Beef Market Advisor

Monday, March 03, 2008




2008 Business Plan for Grass Cattle in the Emerging Biofuel Era

By
Harlan Hughes
Professor Emeritus
North Dakota State University

Planning Prices for Grass Cattle

(double click the figure images to load a larger version into yout computer. Then, use your browser print option to print the figures. Click back on your browser to return to the text of this article.)

My 2008 ranch business plan for the emerging biofuel era calls for the marketing of heavier feeders off grass. Looking at Sep08 planning prices in my April08 BEEF Market Advisor, Figures 4, suggests a $126/cwt planning price for 625 lb steer calves going on grass in May08.

Figure 1 above presents my detailed Sep08 futures-based planning prices for alternative animal weights. Since I wanted to evaluate the production of 850 lb feeders off grass, I selected the $108/cwt planning prices for my 850 lb steers off grass in 2008. This is an Eastern Wyoming/Western Nebraska planning price.

Grass Cattle Profit Center Budget

Now that I have my planning prices for running grass cattle in 2008, I can now project my resource costs for running grass cattle in 2008. This, then, gives me a grass cattle profit center budget for running yearlings on grass in 2008 (see Figure 2 above).

In summary, the buy/sell margin for 2008 grass cattle is projected to be a minus $18.35. This generates a $115 marketing loss on the initial 625 lbs. To make a profit, the profit from the pounds gained has to exceed the marketing loss.

The market value of the 225 lbs gained is projected to be $242 with a total cost of gain at $126/head for a projected profit on the lbs gained of a $116. The per lb cost of gain is projected at $0.56/lb. Adding the marketing loss to the gain profit gives only a $1 profit overall. I would, however, get paid $15/steer month for my grass.

No labor charge, however, is included. If labor cost were to be added in, I typically use $15/head labor costs. Instead, I am letting unpaid labor be one of the residual claimants in the bottom line along with facilities, management, and risk. All three of these resources are not charged for in this economic analysis.

Management Actions

Let's review what I did. In the April08 BEEF Market Advisor I used CME futures market for a given contract month as my base planning price. I then localized this CME price to my geographic location via the basis adjustment giving me a futures-based localized planning price. I then adjusted the localized planning price by my calculated price slides to adjust the planning price to my specific weight of cattle being marketed. I arrived at a May08 $126 price on grass and a Sep08 $108 price off grass.

Then in this article, I prepared a profit center budget utilizing these planning prices for wintering steers on grass summer 2008. I then integrated that grass cattle profit center budget into a business plan for running fall calving cows in 2007.

Economic Analysis of a 2007 Fall Calving Beef Cow Herd

The grass cattle budget discussed above is integrated into a set of four production/marketing alternatives for a Fall 2007 Calving Cow Herd (see Figure 3). The grass cattle budget is the 3rd marketing alternative from the left in Figure 3.

As you probably can guess, the exact same procedure as described in detail for the grass cattle profit center was used to generate the beef cow herd profit center budget, the wintering profit center budget, and the finishing profit center budget for a complete economic evaluation of a fall calving cow herd.

The 2007 fall born calves are wintered in 2008, summer grazed in 2008, and finished in the fall of 2008/winter 2009. Now I can evaluate four different marketing points for running a fall calving beef cow herd. The four marketing points are:
• Selling at weaning,
• Wintering the calves through the winter,
• Running the calves as grass cattle through the summer, and
• Finishing the grass cattle off grass.

Line 44 in Figure 3 presents my projected profits for each marketing point:
• Selling at weaning with $60 projected profit per cow,
• Selling at grass time with an added $25 projected profit per calf,
• Selling off grass with an added $4/head (a rounding difference of $3 from Figure 2) projected profit per calf, or
• Selling finishing the animals with a negative projected profit of $139 per head.

Remember, these profits are accumulative as you go from left to right. Even if I take my potential profits from selling at weaning, wintering the calves, and running grass cattle, and subsidize the finishing profit center,( a common rancher practice), I am projected to not make any money finishing these calves. Why, then, would I want to finish these calves?

Also, for income tax purposes, the first 3 marketing points all would occur in 2008 so there are no different tax consequences.

My conclusion from this 2008 ranch business plan is that I am interested in keeping my calves through Sep08 and marketing the calves as feeders off grass. I am not interested, at this point, is finishing these calves.

posted by Dr. Harlan Hughes 8:42 PM [edit]

Friday, February 22, 2008



Northern Plains Benchmark Herd Data

Since it is that time of the year when we analysis the production of our 2007 claves and start working on plans for the production of 2008 calves, I have elected to share a set of herd performance benchmarks from the Northern Plains. I wonder how your herd compares to these benchmark herds' numbers?

A question was raised as to what the letters in the column heading meant on the above benchmark table.

SPA = Standardized Performance Analysis -- measures defined in the published National Cattlemens BBeef Association SPA Standards.

CSF = Critical Success Factors


Double click on the figure to load a larger version of the table into your computer and then you can use your browser's print option to print out this benchmark table.

posted by Dr. Harlan Hughes 9:25 AM [edit]

Sunday, February 17, 2008

Price Forecasting -- Part I

Producer often tell me that one bottleneck to Strategic planning of marketing is not knowing which planning prices to use. Thus, I am sharing with ranchers my forecasting and marketing strategy evaluation techniques. It consists of two parts. First, I prepare an extensive set of planning prices for the next 12-18 months. Second, I enter them into an expanded set of enterprise budgets that project the gross income, resource costs and earned economic net returns for alternative marketing strategies. Due to limited space, this column will focus solely on the development of my latest set of suggested planning prices.

...more (click the "more" hotbutton to see the complete article in BEEF Magazine, January 2008.

posted by Dr. Harlan Hughes 3:53 PM [edit]

Price Forecasting -- Part II

Ranchings economics is changing. Preliminary data suggest the cost of running a beef cowherd has increased 15-20* in the list two years. Altered production costs and rising feed and livestock prices are generating a different set of ranch-level, cost-and-return (C&R) relationships. And it's imperative that ranchers have a good handle on their herd's annual costs and returns in this emerging biofuels era.
Ranchers must ask themselves: "Does the emerging biofuels era favor a different ranch-level production/marketing system?" If so, what is optimum for you?

….more click the "more" hot button to see the complete article in BEEF Magazine February 2008.

posted by Dr. Harlan Hughes 3:30 PM [edit]


Beef Cow Herd Liquidation On The Horizon?

Source: Cattle Network Today 2/15/2008

(Please note my editorial comment at end of this article)

Rising costs, and prospects for lower calf prices, could lead to the U.S. beef cow herd declining over the next several years. USDA's Cattle inventory report, released a couple of weeks ago indicated that the January 1, 2008 beef cow inventory was about 1% smaller than a year earlier. Most observers think drought conditions, particularly in the Southern Plains during 2006 and the Southeastern U.S. during 2007, prevented U.S. producers from expanding their herds the last two years. This line of thinking suggests that, if weather conditions return to normal, cow herd expansion is on the horizon. But the delayed expansion is not likely to turn into future herd expansion. The reason is simple.

For most U.S. cow-calf producers, there is simply no compelling profit motive to expand their herds. And rapidly rising costs, and stiff competition for pasture, are actually likely to lead to modest herd liquidation in 2008.

Kansas Farm Management Association data indicate that cow-calf producers' returns above variable production costs have been positive for the last nine years (including projected returns for 2007,actual 2007 data won't be available until later this spring), but the margin has been declining rapidly the last two years. And combining forecasts for lower calf prices in 2008 with a dramatic upturn in production costs, including higher feed grain prices, pasture rental rates, fertilizer prices, hay prices, and transportation costs, odds are high returns for average cost cow-calf operations will fall below variable production costs in 2008.

Recent cow slaughter data tends to support this view. Beef cow slaughter during 2007has 6.6% larger than in 2006 and, during the first five weeks of 2008, was nearly 10%larger than a year earlier. Total female slaughter (cow and heifer slaughter, combined) expressed as percentage of steer slaughter is running ahead of last year and at a level that suggests liquidation is taking place. During the first five weeks of 2008, female slaughter totaled 101.6% of steer slaughter, well ahead of last year's pace during January of 96.2%. So, one of the early by-products of the ethanol induced run-up in grain prices could well be the beef cow herd expansion that didn't happen!

Editorial comment from Harlan Hughes: While I totally agree with the general theme of this article, I suggest readers think about one more aspect of the beef industry as you read this. "The role of beef cows in U.S. agriculture is to harvest land that should not or can not be farmed." Beef cows have never really been able to compete with "farming" when that land could be farmed. The emerging biofuel era is again emphasizing that land that can be farmed will be farmed. The nations beef cow herd could well reduce in size due to the bio fuel era.

Now for the key point. The great-plains and mountain regions are not going to see this conversion from beef cows back to farming -- I think it will be the western corn belt and southern plains regions. As a result, the nations beef cow herd will move west in the biofuel era. Those remaining in the beef cow business will have less competition from the corn belt and southern beef cow producers.

posted by Dr. Harlan Hughes 11:45 AM [edit]

Friday, February 15, 2008





Economics of Running Grass Cattle In The Summer of 2008 - Part II


Part I of this series was devoted to developing a set of planning prices for running grass cattle. This article will focus on the total budget generated to evaluate the economics of running grass cattle the summer of 2008.

