Learn How To Become A Low-Cost
Learn how to become an efficient low-cost cattle
producer by attending the Jim Gerrish Hands-On Management-Intensive
Grazing School. Set for Sept. 27-30 at North Star Land & Cattle in
Winona, TX, the workshop will cover such topics as year-round grazing,
contract grazing, fertility management, grazing-cell design, pasture
finishing, balancing animal demand and forage supply, managing for a
variable stocking rate, pasture improvement, fence and water
development, marketing strategies, and much more.
The workshop faculty includes: Jim Gerrish, former lead pasture
researcher at the University of Missouri's Forage Systems Research
Center in Linneus; John Sattler and Doug Behm of North Star Land &
Cattle; Gerald Evers, Texas A&M University-Overton professor of forage
management; and fence builder and cowhand Ian Gerrish.
The program begins at 8:30 a.m., Sept. 27, and winds up at 3 p.m., Sept.
30. For more info, a full agenda, or to register, visit: www.americangrazinglands.com/AGLS/ and click on
"Grazing Schools;" or email email@example.com
or call 208/876-4067.
Weather And Crops
Katrina Brought Some Needed Rain,
The force and destruction wrought by Hurricane Katrina
dominated the crop and weather picture for the week ending Sept. 4.
Folks along the Gulf Coast -- primarily Louisiana, Mississippi and parts
of Alabama -- were battered by one of the strongest hurricanes to ever
come ashore in the U.S.
For many in those areas, sadly, life will never be the same. As always
seems to be the case in ag, though, there were beneficiaries of the
Specifically, the eastern Corn Belt and Ohio Valley picked up some
needed moisture as the storm spawned heavy rains clear up to New
For the week ending Sept. 4, according to the National Agricultural
States ranking at least 40% of their pastures and rangelands as poor or
very poor include: Arizona (44%); Arkansas (68%); California (85%);
Illinois (56%); Iowa (40%); Louisiana (48%); Missouri (59%);
Pennsylvania (62%); and Wisconsin (42%).
- 96% of the corn was at or beyond dough stage, 11% ahead of last year
and 3% ahead of normal. The crop is at maturity on 20% of the corn
acreage, which is 4% ahead of last year but 2% behind the five-year
average. 51% is reported to be in good or excellent condition, compared
to 69% last year.
- 15% of the soybeans are dropping leaves, 1% ahead of last year and
even with the five-year average. Progress is ahead of normal in the
Southeast, but lagging behind usual in much of the Corn Belt and Great
Plains. Just over half the crop (54%) is reported to be in good or
excellent condition, compared to 62% last year.
- 90% of the barley is in the bin, compared to 75% in 2004 and 85% for
the five-year average.
- Sorghum advanced to 96% -- 5% ahead of last year and 3% ahead of
normal; 47% of the crop is reported to be in good or excellent
condition, compared to 64% last year.
- Pasture and range conditions held basically steady with last week as
34% rated as good or excellent, compared to 51% last year; 66% is rated
fair or better, compared to 77% last year.
- On the other end, 34% is rated as poor or very poor, compared to 23%
On the other end of the spectrum, states reporting half or more of their
pasture and range in good or excellent condition: Alabama (79%); Florida
(55%); Georgia (78%); Maine (73%); Maryland (51%); Nevada (88%); North
Carolina (64%); North Dakota (62%); South Carolina (71%); and Utah
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Calculating Stocker Profit
"Buy 'em right. Feed 'em right. Sell 'em right." That's
the advice most stocker operators grew up with, says Walt Prevatt,
Auburn University Extension economist. And it holds true today, though
he explains a more detailed version using contemporary lingo would be:
"Identify and buy under-valued stockers. Minimize health problems and
death loss. Provide high quality, low cost feed. Achieve reasonable
weight gains of at least 300 lbs. Market them as feeders for their full
There's plenty of ways to skin this proverbial cat, too. But there are
only a handful of methods to determine the potential profitability of
skinning the cat a particular way. That's what Prevatt shared with
producers attending the recent triennial stocker conference at Auburn.
