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News and views on stocker segment issues from BEEF magazine.
August 15, 2006 A Prism Business Media Publication

ISSUE CONTENTS
Program Feeding -- More Perspective

Corn Estimates Grow

Drought and Taxes

Wheatland Stocker Conference

Southwestern Oklahoma Stocker Conference

Other Upcoming Events

Fed Market Jumps -- Feeders Follow

Questions & Comments


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Stocker Management
Program Feeding -- More Perspective
"I've had some of the largest stocker operations in the area tell me if they had the guts they'd get rid of every lease they have and go strictly to program feeding because they can put 300-400 lbs. on the calves at a similar cost to grazing, but with more predictability," says Dave Jones, general manager of Livestock Nutrition Center facilities at Chickasha and Fletcher, OK.

Even those more inclined toward tradition are taking a harder look at program feeding this year given the horrid grazing condition since last fall.

In order to estimate the potential of program feeding, David Lalman, Oklahoma State University (OSU) Extension beef specialist, says, "The important factors in developing a ration are to obtain a high value for net energy for gain per dollar of ration cost, and then to adjust the protein and mineral content of the ration to the animal's requirements, determined by the targeted gain, the animal's sex, weight and frame size. It's simplest to calculate the ration's net energy for maintenance and growth (NEm and NEg) values on dry matter basis." You can find a spreadsheet calculator at www.ansi.okstate.edu/software/PROGFED2.xls.

As for the mineral included, Jones believes matching it to the specific ration and goal is a key. "We're seeing 4-5¢ better cost of gain with the right vitamin and mineral package," he says.

Lalman also cautions that feeding a single ingredient is an invitation to problems. He and other OSU researchers have tried in studies feeding free-choice soybean hulls and the equivalent of 1 lb. of hay/day on a dry matter basis. "It works for a short period of time, up until about 45 days, and then you start running into bloat problems," Lalman says.

Bottom line, both Jones and Lalman suggest arriving at the performance goal for program feeding, then work with Extension agents and nutrition specialists to design a cost-effective program capable of achieving the goal.

Of course, feeding this way isn't for everyone. For one thing, cattle need to be fed the same amount at the same time every day in a situation where all calves have a chance to get to the bunk. And you need to calculate and adjust the ration every couple of weeks as the cattle grow.

"Anyone who has difficulty maintaining a regular time schedule should think twice about program feeding. You can't be sloppy. You have to feed them at the same time every day and have the capacity to feed the right amount of feed. You can't guess at it," Lalman says. "Program feeding is all about you deciding what you want the cattle to consume and gain.

"You have to go at it with the right mindset and understand the principle behind it, which is feeding two-thirds to three-quarters of what the cattle would normally eat. You don't feed them hay, and it won't work in a pasture situation because you have to control what they consume," he adds.

Precision also extends to how cattle are sorted and grouped.

"The cattle need to be as uniform as possible in body type, weight, size, age, disposition and previous background," Lalman says. "The cattle also need to be healthy at the outset, which means most stockers will be taking the cattle through a traditional receiving program before beginning with program feeding."

Likewise, feed selection revolves around more than cost of gain and convenience. For instance, Lalman stresses, "Pelleted diets won't work with program feeding unless the pellet also contains cottonseed hulls or peanut hulls. The usual problem with a complete pelleted feed is it's not possible to maintain adequate roughage particle size to prevent rumen disorders and bloat. However, rations can be developed with only whole corn and specially formulated supplement pellets. With the whole corn program, the supplement and whole corn will have to be carefully mixed before they're fed."

The basic necessities of program feeding management include:
  • Adequate bunk space so most cattle can eat at one time.

  • Pens small enough that cattle can come up to the bunk when fed.

  • Scales or other methods of weighing out daily feed.

  • Roughage feeds to work the cattle up to a high concentrate diet.

  • Skill on the part of the manager.

  • Sufficient business management skill to assess the economic limitations and opportunities of limit feeding cattle.

  • A solid plan for use or sale of the cattle following limit-growing.
Find a detailed fact sheet on program feeding lightweight calves at pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-80/CR-3025pod.pdf.



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Weather And Crops
Corn Estimates Grow
Despite raging drought across wide swaths of cattle and wheat country, corn is defying market expectations, according to last Friday's much anticipated USDA Crop Production report.

This year's corn crop is now pegged at 10.976 billion bu. Though that's 1% less than last year and 7% shy of the bin-buster in 2004, it would be the near-record crop needed to keep feed prices from running away.

Soybean production is estimated at 2.93 billion bu., 5% down from last year; 6% less than 2004. Meanwhile, the 1.8 billion bu. estimated for all wheat production would make this year's crop 14% less than a year ago.