Projecting The Profit From The Lbs Gained On Grass

Figure 1 illustrates the Wyoming production costs that I used to generate a budget running grass cattle in Wyoming during the summer 2008. This table illustrates the projected costs of individual production costs item by item.

In this Wyoming budget, the opportunity cost of grass was included at $17 per steer month for a total of 3.8 months for a total grass cost of $65 for the season. Note that a labor costs of $15 was also included. The projected total production costs come to $132 per head for a $0.66 per lb cost of gain.

The Projected Final Economic Summary

Figure 2 summarizes the combined projected marketing loss and gain while on grass. The projected $48 bottom line is the “earned returns to management, equity capital, and risk.” Given the projected $114 projected purchase price, the breakeven selling price is $103 per cwt. – very close to the guaranteed insurance policy Ranch-Gate-Price discussed in Part I of this series.


What If” ADG Was Not 1.75 Lbs?

The target ADG was 1.75 lbs per day but what if this rancher experienced experiences a different ADG? Figure 3 presents some “what if” projections. For example, if the ADG turns out to be 1.50, the animals are projected to weight 821 lbs at selling time; however, due to he small price slide at this weight, the selling price is projected to go up only $0.82 for a gross income of $876 per head. With a $122 purchase price (see the bottom half of table) and a 1.5 ADG, the projected profit per head is a minus $36/head.

Figure 4 presents a complete 2008 Wyoming grass cattle budget for running 650 lb steer calves on grass in the spring of 2008 gaining 200 lbs and selling off grass at 850 lbs. A “your farm” column is available for you to modify this budget to fit your specific grass cattle situation.

posted by Dr. Harlan Hughes 9:46 AM [edit]

Thursday, February 14, 2008





Economics Of Running Grass Cattle In The Summer Of 2008- Part I

Figures 1, 2, and 3 are at the top printed in reverse order. Double click each to load a larger view into your computer and to print with your browser's print command. You can go back to the print section by clicking the back arrow on your browser.


In response to this changing economic world, a Wyoming IRM Cooperator asked me to help him evaluate the economics of running grass cattle during the 2008 grazing season. He was wondering if he could purchase some 650 lb calves in early May and market them at 850 lbs in mid September 2008 and make any money.

Given the price volatility of corn and its direct impact on feeder cattle prices, he wanted to explore using USDA’s Livestock Risk Protection (LRP) Program to remove most of price risk associated with running yearling steers. The objective of this article in the series is to share the economic analysis that I went thorough to provide this IRM Cooperator’s a set of planning prices for running grass cattle summer 2008.

Ranchers need to answer two economic questions to determine the profit potential from running grass cattle in 2008. First question, how much marketing loss is projected on the initial weight of the feeder calves going onto the grass? This is determined by the magnitude of the negative buy/sell margin times the initial weight of the feeder calves. Second question, what will be the projected profit generated from the pounds gained during the grazing season? The projected profit potential from running grass cattle in 2008 is the sum of these two numbers.

Projected Buy & Selling Price For Yearlings On Grass In 2008.

I will describe two price forecasting tools that I will use to suggest a projected buy/sell margin for grass cattle in 2008. The results of these two projection models are presented in Figures 1 and 2.

Figure 1 suggests that buying 650 lb feeder calves in spring 2008 is projected to cost $114 per cwt (determined by extrapolating between the 600 and 700 lb prices under the Spring08 column in Figure 1; row 10, col U). Figure 1 also projects 850 lb feeder steers in September 2008 to sell for $103 (row 14, col V). These two prices, then, suggests a buy/sell margin of a minus $11 ($103 - $114). Taking 6.5 cwts x -$11 gives a projected -$71.50 marketing loss associated with these grass cattle.

Market price basis is defined as local cash price minus future market price. The above price projections are based on a +$4.16 market price basis for 650 lb feeder calves and a -$8.02 market price basis for 850 lb feeder steers. These basis numbers are based on the basis actually experienced in Western Nebraska the week of 23 Jan 2008. We know, however, that market price basis changes through out the marketing year. Experienced marketers also know that basis risk is the one risk that can not be passed on to someone else.

So...What Market Price Basis Should I Use?

There is now a comprehensive basis projection model available to ranchers that was just recently released by Kansas State University (see BEEF January Issue). This model is accessible at www.beefbasis.com. This model not only gives a projected market price basis by state (in my example Wyoming), it also provides a projected confidence interval for that basis projection.

The input used by Beefbasis.com was state where the cattle are marketed, average weight of the feeders to be sold, number of head and the target selling date. The model retrieved the appropriate live cattle futures price, feeder cattle futures price, and the appropriate corn futures price selected for my targeted marketing date. All of this is reported in the top-half of Figure 2.

The Beefbasis.com Model presents two different projected results summarized in the bottom-half of Figure 2. The first projection is based on Wyoming’s historical feeder cattle prices and projects a minus $4.43 average basis for September 2008. Due the high volatility of current prices, the 68 percent confidence interval for the basis forecast is wide and ranges from -$0.77 to -$8.09.

The second projection in Beefbasis.com model also takes live cattle and corn futures prices into account and it projects an average basis of a minus $0.03 with a confidence interval of -$4.02 to +$4.22. I have elected to use the average of these two basis estimates and settle on a minus $2.23 Wyoming basis for this study. This Beefbasis.com Model can be used to calculate a local basis for your ranch by taking your state’s historical prices into account.

The Beefbasis.com model also provides an expected cash price of $105.47 in the feeder cattle model and $109.87 in the Live Cattle & Corn Model for an average projected selling price in September of $108.

Both the PPP-MIS Model and the Beefbasis.com Model are futures based. The primary difference in the planning prices projected by these two models is the basis projections. The Beefbasis.com projection model is built around considerably more historical price data which, in turn, should lead to more accurate basis predictions.
Using Livestock Price Protection (LRP) To Guarantee A Selling Price.

In recent years, USDA has been offering various new price risk protection programs for ranchers. My Wyomig rancher wants to take the guaranteed market price from a LRP price insurance policy and work backwards to see what he can afford to pay for feeder calves going onto grass.

The USDA insurance coverage price is based on the futures options market so the insurance premium and coverage price changes daily along with the options prices. You can look at the daily price quotes at

http://www3.rma.usda.gov/apps/livestock_reports/main.aspx

Figure 3 summarized my personalized worksheet that I use to calculate the insurance coverage price at the ranch gate. The insurance coverage price is labeled the “Ranch-Gate-Price” on the right-hand side of Figure 3.

You take the coverage price from the USDA daily Price Table, use the provided premium rate, adjust it for the USDA premium subsidy, and, in my example, you get the $3.74/cwt premium rate that the rancher pays that day. The “Net Price” is the insured price after the premium is taken out and “Ranch-Gate-Price” is the net price adjusted for local basis. The premium and Net Price can be locked in the day the premiums are paid . The basis, however, is a projected value so the final Ranch-Gate-Price can vary a little from the projected price. That variance will be the error generated in the basis forecast.

To initiate an LRP insurance contract. a ranchers signs up with his local crop insurance agent and pays his premiums. The contract includes that day’s specific price coverage and insurance premiums inserted for that day, All insurance costs are paid up front and there are no hidden costs like “margin calls” in this insurance program.

In this case, a Wyoming rancher could have signed up for an LRP insurance policy on Jan 29, 2008 that would have set the insured Ranch-Gate-Price at $100.03 per hundredweight for 850 lb feeder steers to be sold in late August.
In summary, I used $114 dollar feeder calves going on grass and $108 dollar feeders cattle coming off grass. USDA’s risk management Livestock Risk Protection (LRP) was evaluated setting the insured price at $100 per cwt. We now have a set of suggested planning prices that can be used to prepare a total budget for running grass cattle during summer 2008.

Next month I will present the actual 2008 grass cattle budget generated for this IRM Cooperator.

posted by Dr. Harlan Hughes 1:34 PM [edit]

Tuesday, February 12, 2008

2007 FEEDLOT REVIEW

According to the Kansas State University "Focus on Feedlots"
survey for calendar year 2007, feeding performance for steers
and heifers deteriorated compared to 2006's. Average closeouts
weights were about unchanged in 2007 compared to 2006. As
expected, in 2007, the cost of gain for both steers and heifers was
well above the prior year, reflecting surging corn and hay costs.
In 2007, the average closeout weight for steers was 1314 pounds
or about 2 pounds heavier than 2006's and 43 pounds above the
2001-2005 average. Heifers closed out at an average 1189
pounds, down a tad from the 1192 pounds reported for 2006 and
3 percent higher than the prior five-year average. In November
steer closeout weights peaked at 1404 pounds while heifer
weights topped out at 1242 pounds in October. In 2007,
placement weights for steers averaged 781 pounds, 5 pounds
heavier than 2006's, while heifer placements weights were down
about 12 pounds.

For reporting feedlots, steers in 2007 were on feed an average
162 days, nearly 4 days longer than in 2006, while heifers were
on feed an average 9 days more than a year earlier. Average
daily gains for both steers and heifers worsened compared to
2006's, as feedlots reported an average daily gain for steers at
3.31 pounds per day versus 3.40 pounds, with heifers at an
average 2.94 pounds per day which was 3.5 percent lower than
2006's. For steers and heifers sold in 2007, the amount of feed
needed per pound on gain dry matter basis was higher than in
2006. Steers required an average 6.19 pounds of feed, up from
the 5.95-pound average for 2006, whereas heifers needed an
average 6.42 pounds well above the prior year's 6.19-pound
average.