First, there's the typical enterprise-analysis approach where you can
account for all of the details, plug in specifics and see whether you'd
be buying a profit or a loss. An interactive electronic worksheet for
this is available at www.ag.auburn.edu/agec/pubs/budgets.
Next, Prevatt shared a breakeven calculator (available at the same site)
that lets you input in-weight, days stockered, anticipated daily gain,
death loss, shrink and desired profit per head. Then you can input and
figure breakevens for three different purchase costs and three different
cost-of-gain levels all at once.
Another electronic worksheet at the site calculates the maximum price
you can afford to pay for a stocker. You input the information above,
plus interest rate, futures price for feeder cattle and the basis. In a
single shot, you can then solve for the maximum purchase price based on
three levels of cost of gain and three desired profit levels at the same
Prevatt also walked stockers through the approach of calculating and
using the expected cash market price of stockers (basis + futures) in
order to set and accept a price objective.
Bottom line, it's well worth checking out the Web site and playing
around with the worksheets. You'll also find Prevatt's presentation from
the conference there, as well.
Spreading The Risk This Fall
What's a stocker to do with calf prices higher than the
moon's sun, freight cost on the rise and the futures market without
"Buy some early, take others in on gain and let someone else carry part
of the risk." That's what Derrell Peel, Oklahoma State University
Extension livestock economist, has been suggesting to area operators.
"Stocker cattle scare me this fall. We're in the same position we were
in last fall, except fed cattle are already losing money instead of us
anticipating they'd lose money," Peel says. "Calves at $1.50 work when
you can sell them as feeders at $1.18, but they don't work if they bring
$1.02 or $1.03. That's how vulnerable feeder prices could be after
Peel had the same concerns last fall. Sure enough, feeder prices went
down, but then they rebounded counter-seasonally. Sooner or later, even
tight supplies can't overcome raw fundamentals, though.
"The Canadian situation with BSE really bought us 18 months of
invulnerability to market shocks, and we've spent most of it... The
feeder markets have been oblivious to the realities of those for fed
cattle and meat," Peel says.
He points out seven-weight steers the first of September were $31/cwt.
higher than the January and February fed-cattle contracts they would be
hedged against if the incongruous economics made hedging possible.
"We've really been bulletproof up to now, but there will come a day of
reckoning," Peel says. "I do think the industry has achieved a new and
higher price plane, but you can't get around the fundamental reality
that sooner or later the feeder and fed cattle markets have to start
running together again."
USDA Database Ruling Changes The ID
"We are gratified by the growing support for an animal
identification system, with over 100,000 premises now registered," said
Secretary of Agriculture Mike Johanns Aug. 30. "We are eager to work
closely with industry as they develop and maintain databases that
contain animal movement information. After hearing the confidentiality
concerns of producers, we envision a system that allows these databases
to feed a single, privately held animal-tracking repository that we can
Just like that, USDA did a complete about-face on its previously stated
intention to make the database for the National Animal Identification
System (NAIS) the sole domain of government.
Allowing private industry to build and maintain the NAIS database --
something some producer groups such as the National Cattlemen's Beef
Association have been pushing for -- may be a key step in pushing the
stalled NAIS effort forward. At least it begins answering some
producers' questions regarding how to exploit the market potential of
mandatory ID without replicating a proprietary database maintained by
Perhaps signaling as much (or maybe just coincidentally), within a week
of the announcement, AgInfoLink, a leading animal traceability service
firm, purchased Animal Permanent Electronic Identification System
(APEIS), another animal traceability service company begun in 1991.
That's the first significant visible jockeying among animal ID players
in more than a year.
USDA says it will host a meeting this fall to clarify its expectations
for the private tracking system, including user requirements and system
specifications. Of course, the industry is still waiting for USDA to
release final NAIS rules, which many expected months ago. So, the
immovable object may be emerging from the hibernation of politics and
indecision, but the pace is still more sluggish than an earthworm in a
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Merial Limited. Duluth, GA. All rights reserved.
Cattle Markets Weather
Hurricane Katrina. The biggest natural disaster in U.S.
history --untold lives lost and more than an estimated $25 billion of
insured losses and counting.
Hurricane Katrina. The biggest displacement of U.S. citizens since the
Civil War -- more than a million evacuated one way or the other with no
jobs or homes to return to.
