Even the folks who believe that cash always runs out before the supply of cattle are taking extra laps with their sharpest pencil to find stocker profit opportunities this fall.
"Two assumptions can be made," says Dale Blasi, Kansas State University (KSU) Extension beef specialist in forage and nutrition. "While we may be getting some rain in stocker country, we're behind the eight-ball on forage growth; and it's a fair bet that calf prices will likely be hotter than a firecracker this fall."
Indeed, when it comes to forage, USDA's weekly Crop Progress (early summer) report indicated 10 southern states, along with Montana, Iowa and Nebraska were running at least 20% below last year on pasture and range reported to be in excellent or fair condition. In all, 27 states reported pasture and range production below 1999.
Moreover, calf and feeder prices are steamier than a July rain in New Orleans. According to USDA data compiled by Cattle-Fax, since the first of the year and heading into summer, cash prices for #1 Medium 600- to 650-lb. steers were running 20% ahead of last year in Oklahoma City.
Consequently, Blasi believes stockers who want to hedge their bets should study their feed alternatives, plan early and do more measuring than guessing.
Look At By-products First, Blasi points out there are lots of ways to skin a cat. In this case, by-products such as wheat midds, soybean hulls and corn gluten feed can offer economic forage extenders or alternatives. (See also, "Research Roundup," page 38).
Blasi has done lots of work with wheat midds the past few years. Producers often see a negative impact on fiber digestibility and a subsequent decline in forage intake when they supplement forage with cereal grain. But, Blasi says wheat midds contain quality amounts of protein and are "fiber-friendly." He explains that midds average 17-18% crude protein and 70% total digestive nutrients (TDN).
In a recent cattle growing trial, Blasi reports wheat midds had a feed value almost equal to corn and soybeans in full-fed sorghum silage-based rations, and about 83% the value of those pricier ingredients in limit-fed rations. Far-sighted stockers could have picked up wheat midds in June (basis KS) for $65/ton.
"It's important to look down the road," says Cathy Bandyk, a ruminant nutritionist who owns Trail's End Consulting and Software at Wamego, KS.
"If this is the year you feel you need to take better care of forage and pasture heading into fall, look at supplement options now, including the cost of delivery, rather than wait to do so in an emergency response situation," she says.
Blasi concurs: "If you know what your costs of production are, you can lock them in and know what you're doing as a manager."
When it comes to supplementing forage, Blasi emphasizes costs have to include the price of hauling the groceries. And, when it comes to anything wearing paint and sucking gas, those costs can be surprising. "Depending on that cost, you can quickly jeopardize the benefit of additional supplementation," says Blasi.
Incidentally, Bandyk worked with Blasi and KSU's Kevin Dhuyvetter to develop a Windows-based supplement cost program (SUPPCOST). It allows a producer to compare up to four supplement strategies on up to three different sets of cattle, including the cost of delivery (For more information, e-mail firstname.lastname@example.org or call 785/636-5403).
"It doesn't do anything you couldn't do with a tablet and a pencil, but it does it quickly so you can evaluate options. There is no way to just guess whether one option is better than another," says Bandyk.
Likewise, when it comes to fine-tuning stocker options, Blasi says. "Bringing cattle in and having a scale under the chute is important so you know not only the size of the cattle but the variation in them," he adds.
In other words, that set of cattle that averages 450 lbs. can easily range from 300-600 lbs. There is no way to develop a nutrition or health management strategy for the group that doesn't, on average, over-power some while leaving others begging.
Think Down The Road With variation in mind, Blasi says this may be a stage in the cycle when shopping for pre-conditioned calves could reap added returns.
"One of the added values of pre-conditioned calves is that they offer you flexibility," Blasi says. "As an example, if you know the history of the cattle that have been previously treated, you may have the opportunity to leap-frog the receiving pen if they've been preconditioned."
At least that's what a handful of Kansas stockers apparently did while driving down their average health costs. In a recent one-of-a-kind stocker industry survey, KSU found fewer than 5% of the responding stocker operators turned their cattle out directly to pasture upon arrival, yet their morbidity and death loss was 5.7% and 0.77%, respectively.
Conversely, folks who stuck calves in the receiving pen for any length of time saw an average morbidity rate of 9.3% and average death loss of 1.2%. That's not an endorsement for stop-and-pop receiving. It merely suggests the folks who knew where their cattle came from and how they'd been treated could bypass one step in the process and enjoy healthier stock besides.
Along the same lines, Blasi encourages producers to consider marketing just as much as price in their buying decisions.
"This fall, I think producers need to be more concerned about the type of cattle they buy because so many feedlots are selling on grids now," he says. "With these tighter calf supplies, stocker operators might think of looking for bargains, but they need to be thinking about where they're going to go with those cattle when they're done with them."