As expected, feedlots reported record high feeding cost of gain for
2007 due to higher corn and hay prices. For 2007, the cost of
gain for steers was $73.51 per cwt. versus $53.94 per cwt in 2006
and over $21 per cwt. higher than the 2001-2005 average. Heifers
closed out at an average $77.91 per cwt., $20.81 per cwt. higher
than 2006's average. For 2007, feedlots reported an average corn
price of $4.12 per bushel, $1.43 per bushel higher than 2006's,
with corn prices only dropping below the $4 mark twice late in the
2007 year. The annual price for alfalfa hay at $135.12 per ton
was the highest ever reported for calendar year and was nearly
$28 per ton above 2006's.

posted by Dr. Harlan Hughes 11:01 AM [edit]

Cattle Cycle Gone -- Production Cycle Here

"From an inventory standpoint, I think the cattle cycle is dead," said Randy Blach, Cattle-Fax CEO, at that organization's Outlook Seminar last week.

He and other Cattle-Fax analysts explained the cattle cycle is evolving into one defined by production and technology where the same or more beef can be produced with the same or fewer cattle.

They expect the soft liquidation of beef-cow numbers last year (see "Cow Numbers Decline" elsewhere in this issue) to continue this year; numbers should remain stagnant at best for the next several years. Yet, there's little reason to expect beef production will decline much.

Besides the technology enabling heavier carcass weights, Blach explained, "We will rely on countries like Canada and Mexico to supply more of the raw material (fed beef and feeder calves) we need to run the factory here."

According to Kevin Good, Cattle-Fax analyst, the U.S. will import about 2.5 million head this year. Even so, U.S. per-capita consumption will decline slightly because of supply, not demand.

Though cattle supplies are running tight, Good says Cattle-Fax believes more cattle will be placed this month and next than popular perception suggests because more calves were placed into grower yards than people think. Popular reasoning has figured most all the calves that would have gone to wheat pasture last fall and couldn't were placed directly on feed.

For prices next year, Cattle-Fax is calling 550-lb. calves at $115 for average (range of $110-$125), 750-lb. feeders at an average of $104 (range of $94-$116), and fed cattle at $92-$94 on average (range of $85-$102).

If these estimates are in the ballpark, selling prices remain near historically high levels. Unfortunately, input costs will continue to rise, pressuring net profit potential.

For instance, Cattle-Fax analyst Mike Murphy said more acres of corn than last year's record level are needed this year at similar yield levels to avoid upward price pressure, given burgeoning corn demand. Raw demand and the weak U.S. dollar boosted U.S. corn exports to a record high last year at 2.45 billion bu. Meanwhile, global corn consumption has exceeded global corn production four of the previous five years.

"Higher prices should ration demand, but we're not seeing it," Murphy explained. Wheat and soybean prices are record high on the board and come with lower input costs. Bottom line, corn acres are expected to decline by at least 4 million acres this planting year.

"Last year's large acreage numbers took some pressure off yields. With a smaller number of acres, there will be more pressure to maximize yield potential," Murphy said. Cattle-Fax expects corn to run $3-$5/bu. this year, barring a hiccup in production, and with plenty of volatility.

On the other side of that, Blach believes there's plenty of opportunity because so many more points of differentiation are available in the market. Whether it's source and age verification, natural, or any of the other value-added attributes, Blach expects price spreads that are already record wide for same-weight, same-class cattle to widen even further.

"You're going to have to embrace more risk management in your operations," Blach said.

Overall, USDA's Economic Research Service predicts the Consumer Price Index (CPI) for all food will increase 3-4%, as retailers continue to pass on higher commodity and energy costs to consumers in the form of higher retail prices. The all-food CPI increased 4% between 2006 and 2007, the highest annual increase since 1990.

posted by Dr. Harlan Hughes 10:48 AM [edit]

Saturday, August 11, 2007

BeefTalk: Wrecks Are Not Desireable; Vaccinate Your Calves Now

The process of getting calves ready for market is not simple. In days past, calves generally were not handled or worked prior to shipping in the fall. Instead, they were gathered, sorted and hauled directly to the auction barn.

Calves would not be separated from their mothers prior to sale and the bawling of fresh-weaned calves echoed from the local sale barns. These calves did well and many returned to the countryside for a more leisurely feeding period in smaller lots or pastures.

Today, the table has turned. Many calves go directly to feed yards that aggressively feed calves. In many ways, this is a culmination of genetic selection for growth and the availability of reasonably priced feed grains available in sufficient quantities that facilitate the operation of large feed yards.

Standing at the entrance of a large feedlot today, one would see a constant flow of tractor-trailers loaded with feed or loaded with calves, courtesy of a very efficient transportation system.

In terms of filling trucks with calves, today's buyers do not have a few select orders that offer a premium. Today's buyers have a standard order that fills large pens in large feedlots with similar types of calves that are preconditioned for such an environment.

The bottom line is that the need for preconditioned calves is now the norm, not the exception. At the Dickinson Research Extension Center, in response to the recommendation of our local veterinarian and in preparation for this fall's shipping, the calves were vaccinated with a seven- way clostridial, including blackleg caused by clostridium chauvoei; malignant edema caused by clostridium septicum; black disease caused by clostridium novyi; gas gangrene caused byclostridium sordellii; enterotoxemia and enteritis caused by clostridium perfringens types B, C and D; and histophilus (haemophilus) somnus.

The calves also received a five-way viral product at branding for infectious bovine rhinotracheitis, bovine viral diarrhea types I and II, bovine respiratory syncitial virus and bovine parainfluenza 3.

The cost of these products was 76 cents for clostridial/somnus vaccine and $1.86 for the five- way viral product. Two to eight weeks prior to weaning, a booster vaccine is administered for clostridial/somnus and the five-way viral.

At the same time as the booster vaccination, calves receive their initial vaccination for mannheimia (pasteurella) haemolytica. The cost for pasteurella is $2.32 per dose. The booster vaccinations cost 76 cents for clostridial/somnus vaccine and $1.86 for the five-way viral product.

At weaning, the calves again will receive all three vaccinations at a cost of $4.94. The calves would not need to be vaccinated at arrival at the feedlot because they should be fully prepared for the transition.

The total cost for the vaccination program is $12.50 per calf.

This is a fairly aggressive vaccination program, but these calves are heading to the feedlot. For every 100 calves in the feedlot, the death of one calf would be more costly than the price of an aggressive vaccination program.

In addition, the nature of many of these diseases, if ever encountered, seldom involves just one animal. The reality of an outbreak is that a significant number of calves will be sick. The lost performance, lost value on the rail and actual treatment costs combine to produce what most cattle producers call a wreck.

It's best to not go there, so vaccinate the calves.

May you find all your ear tags.

Source: Kris Ringwall, Beef Specialist, North Dakota State University

posted by Dr. Harlan Hughes 3:54 PM [edit]

Tuesday, June 12, 2007

Please check out my 2nd Web Page at www.beefcharts.blogspot.com

posted by Dr. Harlan Hughes 8:43 PM [edit]

Friday, March 30, 2007



Cost Of Home-Raised Replacement Heifers


Fall calf prices peaked in 2005 and the current beef price cycle is projected to

trend somewhat lower for a few years as the current beef price cycle plays out.

Measuring and controlling heifer replacement costs over the next three to four years

will become all critical.

Managing home-raised replacement heifer numbers has considerable impact on

UCOP - much more so than ranchers typically believe. The quickest way to increase

the unit cost of producing a hundredweight of calf (UCOP) is to hold back added

replacement heifers. The quickest way to lower UCOP is to decrease the number of

heifer calves to be held back to be developed into replacement heifers.

Cash accounting, as done by most ranchers, will lead ranchers down a prim-rose-

path over the next 3 or 4 years with respect to the costs of raising replacement

heifers. In fact, I am currently projecting that some ranchers will loose a

substantial amount of money raising replacement heifers over the next few years and

they will probably not even be aware of it!

A complete version of this article will be published in the BEEF Magazine, May 2007 issue.

How To Print The Two Input Forms:

The two figures included here are an example completed input form that I use to calculate the costs of home-raised replacement heifers. I also included a blank input form that you can print out, complete, and send to me along with a $25 check and I will prepare a Cost analysis Of your Home-Raised Replacement Heifers.

To print out the example completed input form and the blank input form, double click on the figure and it will load a larger version into your computer. Then, use your browser's print command to print out a copy of the forms.

posted by Dr. Harlan Hughes 10:58 AM [edit]

Thursday, March 08, 2007

Cow Calf: Spring Compared To Summer Calving



The greatest nutrient demand of beef cows is during lactation. During lactation cows need to be fed high quality hay and, sometime, supplemented to meet the energy and protein requirements. In most Northern Plains locations, much like the sandhills of Nebraska, the primary grasses available for grazing are warm-season grasses that become available in late May to June. If cows calve in March, this means they are fed a lactation diet for about 90 days before summer grass. It has been documented that the highest quality in warm-season grasses in Nebraska occurs in late May to mid- June and gradually decreases.