All that, and there should be little, if any, impact on the cattle
market. In fact, damage incurred by the hurricane is actually favorable
to cattle prices in the short term.
The irony of disasters. Obviously, the storm wrought tremendous
ag sector damage. In early estimates, the American Farm Bureau (AFB)
pegs it at $2 billion. So far, it appears the ag sectors hit hardest
directly are dairy, poultry, sugarcane and cotton. While there were some
beef and dairy cattle lost -- a high percentage of these in certain
parishes, according to reports -- their cash value may pale compared to
the rivers of milk dairy producers had to dump because of lost power.
Likewise, while some poultry were lost, it was the temporary closure of
processing facilities and lost product -- frozen inventory sweltering
without electricity -- that rang the cash register earliest. Tyson Foods
for example, estimated its loss last week at $10-$20 million, including
live-bird inventory, temporary closure of processing in Mississippi, and
loss of frozen products stored in Louisiana and Mississippi.
As for crops, cotton and cane farmers were as worried about the quality
they would find in their field after damaging winds and rain as they
were about the actual quantity.
Really, the primary short-term economic threat to ag was the disruption
of grain export service in the lower Mississippi and in the Port of New
Orleans, where AFB says 60% of all domestic corn and soybean exports
originate. Within a week of the disaster, though, USDA reported
operational capacity of the elevators and floating rigs for loading
grain from river barges to ships was back to 63% capacity.
Moreover, many private analysts were predicting the soybean and corn
crops to beat the already-buoyant forecasts of USDA, which could further
depress prices of those commodities.
So, the worst thing a disruption in grain exports can do to cattle
prices is help them. Likewise, any significant damage to the poultry
industry would likely raise poultry prices, which would also benefit the
Beware the toll on consumer demand. Longer term is where beef and
cattle prices might be more vulnerable than many other commodities.
That's due to the impact Katrina may ultimately have on consumer buying
Energy prices were already threatening the nation's economic growth
before Katrina came along. Even if the Gulf refineries and
infrastructure resume operations quickly and at capacity, there's no
reason to believe consumers won't have to spend more money on gas,
heating and cooling than a year ago.
Likewise, Hurricane Katrina will probably increase prices in other areas
-- everything from construction supplies and services to insurance and
business travel. That's in addition to the money the nation and
communities are spending to accommodate the tragedy. These are funds
that either drain other programs and services or must be recouped from
the public in some way. In each case, that's more consumer money that
won't be left for buying beef.
Moreover, when consumers do buy beef, they may be paying more for it
since rising fuel costs impact the production side of the business, too.
Incidentally, fuel prices rise could have a dramatic impact on cattle
prices, relative to the cost of freight, depending on how high they go.
Mike Miller, Cattle-Fax director of research and development, says the
cost of freight has increased by a third during the past 18 months.
Not long ago, folks could get all the cattle hauled they wanted from the
Southeast to the Central Plains for $2.50/loaded mile. Now, there are
reports it's taking $3. Increase the cost of freight per loaded mile by
50-75 cents, and Miller says it reduces feeder cattle prices $3-$5/cwt.
You're also talking about erosion in basis for cattle producers in that
It's not that the cattle market should unravel anytime soon, but
Katrina's impacts have the potential to accelerate the transition from
the high side of the price cycle to the declining side.
KSU Stocker Conference This
You still have a few days to get to Manhattan, KS, for
the annual Kansas State University Stocker Conference, Sept. 15. On tap
The conference, sponsored this year by Merial, begins with registration
at 9:30 a.m., at the Holiday Inn-Holidome in Manhattan. It concludes
that day with a tour of KSU's new Beef Stocker Unit facilities, followed
by a barbeque.
- "Traceability and the Brand Premise: Making Stocker Operations Fit
in the Equation," presented by Leann Saunders, IMI Global.
- "Tomorrow's Stocker Program: Will Pre-Conditioning Fit?" presented
by John Butler, Merial, Ltd.
- "Legal Issues Facing Stocker Operations," presented by Allie Devine,
Kansas Livestock Association.
- "Dealing with Weight Variation -- The Swine Industry Perspective,"
presented by Mike Tokach, Kansas State University (KSU).
