What is in this article?:
Five consulting nutritionists provide their thoughts on the U.S. cattle industry in 2013 as well as their prognosis for 2014 and beyond.
Dave McClellan – Fremont, NE
Wow! The past year was a time of record or near-record losses as well as profits on fed cattle. The year’s high fed market occurred after Thanksgiving, but there were also record feeder cattle prices, a sharp decline in most commodity prices, and even cattle that had been bought at “unhedgeable” prices making a good profit.
Herd liquidation continued at an alarming rate, per-capita beef consumption declined, and several feedyards of all sizes closed for a myriad of reasons. Still, every sector of the beef chain had a chance to be profitable in 2013. In fact, the only remaining historical norm that might still apply to the cattle business is that we’re still better off when the cash market leads the futures.
Cattle performance, as measured by average daily gain, feed per pound of gain, cost of gain, etc., lagged previous years for much of 2013. This was due to poor-quality feedstuffs resulting from the drought. But the fourth quarter saw a nice rebound, which was indicative of a much better 2013 crop.
The current year promises to be interesting. Corn in our area (upper Midwest) looks poised to trade in the $4.20-$4.70/bu. range. Row crop farmers have enjoyed several successive profitable years and large harvests. By-product suppliers have become a bit testy; preferring to dry their distillers grains for export rather than sell at a reduced price to the cattle feeder, though China’s refusal of a few shiploads has somewhat softened that stance.
Contracting at a percentage of corn price for 12-15 months has proven to be a good management strategy for cattle feeders, but doing so also commits you to feeding cattle. I think we’ll see additional feedyard closures caused by a lack of feeder cattle, the financial uncertainty, and producer age. Sadly, we have a shortage of young people willing to commit to the long hours such a livelihood demands, and unable to finance the risk necessary to become part of the cattle industry.
All that aside, there are still opportunities to find and fit a niche. It might be starting high-risk calves; organic, natural, grass-fed, legacy-labeled production; cows raised in confinement or semi-confinement; or finding an older producer willing to work a “sweat equity” arrangement to let a young person enter the industry. One thing is for certain – this industry will continue to be interesting.