Sequencing calving closer to the time when the grazed resource will meet the nutrient demands of the lactating female reduces feed costs and increase profit potential. Basically, this means moving "early spring" calving to "early summer" calving. Key components to changing calving time using a "systems" approach include: 1. Cows have access to vegetative forage for a short period of time prior to calving; 2. Cows meet their energy and protein needs from the pasture resource; 3. Hay and supplement costs are reduced because peak lactation now occurs when vegetative, high quality forage is available; 4. Reduced calf losses and sickness because calving occurs when the weather is warmer; 5. Less labor is needed at calving because calves weigh less at birth for June calving cows compared to February/March born calves; 6. Labor is reduced because less harvested feeds are fed; and 5. Different market alternatives are available for the calves and cull cows and bulls.

In 1993, a summer calving herd was developed at the University of Nebraska, Gudmundsen Sandhills Laboratory to compare spring and summer calving herds. In the spring herd, cows began calving in March and the breeding season began in June, and calves were weaned in October. For the summer calving herd, calving began in June, breeding season began in September, and weaning occurred in November or January. Data were collected in 1994, 1995, and 1996. Summer calving cows were fed 327 Ib of hay/cow/year compared to 3,947 Ib of hay/cow/year. Similar amounts of protein supplement were fed; summer calving cows were fed 154 Ib/cow/yr and for spring calving 96 Ib/cow/yr. The length of the grazing season went from 233 days to 357 days by adjusting the calving time from March to June. Cow reproductive performance was not different between groups. When calves were weaned at similar days of age, summer born calves were about 35 Ib lighter. However, January calf prices tend to be higher for the same weight of calf sold in October; therefore, summer-born calves generate similar gross income as spring-born calves. Due to costs savings in the summer calving system, primarily due to less labor and less hay fed, the summer calving system was a more profitable even at weaning time.

Some concerns with this summer calving system include breeding season occurring at a time when the temperatures are hot. In the sandhills of Nebraska, the temperature decreases at night and the humidity is low. In areas of the United States, because of high humidity and no night cooling, a breeding season that occurs during this time period could result in lower pregnancy rates.

Source: Dr. Rick Rasby, Professor of Animal Science, Animal Science, University of Nebraska - Lincoln, Lincoln, NE

posted by Dr. Harlan Hughes 7:50 PM [edit]

Monday, February 12, 2007

To access these articles, go to www.Beef-Mag.com, scroll down towards the bottom and click on "See more from Harlan Hughes" and this list will come up on your screen. Double click the article name to load that article into your computer. Use your browers's print command to print the article.

Good accounting Part III

Feb 1, 2007, by Harlan Hughes contributing editor
I suggested ranchers look to their on-ranch accounting systems to answer two key business-management questions...

Good accounting Part II

Jan 1, 2007, by Harlan Hughes, contributing editor
Last month, I summarized how some ranchers are being let down by their on-ranch accounting systems. This month, I'll focus on good accounting and how...

Bad accounting Part 1

Dec 1, 2006, by Harlan Hughes contributing editor
Today's ranch businesses are dramatically different from those of years ago. Previously, profit margins were such that the more beef you produced, the...

The perfect beef-cow-lease

Nov 1, 2006, by Harlan Hughes contributing editor
The 2002 and 2006 droughts have stoked interest in beef-cow leases, as drought-impacted ranchers seek to lease their cows to operators with grass and...

Planning prices revised upward

Oct 1, 2006, by Harlan Hughes contributing editor
Prices continue strong for cow-calf producers. As of late August, the 2006 drought has had little impact on cattle prices, and drought-induced early weaning...

What's a fair cow share lease?

Sep 1, 2006, by Harlan Hughes contributing editor
As the nation's drought expands and worsens, I get more calls on the economics of moving a cow herd to another ranch for feeding over the next year. Typically,...

Calculating gross income accurately

Aug 1, 2006, by Harlan Hughes contributing editor
Most ranchers don't accurately calculate the gross income of their beef cow herds. A correct economic analysis should be based on the accrual-adjusted...

UCOP will tell your story

Jul 1, 2006, by Harlan Hughes contributing editor
A statistical analysis of my Northern Plains 1990s beef cow Cost & Return Database suggests weaning weight explained only 20% of herd-to-herd variation...
Planning prices for future markets

Jun 1, 2006, by Harlan Hughes contributing editor
This article is the last in my series on how to make the cattle cycle work for you. Readers should now understand the 10- to 12-year cattle cycle and...
Weathering the cycle's end

May 1, 2006, by Harlan Hughes contributing editor
We know a typical cattle cycle lasts 10-12 years. We also know cattle inventory cycles are the fundamental factor behind beef-price cycles. Such random...
Today's strong bred cattle market

Apr 1, 2006, by Harlan Hughes contributing editor
The U.S. bred female market is very strong. In mid February, some 2-year-old Montana heifers sold for $1,650/head. Given that today's calf prices aren't...
4 winning market strategies Part V

Mar 1, 2006, by Harlan Hughes contributing editor
The key point in this five-article series has been that once a rancher believes in cattle cycles, he can make the cycle work for him. The net result is...
Working the Cycle-- Part IV

Feb 1, 2006, by Harlan Hughes contributing editor
This month, I'll share a management strategy ranchers can use in making the cattle cycle work for them. This is a strategy high-profit ranchers taught...
Working the cycle Part III

Jan 1, 2006, by Harlan Hughes contributing editor
In the November issue, we discussed the cattle cycle and its 10- to 12-year cyclical nature. I suggested that if a rancher fights the cattle cycle, it...
Cattle/beef price-cycle relationship Part II

Dec 1, 2005, by Harlan Hughes contributing editor
All experienced cattlemen know cattle prices go boom to bust and back again that's the cattle cycle. In fact, cattle and slaughter numbers, and cattle...
Working the cattle cycle Part I

Nov 1, 2005, by Harlan Hughes contributing editor
My lectures of the last decade have focused a lot on the cattle cycle and its resulting beef price cycle. My key message has been that if you fight the...
The economics of culling cows

Oct 1, 2005, by Harlan Hughes contributing editor
While most producers direct energy toward marketing steer calves, few do the same for marketing cull cows. Ten years of economic analyses for Northern...
Six steps to an optimal marketing plan

Sep 1, 2005, by Harlan Hughes contributing editor
By now, most of you are pondering marketing your 2005 calves. Thus, I'll share my most recent planning price projections and the management implications...
Cost control is in the details Part III

Aug 1, 2005, by Harlan Hughes contributing editor
Benchmarking is comparing your beef cow herd's production, financial and costs of production measures to those from a set of benchmark herds. Last month,...
What benchmarking can tell you

Jul 1, 2005, by Harlan Hughes contributing editor
Let's look at what benchmarking the act of comparing a beef cow herd's production and financial measures to those of a set of benchmark herds can tell...
Profiting on 2005 calves Part I

Jun 1, 2005, by Harlan Hughes contributing editor
Now is the time to think about generating the maximum possible profit from your 2005 calves. It begins by fully analyzing the production of your 2004...
The worst and best herds

May 1, 2005, by Harlan Hughes contributing editor
Managing a profit into beef cows without detailed management data is becoming increasingly difficult. Inflating production costs tend to negate much of...
Increasing your profits Part III

Apr 1, 2005, by Harlan Hughes contributing editor
With calving season upon us, I hope you're recording your calves' birth dates and their dam numbers in a calving book. If so, all you need to generate...
Increasing your profits Part II

Mar 1, 2005, by Harlan Hughes contributing editor
Record-high calf prices in 2004 should have generated record-high profits. Yet, only one out of my last six herds analyzed generated record profits. The...
Something's amiss with profit part 1

Feb 1, 2005, by Harlan Hughes contributing editor
As I continue to conduct cost and return analyses for U.S. beef cow producers, I see today's record calf prices aren't translating into record profits...



Dec 1, 2004, by Harlan Hughes contributing editor
Last month, I suggested that a fall 2004 preg-checked bred heifer that will produce seven consecutive calves has a calculated economic value of $1,560....
What's a bred heifer worth this fall?

Nov 1, 2004, by Harlan Hughes contributing editor
As more normal rainfall patterns return, ranchers will need to repopulate their herds. The good news: bringing bred heifers into your herd over the next...
Zap up your info system

Oct 1, 2004, by Harlan Hughes contributing editor
Beef cow producers are in the midst of exciting economic times. It's an excitement, however, that the industry experiences at this point in every cattle...
40 years of on-farm computing

Sep 1, 2004, by Harlan Hughes contributing editor
By focusing on the last 40 years of on-farm computing for farmers and ranchers, my goal is to stimulate ranchers to move from a traditional production...
Sell 2004 steers off grass

Aug 1, 2004, Harlan Hughes
As this piece was written in late June and early July, USDA had just announced two false-positive bovine spongiform encephalopathy (BSE) fast-test cases....
The money is in the details

Jul 1, 2004, Harlan Hughes
During the 1990s, I helped implement Integrated Resource Management (IRM) in the Northern Plains. Part of this consisted of going from kitchen table to...
Post-BSE market price tracking Part 1: Slaughter cattle prices

Apr 1, 2004, Harlan Hughes
Last month's Market Advisor column focused on the immediate market price impact of North America's second case of bovine spongiform encephalpathy (BSE)...
Post-BSE damage control strategies

Feb 1, 2004, Harlan Hughes
Damage control has to be uppermost in the minds of most ranchers in light of USDA's Dec. 23 announcement of a single case of bovine spongiform encephalopathy...
The story from up North

Jan 1, 2004, Harlan Hughes
May 20 and Aug. 8 of 2003 are well implanted in the minds of Canadian cattlemen. May 20 was the date the discovery of a single case of bovine spongiform...
How high and how long?

