow-calf profits earlier this decade, there has been no economic incentive for herd expansion, according to Kevin Good, CattleFax market analyst.
“Expansion will require substantially higher cow-calf prices, and that takes significantly higher fed-cattle prices,” Good explained to participants at this year's Cattle Feeders Business Summit, presented by Intervet-Schering-Plough. As such, CattleFax expects beef cow numbers to remain flat for at least another couple of years.
So, much like last year, more cow-calf producers will likely have the economic incentive to keep and market their spring calves as yearlings.
“I think we'll continue to see more cow-calf producers extend forward to stocker and backgrounding and more cattle feeders extend back to it,” Good says.
Ironically that's true despite a cattle-feeding capacity too large for dwindling cattle numbers and the fact that fewer average days on feed for the remaining cattle equates to even more excess capacity.
But, stocker opportunity for cow-calf producers comes not only in keeping cattle longer to add weight and sell into more favorable seasonal markets. Existing stocker operators also represent more options.
“We put together load lots among two or three smaller producers. They usually have their check within 30 minutes. If the cattle get here before noon, we don't shrink the cattle. And we don't charge them a commission. Add it up and it can be a $40-$50/head advantage to them,” says Brad Etheridge of Thomas Cattle Buying Service (TCBS), Williston, FL. He's describing the situation for area cow-calf producers who sell their calves directly to TCBS and bring their calves to them.
That's not an advertisement. As a finalist in this year's National Stocker Award (NSA) competition (see “Accountability First and Always,” page S4), Etheridge is simply describing one facet of his order- buying and pre-conditioning service.
Likewise, Leo Hollinger, Jr. at Camden, AL, has been in the stocker business for the better part of four decades. A while back, he began offering a weaning service to producers in the area. Besides straightening out the calves, he commingles and sorts the cattle into load lots that bring more to their owners than if each producer sold less than a load lot on his own. Hollinger and his wife, Jeannie, (Hollinger Cattle Co.) are this year's NSA winners (see “Spread the Risk,” page S2) in this issue's special section.
Whether producers are adding the weight themselves, marketing into that sector or partnering through the phase, the stocker sector and its operators should be considered when marketing rather than selling.
Of course, many cow-calf producers are already familiar with the notion. According to last year's landmark BEEF National Stocker Survey, 64.6% of stocker producers are also cow-calf operators. Many of them buy calves to stocker along with their own.
Like the supply shock-absorber it serves for the industry overall, the stocker sector continues to offer increased flexibility. That's something worth more these days.
Ask Etheridge to name the most significant challenge facing his business in the past decade, and he'll tell you, “Things have changed so much in the last 10 years, the way business happens so much faster, the biggest thing is our willingness and ability to adapt to that change.”
No matter the economic climate, Hollinger points out, “There's always opportunity out there somewhere.”
Read all about this year's NSA finalists and winner in the special section inserted in the middle of this issue.