For the week ending Aug. 5, according to National Agricultural Statistics Service (NASS).
  • Corn -- 97% is at or beyond the silking stage, which is the same as last year and 5% ahead of average. 44% advanced to the Dough Stage, compared to 42% last year and 36% for the five-year average. 12% has entered the Dent Stage, which is 2% ahead of last year and the average. 57% is rated Good or better, compared to 52% last year.

  • Soybeans --Blooming has begun on 93% of the acreage, 2% behind last year, but 3% ahead of normal 72% was setting pods, 1% behind last year but 11% ahead of normal. 53% is rated Good or better; 51% was at the same time last year.

  • Winter Wheat -- Growers have reaped 94% of the acreage, compared to 93% last year and 91% for average.

  • Spring Wheat -- 49% of the crop is in the bin, which is 28% ahead of last year and 32% ahead of the five-year average. 32% is rated Good or better, compared to 67% last year.

  • Barley -- Harvest advanced to 37% complete, compared to 20% at this time last year and 15% for normal. 50% is rated Good or better, compared to 71% last year.

  • Oats -- 77% of the acreage is harvested, compared to 66% last year and 55% for average.

  • Sorghum -- 67% of the acreage is in the heading stage, which is the same as last year and 5% ahead of average. 29% was at or beyond turning color, 6% ahead of last year and 4% ahead of normal. 31% is ranked Good or better, compared to 44% last year.

  • Pasture -- 19% is rated Good and 3% is rated Excellent, compared to 31% and 5%, respectively last year. 26% is rated Poor and 24% is ranked Very Poor, compared to 20% and 12% respectively at the same time last year.
States with the worst pasture conditions -- at least 40% of the acreage rated poor or worse -- include: Alabama (77%); Arizona (74%); Arkansas (57%); California (46%); Colorado (62%); Georgia (67%); Iowa (49%); Kansas (53%); Louisiana (43%) ; Minnesota (55%); Mississippi (52%); Missouri (71%); Montana (40%); Nebraska (70%); New Mexico (42%); North Dakota (74%); Oklahoma (78%); South Dakota (72%); Texas (74%); Wyoming (73%).

States with the lushest pasture conditions -- at least 40% rated good or better -- include: Florida (69%); Idaho (60%); Illinois (46%); Indiana (61%); Kentucky (54%); Maine (91%); Maryland (50%); Michigan (57%); New York (67%); North Carolina (52%); Ohio (72%); Pennsylvania (51%); Utah (54%); Washington (51%); West Virginia (62%).



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Stocker Business
Drought and Taxes
If drought has forced your hand in marketing cattle, make sure you're aware of special federal income tax considerations potentially available to you, says Tim Petry, North Dakota State University livestock marketing economist.

For instance, Petry explains, according to Internal Revenue Service (IRS) guidelines, one provision applying to all types of livestock allows postponement for reporting income from forced sales for a year.

"The normal business practice for a cattle producer may be to background calves after fall weaning and market them the next February," Petry says. "If, due to drought conditions and lack of feed, the calves are marketed at weaning in October, the income may be postponed until the next year. Only sales in excess of 'normal' (usually defined as the number sold in each of the last three years) qualify for the deferral."

Petry points out the drought must have caused an area to be designated as eligible for assistance by the federal government. However, the livestock doesn't have to be raised or sold in the exact designated area, such as a particular county, but only nearby.

The IRS tax code is complex, Petry points out, so livestock producers considering marketing livestock at abnormal times due to dry conditions should consult their tax adviser. Other tax-management tools, such as income averaging, also should be considered, he adds. For more, visit: www.ext.nodak.edu/extnews/newsrelease/2006/071306/09forced.htm


Events
Wheatland Stocker Conference
There's still time to sign up for the Wheatland Stocker Conference, Aug. 18 at the Cherokee Strip Conference Center in Enid, OK. The 20th annual event features a Who's Who of industry leaders to discuss everything from the cattle cycle, to no-till and low-till farming, to the impact of industry transitions on the stocker business.

Speakers and topics include:
  • Paul Hitch, Hitch Enterprises, Guymon, OK, Change and the stocker business.

  • Mark Gardiner, Gardiner Angus Ranch, Ashland, KS, Change and the stocker business.

  • Jackie Moore, Joplin Regional Stockyards, Joplin, MO, Change and the stocker business.

  • Rep. Frank Lucas, farm bill legislation.

  • Dan Thomson, DVM, Kansas State University, Stocker cattle health.

  • Derrell Peel, OSUy, Cattle cycle and stocker economics.

  • Craig Watz, FBI Special Agent, Kansas City, MO, food safety.

  • Roger Gribble, Area Agronomist, Enid, OK, No-till, low-till and maintaining forage quality and quantity.

To register (which is free, including lunch), call 580-237-7677. For more info, contact Greg Highfill at 580-237-7677 or Greg.Highfill@okstate.edu.


Southwestern Oklahoma Stocker Conference
New cattle-production research and info are available at the Aug. 24 Southwest Cattle Conference in Lawton, OK, at the Great Plains Technology Center in the Worley Seminar Room.