Nov 1, 2003, Harlan Hughes
As beef cow producers approach the weaning of their 2003 calves, market prices are at or near record levels. Two key questions are why are calf prices...
Good times are a'coming

Oct 1, 2003, Harlan Hughes
All indications are that several years of good economic times have returned to the cow-calf sector. Feeder cattle prices, driven by record-high slaughter...
Post-drought management Part III

Sep 1, 2003, Harlan Hughes
Managing a farm or ranch is never easy, but it's especially difficult during drought and its aftermath. Integrated business planning (IBP) can help you...
Managing the EZ-Way Part II

Aug 1, 2003, Harlan Hughes
A proper ranch management analysis must be based upon on-farm data specific to that ranch. It's from such data that long-term drought solutions and planning...
Managing post-drought, the EZ-Way

Jul 1, 2003, Harlan Hughes
Spring rains in cow country are turning many ranchers' attention toward drought recovery. For some drought-affected ranchers, that means repopulating...
For intensive managers, COOL will be a snap

Jun 1, 2003, Harlan Hughes
The country-of-origin labeling (COOL) law that takes effect Sept. 30, 2004 requires ranchers to verify the cattle they sell as born and raised in the...
Strong U.S. dollar works against U.S. producers

May 1, 2003, Harlan Hughes
This winter, I toured Brazil to visit with beef and soybean producers, and then spent several weeks in Canada visiting with Canadian beef producers. Upon...
Brazil, 33 years later

Apr 1, 2003, Harlan Hughes
In early February, my wife and I accompanied a farm and ranch tour of Brazil sponsored by BEEF and The Corn And Soybean Digest (formerly Soybean Digest)...
Look forward for price signals

Mar 1, 2003, Harlan Hughes
Today's roller-coaster cattle prices are largely attributable to extended drought in the western U.S. and western Canada, and the cattle cycle's delayed...
So Happy Together

Feb 28, 2003, By Harlan Hughes
Given rising carcass weights, increased production costs and unpredictable market prices, astute beef-cow producers are always searching for more efficient,...

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posted by Dr. Harlan Hughes 3:17 PM [edit]

Saturday, January 27, 2007

Don't Forget About the Benefits of Crossbreeding At Bull Buying Time

Greg Lardy, Extension Beef Cattle Specialist, NDSU Animal & Range Sciences Department

Commercial cattle producers are in the thick of poring over bull sale booksthis time of year. Don't miss the benefits of a well-planned crossbreedingprogram as you prepare to make bull purchases. Commercial producers shouldtake advantage of crossbreeding to improve productivity in their herds.

Crossbred cows are typically more productive, have greater fertility, and produceheavier calves than purebred cows. In addition, traits like longevity andadaptability are enhanced in a well-planned crossbreeding program.Data from the USDA-ARS Meat Animal Research Center (MARC) in ClayCenter, Nebraska, indicate that crossbred cows are 25 percent moreproductive than purebred cows. About two-thirds of this advantage comes fromthe crossbred cow while one-third comes from the crossbred calf.

Heterosis or hybrid vigor is the term used to describe the increase inproductivity when comparing the crossbred offspring to the purebred parents.Traits that improve the most from heterosis are fertility, adaptability, andlongevity.

Complementary traits in different breeds are another advantage ofcrossbreeding programs. Crossbreeding can provide a combination of traits inthe offspring that is superior to the parents. Using complementary traits can helpbring moderation to traits such as frame size, milk production and growthrate, making your cows better suited for a variety of production systems.

Many commercial producers have become disenchanted withcrossbreeding over the years. However, crossbreeding systems do not need tobe complex to accomplish desired objectives. A simple two-breed rotationalcross or a terminal sire program in which crossbred replacement femalesare purchased can simplify the systems and reduce the number of breedingpastures needed. A two-breed rotational cross will offer 67 percent of themaximum heterosis possible, while the terminal sire system will offer 100percent of the maximum heterosis possible.

Take the time to consider the benefits of a well-designed crossbreedingprogram before you make bull buying decisions. It will pay dividends for you inthe long run.

posted by Dr. Harlan Hughes 10:12 AM [edit]

Thursday, January 04, 2007

How To Sign Up For My Personalized IRMez Beef Cow Cost & Return Analysis All Done Via Email







Introduction No 1: Here is Introduction No 1 of the "Calculate Your Own Personalized UCOP." Click each page and it will expand on your screen. Then, print the expanded page with your browser print command. Finally, assemble the pages according to page numbers.

posted by Dr. Harlan Hughes 12:17 PM [edit]

Wednesday, December 20, 2006

Heifer Development Costs

At the 2006 Cornbelt Cow-Calf Conference, Mike Kasten, a commercial producer from Missouri, who is a member of an alliance that sells bred heifers to other producers, outlined their costs of heifer development. Heifers are fed to gain 1.75 to 2.00 lbs per day from weaning to first breeding season in order to achieve optimal reproductive performance. Their costs could likely serve as a benchmark for other cow-calf producers in the Midwest. Following is a summary of their average costs.

Item Costs:
Grains (2550 lbs) $163.20,
Forage (pasture and hay) $66.66,
Veterinary and vaccines $11.48,
Breeding fees (semen and synchronizing) $32.87,
Clean-up bull $6.27,
Open heifer charge $18.27,
Interest on heifer $38.81, Interest on feed $5.11,
Labor $40.86, and
Sale expense $40.00.

Total variable costs $423.98.
Value of heifer at weaning $674.25.
Total all costs $1098.23.

As shown above, feed costs accounted for 54% of variable costs, which is slightly lower than for most cow-calf operations

(SOURCE: Proceedings, 35th Annual Cornbelt Cow-Calf Conf., Feb. 25, 2006, Pella, IA).

Source: Dr. Rick Rasby, Professor of Animal Science, Animal Science, University of Nebraska - Lincoln, Lincoln, NE

posted by Dr. Harlan Hughes 4:09 PM [edit]

Sunday, October 22, 2006

Fall 2006 Beef Outlook


by
Christ Hurt
Professor, Purdue University


Beef producers saw a dramatic outlook improvement on July 27th when the Japanese once again accepted imports of U.S. beef. While the news was not so dramatic, the price reaction to it was spectacular. Finished cattle prices rose from the high $70s in late July to near $90 by early September.

Beef supplies for the rest of 2006 and for 2007 are expected to be up about 2%. Beef cow numbers were up only .3% in July and milk cow numbers were up 1 %. The calf crop for 2006 is up only .3%. Thus, much of the 2% increase in beef supplies for 2007 will be from heavier weights.

Beef cow/calf operations are not indicating intentions to expand at this point since they have not increased the number of beef replacement heifers. Drought conditions from the Northern Plains to the Southern Plains also resulted in reduced herds from South Dakota to Texas this year. The dryness on the Plains provides an opportunity for the feed-rich Eastern Corn Belt producers to expand.

While exports have been opened to Japan, South Korea is still considering re-opening as of early September and total U.S. exports are expected to be slow to recover to their 2003 levels. Why? Japan, our largest beef buyer, largely replaced U.S. beef with other products including more beef from Australia and greater U.S. pork and broiler imports. Now, U.S. beef will have to "earn back" that business from other competitors.

This fall, finished steer prices are expected to be in the very high $80s to low $90s. A continuation of strong prices is expected in 2007 with first quarter prices averaging in the very low $90s and mid-to-higher $80 for the spring quarter.

Feeder cattle and calf prices should be near record highs this fall and winter. The record high quarterly price for 500 to 550 pound steer calves in Oklahoma City was $136 per hundredweight. Prices this fall are expected to be near those levels. Steer calves in Indiana and Kentucky are expected to be in the $120 to $130 range. Heifer calves may be $5 to $7 lower. These prices continue favorable profit levels for brood cow operations.

Prospects appear to be very good for cow/calf profitability again in 2007. Why? Exports should continue to build slowly; this year's small calf crop means modest increases in beef production next year; and if the Plains drought improves, more heifers will be retained for expansion.

In 2006, finished steer prices are expected to average about $86. For 2007 a new record high could be established, breaking the 2005 record of $87.18. However, rising corn prices may keep calf and feeder cattle from setting records also.

Indiana's major expansion of ethanol production will mean huge supplies of DDG's will become available in 2007. Production by late-2007 in the state will be about 1.7 million short tons. The abundance and low prices for this new feedstuff should stimulate interest in cattle feeding and dairy in the state.

posted by Dr. Harlan Hughes 2:26 PM [edit]


Corn Price Increasing

Corn prices this year have averaged above a year ago in response to a smaller corn crop and robust demand from the ethanol industry and rather strong exports. In late March, weekly corn prices for Omaha hit $2.00 per bushel and have generally continued on an upward price trend ever since. For the next few years, one of the biggest risks facing livestock producers will be feedstuff costs, especially corn.

Based on weekly data, for the first three quarters of this year Omaha corn prices averaged $2.04 per bushel compared to $1.81 last year, but about 3 percent below the 2000-2004 average. In mid-September corn prices weakened to $1 .94 per bushel and sparked some thoughts of relief in the cattle feeding and hog sectors for lower corn prices this fall. However, the following week, corn prices jumped to $2.20 per bushel, the largest week-to-week gain thus far this year and again to $2.38 per bushel by the end of the month. In early October, Omaha corn prices were over $2.40 per bushel. The last time, Omaha reported a higher weekly corn price was in mid-July of 2004.

