For cow/calf producers, the color of money this fall looks to be gold - corn gold! In fact, cheap grain coupled with alternative management strategies and a feeder market on the come should offer producers more upside opportunity than they've seen since Bill Clinton took office.

"Cow/calf operators are looking at $40-60 profits per head for 1999, representing the first good profits since 1993," says Cattle-Fax's Randy Blach. He expects 500- to 550-lb. steer calves to trade in the mid-$80s to mid-$90s the rest of the year.

What's more, as feeder cattle supplies continue to decline in these last throes of cyclical beef cow liquidation, Ernie Davis, Texas A&M Extension livestock marketing economist, believes producers will see record high feeder cattle prices sometime in the next two years. "We have a good chance for record prices because our cattle numbers are going to be low and beef demand has at least stabilized," says Davis.

Keeping Lots Full Underscoring this approaching reality is the fact that more cattle were crowding feedlot bunks this past summer than anytime in the past two decades, in part due to continued liquidation. Although that means total beef production in 1999 should exceed last year's record output, Davis says, "As we move into 2000 and reduce feedlot supplies, and we get more bullish about the market, we (the industry) will be retaining more heifers."

Of course, producers have been disappointed by similar expectations the past two years. Both times, record carcass weights, fueled by the same cheap grain now offering promise, conspired with faltering domestic and export demand to delay the price bounce. Even now, both these analysts say prices for the next couple of years depend on corn that remains below $2.50/bu.

Likewise, David Lalman, Oklahoma State University (OSU) Extension beef cattle specialist, says grain prices continue to define producer opportunity to add weight at home. At summer's end, he says producers could pocket $50-60/cwt. value in gain by keeping their cattle as stockers and laying them off on the spring futures board. That's assuming gains costing in the mid-$20s to low-$30s, something he says is easily achieved.

For example, while it requires serious management, Lalman says limit-feeding programs - feeding a specific amount of high-concentrate ration to achieve a gain target - can yield average daily gains of 1.5-2.5 lbs. with conversions of 3.5-4 lbs. to 1.

But Lalman cautions: "Implants and feed additives are more beneficial if cattle are fed to gain more than 1 lb. a day, compared to dry-wintering programs where gains of 0.5 to 1 lb. per day are expected. When cattle are fed to gain more than 1.5 lbs., implants and feed additives are almost always good investments."

Soybeans Are Edging In, Too Low-cost gains can be had with less intense management, too. For instance, OSU researchers are proving the merit and ease of growing calves with free-choice, pelleted soybean hulls. Lalman explains soybean hulls have similar energy value to high-quality forage, are low in starch and are highly digestible.

In tandem with native grass pasture, Lalman says implanted heifers in one study last spring gained an average of 2 lbs./day with a conversion of 7.05 to 1. Performance was even better when pelleted soybean hulls were combined with free-choice, low-quality prairie hay (Table 1). In both examples cost of gain was in the mid- to high-$20s.

When these alternatives are affordable - keep in mind the added equipment, storage and labor that may be needed - they also offer producers marketing flexibility. "Especially if a cattle producer can do this at home where you can maintain total flexibility, you can avoid the fall runs which are typically the lowest prices of the year," says Lalman.

For producers looking to retain ownership through the feedlot this year, David Weaber, Cattle-Fax director of research, says, "If I was going to feed calves this year, I'd try to get them marketed next October or November, which means some sort of backgrounding or grazing program before they go to the lot." Lalman says producers unfamiliar with retaining ownership beyond weaning need to understand their true cost and how delayed marketing will impact their taxes and cash flow.

As always, it boils down to judgement. Davis says the traditional cattle cycle is alive and well. He can't tell you exactly when cattle will bring exactly which penny, but he can tell you exactly what he's doing. "We're increasing the cow herd size. We're buying bred heifers, young bred cows and pairs, buying them now so we'll have calves in this market," explains Davis. "We'll watch this thing, then we'll try to get out a year before it turns again."