Among the presentation topics are: wheat pasture bloat research; current market situation and outlook, focusing on wheat pasture cattle; how source and age verification of cattle is becoming a marketing issue and tool, and how verification affects cattle producers; BVD persistently infected cattle, and management strategies to deal with the animals; and receiving health management for wheat-pasture cattle.

For more info, contact Bob LeValley at bob.levalley@okstate.edu or 580-255-0546.


Other Upcoming Events
Sept. 28 -- Kansas State University (KSU) Beef Stocker Conference, KSU Beef Stocker Unit, Manhattan, KS. For more info, call 785-532-1267.


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Markets
Fed Market Jumps -- Feeders Follow
You know it's going to be a bullish marketing week when the fed cattle trade happens on Wednesday rather than the usual rush at the end of the week. Try this on for size: $5-$6 higher in mostly midweek trading. Resulting optimism, not to mention hedging opportunities, fueled the stocker and feeder cattle market, too, pushing the market $3 higher.

"Trends were bullish on all classes of cattle, following the prior week's multiple fed cattle trading sessions that grew progressively higher. Packers were even more aggressive last week and feedlots were shrewd sellers with the backing of the spot August CME Live Cattle Futures which have been trading at a significant premium to cash," say USDA Ag Marketing Service (AMS) analysts.

The analysts also said: "Demand was also noticeably improved for lightweight calves (under 500 lbs.), which have been lackluster for the last several weeks and appear to be a bargain next to yearlings and heavy calves with the condition to go right on feed. Most grazing areas are very low on forage but commodity feed continues to cheapen as Friday's USDA crop production report estimated this year's corn crop at 10.976 billion bu. That's well above the average trade estimate and sent a bearish signal; September CBOT Corn futures were down over 14¢ on Friday. The cattle horizon is beginning to look much brighter with Choice boxed beef cut-out values gaining over $7 this past week and Select over $9."

The summary below reflects the week ended Aug. 11 for Medium and Large 1 -- 500- to 550-lb., 600- to 650-lb., and 700- to 750-lb. feeder 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:

Summary Table
State Volume Steers Heifers
Calf Weight 500-550 lbs. 600-650 lbs. 700-750 lbs. 500-550 lbs. 600-650 lbs. 700-750 lbs.
OK 39,300 $123.96 $119.71 $115.85 $115.72 $113.22 $109.28
TX 30,300 $118.23 $115.53 $114.65 $112.04 $109.74 $100.15
MO 21,300 $131.39 $124.72 $116.80 $116.78 $112.64 $104.80
Dakotas 16,900
South Dakota
North Dakota

$130.40
**

$121.18
$123.804

$120.32
$124.00

$118.102
**

$121.87
**

$114.67
$113.56
KY* 15,200 $116-126 $108-118 $104-1145 $107-117 $100-1103 $94-1045
AL 123,700 $115-124 $108-114 $100-1104 $107-113 $100-106 $98-1034
NE 12,000 ** ** $122.40 $121.022 $116.034 $115.63
KS 10,400 $133.77 $126.17 $120.03 $124.36 $115.51 $113.65
AR 9,800 $121.01 $112.25 $108.26 $108.60 105.36 $99.14
TN* 9,600 $116.76 $110.67 $104.93 $108.06 $102.18 $96.40
IA 9,200 $133.41 $130.66 $122.61 $125.45 120.19 $114.76
GA* 8,700 $104-128 $96-115 $93-109 $100-113 $92-105 $100-1014
FL* 7,500 $100-118 $99-109 $91-1034 $97-116 $95-106 $89-954
FL* 7,500 $100-118 $99-109 $91-103 $97-116 $95-106 $89-95
MS* 7,500 $110-1201 $100-1103 ** $100-1101 $90-1003 **
VA 6,400 $122.16 $118.53 $112.98 $111.11 $107.68 $97.08
Carolinas* 5,900 $100-121.50 $95-1183 $89-109.505 $94-114 $87-1103 $84-99.505
LA* 4,400 $108-120 $101-1143 ** $100-1171 $97-1073 **
CO 2,600 ** ** ** ** ** **
WY* 2,000 ** $115.702 $106.98 ** $112.442 $100.24
WA* 2,000 ** $115.702 $106.98 ** $112.442 $100.24
NM* 1,200 ** ** ** ** ** **

* Plus 2
** None reported at this weight or near weight
(***) Steers and bulls
NDNo Description
1500-600 lbs.
2550-600 lbs.
3600-700 lbs.
4650-700 lbs.
5700-800 lbs.
6750-800 lbs.
7800-850 lbs.


Contact
Questions & Comments
Please send questions to:

Wes Ishmael, Contributing Editor, BEEF Stocker Trends, at wesleysink@aol.com

Joe Roybal, Editor, BEEF magazine, at jroybal@beef-mag.com



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