Corn prices could moderate some this fall depending on the size of the 2006 corn crop. But, in the longer-term corn prices are expected to continue the upward trend mainly due to growing demand from the ethanol industry. Some industry forecasts call for cash corn prices to hit the $3.00 per bushel mark next year.

In recent weeks, feeder cattle and calf price declines have in large part been due to the upswing in corn prices. In LMIC calf and yearling price forecasts for 2007 and 2008, most of the forecasted declines in prices are a result of higher
corn prices. In fact, slaughter cattle prices will likely be rather flat compared to calf prices.

source: LMIC Denver,Co

posted by Dr. Harlan Hughes 5:55 AM [edit]

Sunday, September 03, 2006

Some Grain-Feeding Tips For Cows In A Drought


If drought is playing out your pasture, Rick Rasby, University of Nebraska beef specialist,
offers the following feeding and supplementation advice for those looking to feed corn:
In limit-feeding corn to cattle in drylot, be sure to allow plenty of bunk space to ensure all
cattle have the opportunity to feed (24-36 in./head, perhaps more with bigger cows).

The following ration recommendations are based on feeding situations where no pasture is
available. The concentrate part of the ration supplies the energy and protein needs, while a
low-quality forage ensures that rumen health isn't compromised.

If using a low-quality hay for the forage source, Rasby recommends including a supplement
with an ionophore calibrated to deliver 200-250 mg/head! day to each cow. The ionophore
will help reduce digestive problems and increase feed efficiency.

Because these rations are supplying all of cattle's daily nutrient requirements, Rasby
recommends feeding twice/day - mornings and evenings - for the first week, feed half of the
ration at each feeding to allow cows' rumens to adapt. After a week, it's likely more
economical to feed the ration once/day, he says.

If corn gluten feed or soy hulls are substituted for grain, an ionophore isn't necessary. The
corn gluten feed may be dry or wet, but account for the moisture if feeding wet product.
Corn gluten can replace corn or milo on a pound-for-pound basis, but be sure to account for
the product's moisture. Half the grain part of these rations could be replaced with soy hulls.

If using distillers grains, feed a maximum of 7 lbs./head/day on a dry matter basis. When
using gluten or distillers, phosphorus supplementation isn't needed; if fed instead of corn, a
protein supplement isn't necessary.

If feeding gluten or distillers, Rasby says a high-quality forage such as alfalfa isn't necessary.
When feeding whole corn, include 10-12 lbs.,/head/day on an as-fed basis, along with 2-2.5
lbs. of a 38% supplement (with ionophore), 6 lbs. of low-quality hay, and salt and mineral
free-choice, for a 18-20 lbs./head/day total ration.

For cows whose calves have been weaned, Rasby recommends 10-12 lbs. of whole
corn/head/day on as as-fed basis, with 2 lbs. of a 38% supplement, 6 lbs. of low-quality hay,
and salt and mineral free-choice, for a total ration of 16-18 lbs./head/day.

The low-quality hay can be any of last year's carry-over hay, but if the hay is very low
quality, protein will be needed. If 6-8 lbs./head/day of alfalfa is included in the whole-corn
diets, a protein supplement isn't needed.

Because the diets are limit-fed, it may take time for cows to adapt to the feeding program,
Rasby says, so add 3-4 lbs/head/day of a low-quality forage as a filler.

-- Rick Rasby, University of Nebraska-Lincoln animal science professor


posted by Dr. Harlan Hughes 7:37 PM [edit]

Early weaning a viable option during drought conditions

by Dr. Kris Ringwall

NDSU Extension Service

DICKINSON, N.D. - On Aug. 9, the North Dakota State University Dickinson Research Extension Center shipped its first load of early weaned calves to Scottsbluff, Neb. The day was hot, but not unbearable. The cows were put back to pasture after ultrasounding for pregnancy.

The cows were bred well. Only five cows of the 48 in the group were not detected as pregnant. That doesn't mean they were not pregnant; it simply means they could have been late and are under the detection age for ultrasounding. The other 43 cows were at least a month along in their pregnancy.

The bulls will be heading to town. All should break the ton mark for weight and hopefully will bring in the low- to mid-$60 range. Given the current competition for a bite of grass, the check should be good. The corrals will breathe a sigh of relief because they do not have to hold another set of bull re-acquaintance sessions.

Two-year study

The early weaning project is a two-year study involving 505 cow-calf pairs from the NDSU-DREC, South Dakota State University Antelope Research Station and the University of Wyoming Beef Unit. By now, the calves should be getting acclimated in their new home.

Doug Landblom, DREC animal scientist, is the lead author of the study, which reported first-year results in the 2006 NDSU-DREC annual report. Landblom and colleagues investigated many variables in the study.

The objective of the study was to evaluate the effects of mid-August weaning vs. more traditional early November weaning on cow and calf production traits, forage utilization and economic returns. The study revealed weaning calves early from spring-calving cows can have multiple impacts on beef systems.
The calves were penned relative to their individual weight and body condition score. In the study, calves were weaned either at an average of 140 days of age in August or at an average of 215 days of age in November. The mother cows grazed native range between the two weaning dates.

Calves from the North Dakota and South Dakota cow herds were finished in Nebraska, while the Wyoming calves were finished in Wyoming. Not all locations responded the same. For purposes of practical discussion, overall, the cows that had calves weaned in August lost less weight than the November-weaned cows. The Dakota cows' body condition score was improved for August-weaned cows vs. the November-weaned cows, but not for the Wyoming cows.

This study was especially appropriate this year because of the drought conditions that exist. Data collected in the first year of the study showed the quantity of forage that disappeared was reduced by more than 27 percent when calves were weaned in August.

Performance

During the backgrounding feedlot phase, the performance of August-weaned steers from North Dakota had greater average daily gain than the November-weaned calves. Both North Dakota and South Dakota steers were more feed efficient during backgrounding.
In the finishing phase, August-weaned steers grew slower, but were more efficient. On average, at all locations, November-weaned steers entered the feedlot heavier and required fewer days on feed to harvest, but August-weaned steers were 46 days younger at harvest.


Early weaning a viable option during drought conditions

Landblom and his associates concluded weaning spring-born calves early reduced forage utilization, improved cow body weight and body condition score, improved backgrounding performance and finishing feed efficiency, reduced the number of days from birth to harvest and yielded similar finishing performance.

The bottom line is don't be afraid to early wean calves. Make sure you get with a feedlot and nutritionist and do it right.


posted by Dr. Harlan Hughes 5:20 PM [edit]

Friday, August 11, 2006

Cow Market Pressure Likely to Increase
by Derrell S. Peel, Oklahoma State University



Cull slaughter and breeding cow prices are likely to come under more downward pressure in the coming weeks as drought forced sales continue. In the southern Plains it is not necessarily larger sales of cows that will increase the pressure on cow prices as increased cow culling has been the case all year. Region 6 beef cow slaughter is up 44 percent for the year to date. It is the additional of more cows from other regions combined with continued heavy cow sales in the Southern Plains that may push cull cow prices lower. Rapid deterioration of forage conditions in the central and northern plains and the southeast has added additional pressure to cull markets. On the positive side, the overall meat market situation is somewhat improved compared to the first half of the year, especially with respect to poultry supplies and that may firm up the hamburger market. Hopefully this will lessen the impact of additional supply pressure as a result of drought forced culling.



So far this year, beef cow slaughter in the region 6, that includes Oklahoma, Texas, Arkansas, Louisiana and New Mexico has been 422,100 head which is equivalent to 4.49 percent of January 1 beef cow inventories in these states. In 2005, beef cow slaughter at this point in the year was 293,400 head, a rate of 3.13 percent of January 1 beef cow inventories. This represents an increase of 1.37 percent in culling or an additional 128,700 head. This does not include any beef cows that have been relocated outside the region due to drought. Decreases in beef cow numbers in this region combined with additional culling in some other areas could well result in a decrease in beef cow inventories come January.




posted by Dr. Harlan Hughes 7:37 PM [edit]

Monday, July 31, 2006

Creep feeding considerations for your ranch

By Travis Maddock PhD

Ah summer. Cows are out grazing (or not, depending on where you live in The Cattle Business Weekly territory), haying has started (or not), and many ranchers are. getting out the creep feeders, preparing to put a little extra pay weight on their calves or hoping to alleviate drought stress on their cows.

But the question often asked is does creep feeding pay? Of course it depends on a number of things like feed costs, conversion or gain efficiency, and market conditions. So let's explore the ups and downs of creep feeding.

Do the calves gain weight? And what is the cost? Over the years, a number of studies have looked at supplementing suckling calves, what we commonly call creep feeding.

A review of this literature summarized. 31 different research trials and found that creep feeding increased daily gains 0.2 to 0.5 lbs./day during the feeding period with an average of 0.4 lbs/Day. When convert-ed to a 90 day creep feeding period, this translates into an average 36 extra pounds at weaning. This is certainly a positive, especially to producers that market their calves at or shortly after weaning.

Efficiency is another question altogether. Gain efficiency is calculated as gain above control divided by creep feed intake (example creep fed calves that gained 0.25 lbs./day more than control and consumed 4 lbs. of creep feed would have a gain efficiency of 0.0625 (0.25/4=0.0625)).