- "Strategic Use of Antibiotics in Stocker Operations," presented by
Mike Apley, DVM, KSU.
Registration is $30 at the door. To learn more, call 785-532-1267.
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Merial. © 2005 Merial Limited. Duluth, GA. All right
Feeders And Fed Cattle Prices Are
A robust national economy is a wondrous thing! At least
in the short run, both the Chicago Board and Wall Street seemed to shrug
off worries about inflated oil prices and Hurricane recovery by the end
of last week.
Between declines in the grain markets and a move forward in the fed
market, feeder cattle sold steady to $2 higher last week, with calves
picking up $2-$5 in some areas; that in a week shortened by the Labor
Day festivities. Fed cattle were mostly $2-$3 higher at $82-$83, led by
sales in the Southern Plains at mostly $84-$84.50.
Longer term, there's plenty of reason for caution on the demand side,
though (see "Cattle Markets Weather Katrina" in this issue). And, it
could be the optimism in the financial markets will turn back south as
the realities of damaged oil and shipping infrastructure in the Gulf
become more clear.
For the week ending Friday, Ag Marketing Service analysts report, "Sale
barns are gearing up for the expected usual fall increased movement of
feeders. However, recent rains that breathed new life into the pastures
and lower feed costs may entice producers to hold out a little longer."
The summary below reflects the week ended Sept. 9 for Medium
and Large 1 -- 500- to 550-lb., 600- to 650-lb., and 700- to 750-lb.
heifers and steers (unless otherwise noted). The list is arranged in
descending order by auction volume and represents sales reported in the
weekly USDA National Feeder and Stocker Cattle Summary:
| State|| Volume ||Steers || Heifers
| Calf Weight|| 500-550 lbs. || 600-650 lbs.
|| 700-750 lbs.
|| 500-550 lbs.
|| 600-650 lbs. ||
700-750 lbs. |
| TX ||19,400 || $118.75
|| $110.42 ||
|| $109.83 || $106.484 |
| MO || 16,100 || $132.78 || $128.31 || $122.65 || $123.34 || $120.44 || $117.824 |
| KY* ||15,200 || $116-126 ||
$110-120 || $100-1105 || $108-118 || $99-1093 || $94-1035 |
| OK || 14,400
||$121.56 || $115.59 || $116.46 || $108.21
|| $109.01 |
| AL ||13,200
|| $112-1182 || **
|| $100-1103 ||
| IA ||9,400 || $136.82
|| $122.87 || $124.28 || $120.50 || $111.51
| GA* ||8,700 || $108-126 ||
$100-117 || $95-109 || $103-118 || $94-115.25 || $90-1074
| TN* ||7,700 || $118.73 ||$113.93 || $107.31 || $111.91 ||$107.10 || $96.86 |
| WY ||7,300 || $136.81
|| $115.15 6 || $121.41 ||$118.474
| LA* ||7,200 || $111-121 ||
** || $107-116 ||
$105-1152 || ** |
| AR ||6,600
|| $111.62 || $106.68 || $112.77 ||
$106.08 || $105.00 |
| KS ||4,400 || $139.87 || $128.85 || $119.44 || $119.392
|| $114.33 || $110.92 |
||3,800 || $106-122 ||
$97-1133 || $89-1065 || $97-115 || $93-1073 || $85-97 5 |
| VA ||3,600
|| $113.47 || $109.90 || $111.91 || $108.54 || $101.32
| CO ||3,400
|| ** || $115.254
| NE ||3,100 || **
|| $117.887 || **
|| $112.276 |
| MS* ||2,700 || $111-1201 || $100-1143 || ** ||
|| $97-1053 ||
| Dakotas ||2,400 || $133.47 ||
$129.58 || $120.67 || ** ||
$120.96 || $114.186 |
| WA* ||1,800 || $123.58
|| ** || $109.95 ||$104.55 || **
| MT* ||1,200 || $118.12* ||** ||
** || $117.36 ||
| NM ||1,000 || **
|| $109.58* || **
|| ** |
* Plus 2
** None reported at this weight or near weight
*** Steers and bulls
Questions & Comments
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