“The money runs out before the cattle do.” — Sure seems like it.
“Every head walking will find a home at some price.” — Usually.
“Stocker operators buy other producers' mistakes to upgrade.” — Not necessarily.
At least that's not true when you peruse the BEEF National Stocker Survey (NSS). Though the landmark effort provides insight to the stocker-cattle industry (see page 16), it also offers advice and reminders for the cow-calf producers who supply them.
For instance, instead of buying others' mistakes, 58.4% of “pure” stocker operators buy quality calves to reduce market risk; 66.1% of pure stocker respondents say they focus on low-cost management. As such, only 23.9% of pure stocker operators say they buy cattle below the average market price (straightening out someone else's problems), while 65.3% say they buy at market average and 10.8% say they buy over the market.
Pure stockers are those engaged exclusively in that phase of the cattle business. The NSS defined the others as cow-calf operators who also stocker cattle (CCS), feedlots that also stocker cattle (FS) and producers involved in the whole cycle (WCS) from cow-calf through the feedlot.
For comparison, 24.6% of the CCS group, 20% of the FS group and 35.8% of the WCS group buys calves below the average market price.
Moreover, 30.4% of pure stocker operators say they retain ownership in at least half their cattle through the feedlot. So, those folks are as interested in how cattle perform on feed and on the rail as feedlot buyers are.
Conversely, few stocker operators are seeking cattle that fit value-added programs. Only 6.7% of pure stocker operators say half or more of the cattle they own/manage are aimed at value-added.
The interest in quality also means hardly anybody wants cutter bulls. Just 10.7% of pure stocker operators say cutter bulls are part of their operation; only 4.2% say they have a place for heiferettes and cull cows.
Though it's not news, the NSS underscores the importance of time and weight to stocker operators. Generally speaking, stocker producers buy calves up to about 500 lbs. and market them at 700-900 lbs. That may change a touch on both ends of the equation with high feed costs and the demand to grow cattle to heavier weights outside the feedlot. But, wean calves too heavy and you lose the stocker industry as a bidder.
Consider that 84.7% of pure stocker operators say typical length of ownership in a set of stocker cattle is 121 days or more; 50.1% say typical length of ownership in a set of stocker cattle is 180 days or more. Meanwhile, 70.1% say that length of ownership is based on selling weight, while 45.5% say it's the length of the grazing period, and 31.9% base it on a desired profit. All categories rank profit motive behind grazing period and desired selling weight as a basis for ownership length.
Additional time and pounds are the primary ways stocker producers dilute cost and cheapen breakevens; limit either and you limit the market for the calves.
Of course, cow-calf producers can and do exploit those same opportunities by stockering their own calves. In fact, the NSS found that cow-calf producers who stocker cattle are the largest segment of stocker producers (64.6%).
These operations also buy lots of calves. 63.1% of CCS respondents say half or more of the calves they stocker originate on their operations, which means 37% are procuring half or more from someone else. Likewise, 44.7% of WCS operators say half or more of the cattle come from their own operations, meaning 55.3% of WCS operators procure at least half of the cattle they stocker and background somewhere else.
On average, pure stocker operators own 80.6% of the cattle they manage. For the largest stocker operations of all types (2,500 head or more), sole ownership is even less (75.4%). So, there's opportunity for cow-calf producers to partner on their calves with stocker operators.
The survey results indicated that the easiest way producers can improve calf marketing is to obtain basic market information. Among the CCS group, less than one-third rely on dynamic, up-to-the-minute sources for price and market information (think CME, DTN and Cattle-Fax). 40.3% rely on stocker publications and newsletters like BEEF Stocker Trends; 35.6% cite USDA reports. Mostly, though, producers rely on the local auction market (63.5%). That's obvious and necessary but foregoing other sources limits the knowledge producers can use to their advantage.
“Knowledge is power.” — Always.
Find a detailed summary and overview of the National Stocker Survey at: www.beefmagazine.com/October08