Gain efficiencies found in existing literature ranged from 0.03 to 0.17, however the average for the literature reviewed was 0.11. This means that for every 100 lbs. of creep fed consumed, the calves gained an extra 11 lbs. The average intake of creep feed over all the trials evaluated was 3.6 1bs/day. The cost of creep feed can vary greatly. Commercial creep feeds can run any-where from $120 to $200/tan or . $0.06 to $0.10/lb. in the Northern Plains, depending on protein level, mineral addition, and medication added.

After inquiring with a couple of local producers and feed 'dealers, I settled on an average of $150/ton, or $0.075/lb. Consider this a run of the mill feed, 16% protein and most likely a mix of grain, either corn, barley, or oats; and some co-product, such as wheat midds or soy hulls. This feed would most likely have some sort of mineral mix included as well. Using the gain and efficiencies averages noted above, calculating cost and return is easy. The base numbers would look like this: average gain above non-creep of 0.4 lbs./day with an average intake of 3.6 lbs/day (a gain efficiency of 0.11) and an average cost of $150/ton or $0.075/lb .(this does not include labor, feed transportation, creep feeders, etc.). Over a 90 day feeding period, you could expect calves to gain an additional 361bs. (90 days 0.4 lbs./day = 36) and consume 324 lbs. of feed (90 days * 3.6 lbs/day = 324) at a cost of $24.30 (324 lbs. $0.075/lb = 24.30).

Does it pay?


Let's assume that non-creep fed calves would have an average weaning weight of 535 lbs. and calves creep fed would then wean off at 571 lbs. (very close to benchmark averages for Northern Plain's cowherds). Looking back to the first week of November, 2005, and the average weighted price (including both steers and heifers) for these weights in North Dakota were $126/cwt and $122 /cwt, for 535 and 571 lb. calves, respectively. This means the 535 lb. calves were worth $674 and the 571 lb. calves were worth $697, or a difference of $23.

If the gains and cost of feed were similar to the example above, the producer in this scenario would have lost $1.30 per calf creep feeding (the cost of the 36 lbs. was $24.30). And this didn't even include labor, cost of transporting feed, and other fixed and variable costs. Now keep in mind, that the numbers used to generate this return were averages and assumptions.
Producers should do their own math when determining if they should creep feed or not.

For What It is Worth


Creep feeding is one of those management tools that has pros and cons. The numbers above , especially feed costs, can be managed to make creep feeding appear more attractive. However, the truth of the matter is that the returns on investment generally is not very good, other than bragging right at the coffee shop about waning weights.

On the other hand, more research is under way on the effects of creep feeding, and probably more specifically, on creep feed composition and how this might improve feedlot performance and, probably more important, carcass composition. This may lead to new ideas and improved economics when it comes to utilizing creep feed in commercial cow herds.

====================================================================================
Travis Maddock is a native of North Dakota and a PhD graduate of Dakota State University. He owns and operates Cattle Concepts, a beef systems consulting business base in Fargo, ND.

Email at travis@cattleconcepts.com or ohone at 701-541 5533.

posted by Dr. Harlan Hughes 4:44 PM [edit]

Wednesday, July 26, 2006


Creep Feeding Economics


Questions about creep feeding calves tend to pop up during times of high prices and also during times of drought.
Creep feeding of calves can be of economic value during times of drought and reduced forages for the cows. Indications are that calves do substitute some creep feed for the grass they consume and also the creep fed calves may not draw down the milking cows as much.

Creep feeding because of high calf prices is generally not recommend -- at least with expensive commercial creep feeds. The problem is that with high market prices of calves comes large price slides. For example, a 550 Ib. feeder calf at weaning 2006 is projected to sell for $132 per cwt. A 650 Ib. feeder calf is projected to sell for $124 for a price slide of $7.49. This means that all 650 lbs will sell for the reduced $124 per cwt. This calculates out, then, to a gross margin of $0.84 per Ib. gained from creeping.

If the creep feed cost less than $0.84 per lb, then creeping economics is favorable. If the creep feed costs more than $0.84 per lb, then the economics of creep feeding is not economical.
The rancher situation that triggered this creep feed analysis, said the commercial creep feed would cost $180 per ton and said that it would take 5 lbs per day and the average daily gain (ADG) was projected at 1.0 lbs per day.

After buying $7000 creep feeder to service 160 calves, the projected profit from creep feeding is a positive $0.24 per Ib. of gain from creeping. The detailed economic analysis for this creep feeding in presented in the table.

Given these numbers, I cautiously recommend that this rancher try creep feeding of his calves this year. The challenge in all of this will be to get the 5:1 feed conversion that was suggested by the feed salesman.

Harlan Hughes
Western Edge Consulting
701-238-9607
Harlan.hughes@gte.net

posted by Dr. Harlan Hughes 8:48 PM [edit]

Drought & Infertility - Find The Fertile Cattle & Sell the Rest



Several weeks ago, as bulls were going out to pasture, an absolute requirement was fertility. Bulls incapable of settling cows are useless and with the current feed shortage, compromise the system.

Likewise, cows that fail to settle are similar. Open cows' greatest value is salvage because they eat well, compete better and produce fat, which is not the desired product of a profitable and customer-orientated beef system.

Bulls that don't settle cows cost money. So do cows that are not bred to calve early. Feed is short; there is no use living in denial. There is no room in the pasture for infertile cattle.

Early detection of open or later-calving cows can be a potential group of cattle to cull. Cow Herd Appraisal Performance System (CHAPS) benchmarks indicate that 6.6 percent of the cow herd is typically open and 5.4 percent of the cows typically calve very late, which is defined as 63 days after the start of the calving season.

These two groups of cows account for 12 percent of the herd and would make a very logical cut today as pastures and feed start to look scarce. Another 8.2 percent of the cows calve between the 42nd and 63rd day of the calving season. This group of cows also could make a trip to town, with someone else's calving pasture the destination.

Heifers are another area to review. CHAPS data indicates that only 71 percent calve within 21 days and 85 percent calve within 42 days of the start of calving. This could be an area to review.

The bottom line is simple. Call your veterinarian and get that ultrasound date booked so you have an idea of your calving spread and can cull as feed supplies and performance dictate. Open and late-calving cows impact the bottom line the same as infertile bulls.’

Recently, a producer inquired where I came up with the $40 daily bull charge for each day a bull is infertile. The $40 value, calculated with a little cowboy arithmetic, is the CHAPS benchmark (Chaps2000.com, click on benchmarks) for calf average daily gain on pasture of 2.38 pounds per day times the percentage of cows cycling on any given day (assuming all the cows have an equal opportunity to cycle and breed) times 21 days (reflecting the days before another opportunity to breed if the opportunity is missed).

On any given day, 4.76 percent (1 day divided by 21 days) of the cows should be cycling. Therefore, if a bull is not fertile on that day, the opportunity to conceive the calf is lost. If a bull is in a pasture with 30 cows, 1.43 cows should be cycling each day. If the infertile bull misses the opportunity to sire 1.43 calves and loses 21 days of gain at 2.38 pounds per day, 71.47 pounds of calf is lost.

Going back to the CHAPS benchmarks, in reality, only 62.4 percent of the cows are cycling in the first 21 days. Given some rounding, roughly 70 pounds of calf is lost on 60 percent of the cows. At $1 per pound of calf over the long haul, the end number appears to be just more than $40 per day per infertile bull. Obviously, high market prices will inflate the number and the weight or timing of marketing also will impact the number, but that is where the cowboy math comes in.

On the other hand, $40 may by a month's worth of hay for a pregnant cow. There seems to be some regret in repeating notes, but infertility simply needs to be steered out of beef cattle management systems. During a drought is a good time to make the point. Hope this helps and gives producers some food for thought in tough times.

Source: Kris Ringwall, Beef Specialist NDSU Extension Service


posted by Dr. Harlan Hughes 1:35 PM [edit]

Monday, July 24, 2006


JULY 1 CATTLE INVENTORY SLIGHTLY ABOVE 2005's

On Friday, July 21s, , USDA-NASS released quite a few key reports, one of the most anticipated being the July 1 Cattle report. The report confirmed that drought conditions across much of the U.S. prompted a slowdown in the rate of increase of the cowherd. The total number of beef and dairy cows was very modestly above 2005's.

According to USDA, as of July 1St, all cattle and calves in the U.S. totaled 105.7 million head, 1.2 million head (or 1.1 percent) above a year ago and 2.2 percent over 2004's. The number of beef cows was reported at 33.9 million head, up less than half a percent from last year while the number of dairy cows at 9.2 million head was 1.1 percent larger. Of importance was the number of heifers 500 pounds and over held for beef replacements which totaled 5 million head, unchanged from the prior year and lower than the average industry expectation. However, dairy heifer replacements were nearly 3 percent higher than 2005's at 3.8 million head and 200 thousand head above 2004's. USDA reported the number of steers 500 pounds and heavier was 3.5 percent larger than a year ago.

The USDA estimated the 2006 U.S. calf crop at slightly above 2005's, however the year-to-year increase was smaller than expected given the larger cowherd on January 1 of this year. USDA reported the calf crop at 3.79 million head, 0.3 percent or 120 thousand head more than 2005's.

Source: LIvestock Monitor, Livestock Market Information Center, Denver, Co 24 July 06.

posted by Dr. Harlan Hughes 7:59 PM [edit]

Cattle Industry Faces Vulnerable Period

Cattle producers are continuing a slow expansion of brood cow numbers, but rapid movement of calves into feedlots due to depleted pastures means lower finished cattle prices are likely. Late 2006 and early 2007 remains a vulnerable period for the cattle industry as higher beef supplies are interfacing with delays in restoring beef exports to Asia. Slowing U.S. economic growth in the face of rising energy costs may also reduce beef expenditures.

