With outdoor temperatures struggling to stay above 20 degrees, the cold weather didn’t deter more than 140 beef cattle producers from hearing more about a modest cattle market outlook at the recent Central Texas Cow-Calf Clinic in Cameron, Texas.
The clinic was hosted by the Texas A&M AgriLife Extension Service offices in Bell, Burleson, Falls, Milam, Robertson and Williamson counties. The day-long program featured numerous presentations and demonstrations, plus an order-buyer evaluation from cattle market experts.
“It’s amazing the value of cattle now versus 18 months ago,” said Jason Cleere, AgriLife Extension beef cattle specialist in College Station. “Two years ago if I told you that you would get an extra $20 by spending $1 on a growth implant, you’d probably say ‘heck, what’s $20 when I’m getting $1,500 for my calves?’ Now things have changed. It’s the little things that are low cost, such as castrating calves, that can add value to your calves so that you can receive extra dollars.”
“We are starting to see more beef in the system every year and that’s putting pressure on prices,” said Jason Johnson, AgriLife Extension economist, Stephenville. “Why did prices fall so fast? Historically, there’s been a wide spread between feeder calves and slaughter steers. Part of the reason for the drastic fall in prices was the reduction in a (traditional) large spread between feeder and fed cattle prices. Back when prices were high, feedlots were paying premiums to keep their operations going. They paid $2.20 a pound and didn’t make a lot of money when prices started coming down.
“In 2016 and into 2017, there’s much more of a normal spread between feeder calves and slaughter steers. A bulk of that gain price has already taken place. Don’t hold your breath on those high prices in 2014 and 2015 to return. Hopefully you took those windfalls you received during those historically high prices and invested it back into your operations. Overall, there will be more calves every year and that’s going to put downward pressure on prices.”
Johnson said projections of flat to net returns per calf can be expected looking forward.
“That’s more normal, but pretty depressing when you consider it was $500 a head a few years ago,” he said. “I suspect there’s been some holding off of marketing calves the past two months. We’ve seen a nice rally since the election in November. There’s the potential that a lot of these calves have been held back and there will be a temporary backup flow that could bring prices down. Take advantage of the rally in prices and market those calves if you haven’t already done so.”
Johnson said over time, “hopefully we will move some of this out of the system,” referring to large export market countries such as Japan, Canada and Mexico.
He also noted drought monitor conditions do not pose a threat to forage availability.
“The three-month outlook from January through March calls for above normal temperatures and below normal precipitation,” he said. “The April, May, June period calls for above normal temperatures and average precipitation.”
Record corn production will not pose a threat for downward bidding on the calf market, Johnson said.
“As a cattle producer, this is what we want to see,” he said. “We are looking at $4.08 a bushel all the way through 2020. Sub-$4.25 corn is very manageable.”
Johnson advised cattle producers to focus on efficiency and production.
“The 4- to 10-year-old cows are most productive,” he said. “Look at your herd’s age and see what it is going to be in two years. Secondly, look at feed costs. You can’t short your female cattle on nutrition. You’ve got to keep them bred and keep them at a body condition score of 5 to have acceptable rates of getting them bred.”
Johnson also recommended castrating and dehorning to add value to calves that are marketed. He also advised to watch stocking levels.
“If we have another drought like 2011 and you try to feed your way out of it, you are going to lose a lot of money.”