The upcoming opportunity in the conventional cattle market is for established ranchers and not for newbies. For more information on why American beef is endangered, click here. With the control that the 4 major meatpackers have on the commodity cattle market, the system is rigged. If there is an upswing in 2022-24 it will follow the same pattern and will not be a long term increase in prices. The 2014 price spike ended as quickly as it began. Any upcoming price spikes will be very short term. Here in 2022 we are facing the same set of circumstances and possibly the same opportunity to cash in on our beef cattle, but there are 3 things we need to pay attention to: Once precipitation returned to these drought stricken areas, ranchers began restocking, and prices went up for a very brief period of time… ![]() In 2011, a red hot drought across the Deep South drove many ranchers to liquidate and herd sizes were reduced. What lead up to these record high prices? In 2014 the live cattle market saw all time record high prices, with steers at 550lbs going from $1.63per pound in 2012 to $2.95 in 2014. Further, these prices will change with the market and operation.Channel Guest: Corbitt Wall, FEEDER FLASH, ĮMAIL: shepherdess (at) harmonyfarms.blog They are not an expectation of what the producer will receive at the sale barn, nor an accurate reflection of the producer's actual production costs. Then, given the price of calves, feed, and the futures market, producers can make economically sustainable decisions for their operations.Īuthor’s Note: The prices in this article are for demonstration purposes. The bottom line is that the producer needs to evaluate their current situation. Feed price protection can be accomplished by making the feed purchase, forward purchase contracts, or using Call Options for some grain products. Price protection tools, like Put Options and Livestock Risk Protection (LRP) insurance, can help producers protect themselves from declines in the feeder cattle market. If the cost of gain increases to $1.50 per pound, feeding until May increases the feed costs to $630 and the breakeven price to $1,720.If the March Feeder Cattle price drops to $170/cwt, the final price for the steer becomes $1,360.Consider the following changes to our examples: For illustration purposes, consider a ration that results in an average daily gain of 2 pounds on 500-pound steers, with a cost of gain of $0.90 per pound.įactors affecting the estimates and decisions include grain and forage prices, seasonal trends, and livestock market changes. Using actual cost-of-gain numbers is essential in the decision-making process. The calculation of these costs further aids the decision-making process.ĭetermine your ration to make these decisions. ![]() Once the feed availability evaluation and the feeder calf's potential income are determined, the cost of gain needs to be calculated. ![]() The October 17 Feeder Calf report listed 474-pound Medium-Large 1 Steers sold for an average price of $234.28/cwt, calculating an $1110 value per steer. At the time of this article, the March contract is trading near $180/cwt, and the May contract is near $188/cwt. The November Feeder Cattle futures contract for calves is steady, with upward tendencies, and remains throughout Spring 2023. The supply and demand issue is something producers need to consider. Cattle-on-feed inventories show many lightweight calves going to feed. The SDSU Extension Forage Inventory and Demand Calculator can help determine how many tons of feed are needed to maintain the cattle herd.Īnother consideration is the drought situation. Things to Considerįeed inventories and requirements are one of the first considerations. Selling or feeding because that is 'what we always do' is not an economically sustainable situation. These decisions include options to sell calves at weaning, wean them and hold them for 45 days, background until spring, or retain ownership until the calf reaches yearling or fed cattle weights.Įvaluate these decisions from a business perspective, given the current feed costs and feeder cattle market. Fall brings many weaning and selling time decisions. Feeder calf sale numbers are ramping up across South Dakota.
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