The cattle expansion remains slow. In the mid-year Cattle report, USDA indicates that the total inventory was 105.7 million head, just 1 percent greater than last year at this time. The calf crop for 2006 is estimated at 37.9 million, fractionally higher than last year. The beef industry is in the second year of a brood cow expansion, but so far the growth is very moderate. Beef cow numbers reached a cycle low level in July 2004 at 33.4 million head. This summer’s inventory of 33.8 million head is just slightly over a 1 percent expansion in the past two years. So clearly, there is no rush to grow brood cow numbers. In addition, producers report they do not intend to increase cow numbers in the near future as they are retaining the same number of beef replacement heifers as last year. This means they are replacing cull cows, but are not likely to expand in the coming year.

So far this year, beef supplies have been up almost 7 percent on 4 percent higher slaughter numbers and 3 percent higher weights. Choice steer prices have averaged about $84.50, roughly $2.50 lower than during the same period in 2005. Overall, demand has held well this year with supplies 7 percent higher and prices only down 3 percent. Finished cattle prices will likely trade lower, into the higher $70s, for the end of the summer. Prices are expected to recover into the lower-to-mid-$80s by fall, with prices somewhat above the mid-$80s by the end of the year. For 2007, beef production is expected to be up 1 to 3 percent. While this year’s calf crop is estimated as only fractionally larger, weights will likely be up some next year, but not as much as this year due to higher feed costs and higher interest rates.

Feeder cattle and calf prices may feel some downward price pressure this fall and in 2007 as well. Calf prices this year have been only about $1 per hundredweight lower compared to the same period last year. Lower calf prices are expected to result from lower finished cattle prices, higher feed costs over the next year, and higher interest rates. Given an environment of slowing U.S. economic growth with high energy prices, this makes the rest of 2006 and early 2007 a vulnerable period for cattle finishers and adds new importance to getting “back on-track” with the Japanese.

Source: Chris Hurt, Extension Economist, Purdue University

Pasted from


posted by Dr. Harlan Hughes 4:48 PM [edit]

Wednesday, July 12, 2006

Japan retailers won't sell U.S. beef

Fewer than one in 10 Japanese restaurants and retailers plan to immediately stock U.S. beef once Japan resumes imports of U.S. product, according .to a survey by the Nihon Keizai Shimbun. Only 7.4 per-cent of businesses indicated they would immediately resume selling U.S. beef once it ships to Japan, probably in late July. (Do not hold your breath!)

Fifty percent of businesses said they had no plans to resume beef imports and some 30 per-cent said they would wait and see, depending on price, health concerns and other variables. Nihon Keizai Shimbun polled 60 major restaurants and retailers. By comparison, 60 percent of businesses polled in November said they would stock U.S. beef.

posted by Dr. Harlan Hughes 4:22 PM [edit]


Strong Planning Prices Projected For Cow-Calf Producers

Good news! My current Planning Price Projections (as of 30 Jun06) suggest that calf prices in the Fall of 2006 may equal or exceed fall 2005 prices! This is a change from my previous projections.

It looks like the 2006 drought in the southern region and the potential of drought in other regions has slowed the beef cow expansion that was projected as late as a few months ago. A slower national beef cow herd expansion suggests a slower price turn down in this cattle cycle.

The fact is that cull cow slaughter is up in the last few months suggesting that the beef cow build up has at least slowed.

Some other factors influencing these revised projections are:

1. We have considerable more bunk spaces than we had 10 years ago. These feedlots have two choices: 1) over-pay for feeder cattle or 2) let their bunk spaces go idle.

i. Most feedlot have considerable equity capital now so they are electing to over-pay for feeder cattle to ensure they use their bunk spaces.

ii. Someone, however, will not have feeder cattle to feed.

2. Corn prices are projected to be relatively low this year again leading to low cost of gain in the feedlot.

3. Calf-Feds placed 30 Jun 06 are projected to turn a slight profit. Yearlings placed 30 Jun are projected to loose money.

4. There is consider hype in the market again with respect to the Japanese market Just like in Dec05 thru Feb06.

i. I truly believe that this hype is misled but that is irrelevant if you are selling feeder cattle.

ii. Always remember with respect to hype. It can disappear just as fast as it appeared. Remember Mar and Apr 2006.

iii. Maybe one prices some calves now to lock in some of
these good calf prices.

If you have any comments or questions, please call me at 701-238-9607 or email at harlan.hughes@gte.net.

posted by Dr. Harlan Hughes 11:28 AM [edit]

Saturday, July 08, 2006

US Beef Sales May Fall Short Amid A Japan Border Reopening

KANSAS CITY (Dow Jones)--U.S. beef marketers and analysts say a trade deal with Japan that reopens its markets to U.S. beef products would be good for the U.S. industry, but the volume of sales probably wouldn't be large.

Trade sources who spoke with Dow Jones said consumer demand has shifted since Japanese officials halted further U.S. beef imports in January after a shipment of veal was found with spinal bone pieces attatched. Surveys show a significant percentage of consumers no longer want U.S. beef, and winning the market back will take time and effort, the said.

Even the U.S. Meat Export Federation, the organization devoted to marketing U.S. meat products abroad, has modest hopes.

Assuming the first shipments leave U.S. shores on Aug. 1, USMEF economists project only 25,000 to 30,000 metric tons of product will ship in 2006, said Cheryl Kamenski, manager of media communications for the USMEF.
For comparison, a chart on the USMEF Web site lists U.S. beef and beef variety meat exports to Japan in 2002 at 332,204 metric tons, with a value of $1.028 billion.

Kamenski said the products sold initially are likely to be a mix of beef variety meats destined for retail sale and steak products going to the restaurant trade.

The USMEF is keeping its estimate of initial beef trade low because Japan has said it planned to inspect every box of U.S. product it imports to make sure it all meets the trade-agreement guidelines, and the added cost could discourage trade, Kamenski said.

Source: Lester Aldrich, Dow Jones Newswires; 913-322-5179; lester.aldrich@dowjones.com

Pasted from


posted by Dr. Harlan Hughes 10:57 AM [edit]

Wednesday, July 05, 2006

Economics Of Drought Management Strategies

Major editorial correction made in the recommended drought strategies at the end.

July 05, 2006

Ranchers in the dry regions of the West are starting to ask questions about the economics of drought strategies. I have now conducted considerable simulation work on the economic impact of alternative drought management strategies for the potential 2006 drought coupled in with the past 2002 drought. I think My conclusions may well surprise ranchers!

I now have now developed the tools to look at the economics of alternative drought management strategies applied to specific individual ranches.

I recommend that ranchers separate de-stocking decisions from de-populating decisions. One decision is to remove cows from the grasslands and other decision is to remove cows from ranch ownership. De-stocking is a production decision and de-populating is an economic decision -- each with its own and distinct management decision variables. These are two distinct and different management decisions!

There are three added economic costs associated with a drought that can be broken down into visible and invisible drought costs. First is the selling of breeding females at fire-sale prices which is the visible drought cost. Buying back or raising added replacements after the drought is a second visible drought cost.

Having less calves to sell in years following the de-population is an invisible (hidden cost) --sometimes a huge hidden cost. In many cases, the invisible costs exceeds the visible costs.

Second, I suggest that optimal drought strategies vary with where we are in the cattle cycle. When calf prices are high, you have several drought strategies possible. When calf prices are low, about the only strategy available is to sell cows.

In the drought of 2002, we had low calf prices and low fire-sale prices for bred cows and high replacement prices after the drought. In the drought of 2006 we currently have high calf prices, projected higher fire-sale prices for bred cows, and projected lower replacement prices after the drought. The optimal drought strategy for 2006 probably is not the same as the optimal drought strategy for 2002. Be careful using your 2002 experience in formulating your 2006 drought strategy.

I am simulating two different drought strategies -- 1) selling off 30% of the females to reduce grass demand and 2) buying feed and keeping the original cow herd in place. I am currently looking at the compounding economic impact of the 2002 drought and now a 2006 drought projected over the total decade for the years 2000-2009.

As a general comment, the drought of 2002 and drought 2006 are projected to reduce the 10-year total net cashflow on my case ranch by 43%!

Major Editorial Correction entered in the next two paragraphs 15 Aug 06 !!

My simulations suggest that buying feed and keeping the cow herd in place in the 2002 drought so that one could continue selling full production of calves produced during the high-priced phase of the cattle cycle reduces the dollar impact of the drought substantially over the more traditional drought strategy of de-populating some of the herd in 2002. It is the record calf prices in 2003, 2004, and 2005 that made this difference.

My simulations also suggess that given the high firesale prices of breeding females, at least so far into 2006, that it makes more economic sense to de-populate the beef cow herd in the 2006 drought and then re-populate the herd back in 2 to 4 years down the road when bred females are projected to be lower priced. This is just the opposite strategy as was suggested for the 2002 drought.

My simulation work suggests that the drought management strategy that you pick is all critical!

Harlan Hughes
Professor Emeritus
North Dakota State University

harlan.hughes@gte.net
ph: 701-238-9607


posted by Dr. Harlan Hughes 10:58 AM [edit]


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