Consistency can pay for itself in cattle business

(By Miranda Reiman)

After living through the summer of 2012, a farmer in my area might be tempted to plant longer season corn. That year it warmed up early, was a hot dry summer that stretched well into fall.

The 117-day varieties out-performed the 112-day ones that are common in central Nebraska. As most farmers know, corn that’s adapted to longer growing seasons is typically the highest yielding. But most won’t make cropping decisions based on one year’s worth of data, and certainly not on one year’s weather pattern.

Our first average freeze is Oct. 12. Our average growing season lasts 156 days. There are curve benders, to be sure, but the crops are selected with those dates in mind.

Very similar

Cattle marketing is much the same. There are normal price patterns and then there are years that defy those trends. Cattle feeders have told us that some of their long-term retained ownership customers, still seeing the red from last season, decided not to feed their calf crop this year.

Instead, those ranchers sold on summer video auctions and now may be wishing they hadn’t. Those who did stick with cattle feeding one more year are enjoying lower input prices and higher beef cutouts.

Just as it’s tricky to stand there in April and guess what the next several months of weather will bring, it’s difficult to predict the market. Even with the National Weather Service data, the latest gizmos and information at your fingertips, it’s hard.

No matter how many market analysts you hear, what ag economic theories you study and how many historical reports you take into account, it still comes down to making an educated guess and hoping for a little bit of luck.

The only way to really beat the market is to get a program together that helps you capture better-than-commodity prices, and then stick with it. The best way to secure more than the market average? Producing cattle that are worth more.

That means genetics and management, paying attention to the details, big and little — and then finding a way to get paid for doing all of that. For many people that means owning those better cattle through the feedyard.

Waiting game

Every year that means that they take a risk. Sometimes they see high calf prices in the summer and yet have the confidence to put those cattle on feed and wait another couple of quarters for their payout.

Why? Darrell Busby, Iowa State University, told me once, “We find many producers have spent time and effort selecting genetics for high-quality, fast-gaining cattle and have gone through the rigors of preconditioning their calves. Retained ownership offers them the opportunity to take advantage of the genetics and management that they’ve put into their cattle.”

They’ve seen that strategy work, and though it’s not perfect, it’s proven. And the more they improve their cattle, the better it works. That’s not saying you have to stick with the same marketing plan year after year, but making drastic moves based on the whim of one odd year might make as much sense as switching to 120-day corn varieties in Minnesota.

Next time in Black Ink, Steve Suther will look at decision-making tools.

(Miranda Reiman, an industry information specialist for the Certified Angus Beef Program, can be reached at 785-539-0123 or you can e-mail her at mreiman@certifiedangusbeef.com.)

About the Author

Miranda Reiman, an industry information specialist for the Certified Angus Beef Program, can be reached at 785-539-0123 or you can e-mail her at mreiman@certifiedangusbeef.com. More Stories by Miranda Reiman

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