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.
According to Kevin Good, CattleFax market analyst, despite heady average cow-calf profits earlier this decade, there has been no economic incentive for herd expansion.
“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.
That can mean more opportunity for stocker operators.
“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) at Williston, FL. He’s describing the situation for cow-calf producers in the area who sell their calves directly to TCBS and bring their calves to them.
That’s not an advertisement. Etheridge is simply describing one facet of his order buying and pre-conditioning service, which serves plenty of stocker folks. Etheridge is a finalist for this year’s National Stocker Award (more later).
Likewise, Leo Hollinger, Jr. at Camden, AL – another finalist for the National Stocker Award – has been in the stocker business for the better part of four decades. A while back, he and wife, Jeannie – Hollinger Cattle Co. – 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. On the other end of the equation, Hollinger buys calves to stocker from a cattle buying and preconditioning service.
Likewise, Gale and Darrel George of Uniontown, KS – G Three Cattle Co. – began procuring their stocker calves through a buying service that vaccinates, deworms and tests calves before shipment for persistent infection (PI) with bovine viral diarrhea.
The Georges began PI-testing after a health wreck two years ago that yielded 25% deads and 25% chronics. With the testing, Darrel explains, “It’s not a cure-all, just another tool we can use.” Though there’s never a true apples-to-apples comparison in the stocker business, the brothers say PI-testing has reduced the percentage of pulls and increased the percentage of those responding to treatment. G Three is another of this year’s finalists for the National Stocker Award.
Like the supply shock-absorber it serves for the industry overall, the stocker sector continues to offer increased flexibility to other industry sectors. That’s something worth more these days.
Ask Etheridge to name the most significant change or challenge facing his business during 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.”
The National Stocker Award, sponsored by Elanco Animal Health and BEEF magazine, recognizes the top stocker and backgrounder operations in the nation. You can find out more about this year’s finalists, and who the winner is in the October issue of BEEF, as well as the next issue of BEEF Stocker Trends. For more information about the award and previous finalists and winners, go to www.nationalstockeraward.com.