STEUBENVILLE, Ohio —One thing is for sure in the cattle market, there are no guarantees and it is constantly changing.
The 2012 Eastern Ohio Beef Management School started its series Jan. 26. It is sponsored by the Ohio State University Extension and the cattlemen’s associations in Carroll, Harrison and Jefferson counties.
Dr. Kevin Dhuyvetter, extension farm management specialist at Kansas State University, talked to the group via the Internet about the outlook for the meat industry, including changes in choice and select spreads.
There is no clear cut plan for beef producers to follow the next few years.
Dhuyvetter said 40 percent of the U.S. beef supply was in the area devastated by drought in 2011. He added 40 percent of the land in the drought reached the severe stage as of September and although there has been some rainfall, it remains devastated and cattle remain on the light side of the weight scales.
He said this is important because it could signal a change in beef production in the southern part of the country mainly, Texas, Oklahoma and New Mexico.
Dhuyvetter said the cattle that were not sold were shipped north to areas like Kansas where there was grass for them to eat. However this could impact the industry because some producers may not bring the cattle back to the drought-stricken areas or the producers who sold out may not get back into the business, especially with high heifer prices in the market place.
“The projections for 2011 suggest that returns will be up considerably from 2010 and projections are even better for 2012,” said Dhuyvetter.
Although the time looks good to be expanding herds because the U.S. cattle herd is at its lowest level in 40 years, Dhuyvetter cautions producers to examine certain factors before growing their operation.
One area that is not growing, according to Dhuyvetter’s research, is the small feedlots. He said there is little profit to be made for many producers and sometimes it’s just a losing game. He said that there are more empty spots in feedlots across the country than there are cattle. In other words, the feedlots could take on bigger sizes but the profit is not there.
“It’s not looking good for the feedlot industry at this moment,” said Dhuyvetter.
Dhuyvetter also encouraged producers to look at their costs before they agree to expand. This includes how much they are willing to pay for heifer and cows. He said farmers must include the cost of managing the cattle, but often poor management leads to higher costs so that also has to be factored in.
According to the USDA Economic Research Service, using USDA’s 2008 agricultural resource management survey, it takes 31 hours per cows of unpaid labor to produce 20-49 cattle a year and that number drops to six hours per cow when there are more than 500 cattle on the farm.
Producers also need to consider how cattle marketing is handled.
Dhuyvetter said research he has completed at Kansas State University show that the breed impacts the price. He said the best price comes from targeting 500-pound calves in the fall and 700-pound feeders in the spring. He also found that there is a consistent premium on Angus-influence calves.
He said producers should keep the lot size and the cattle in it uniform in size; dehorn and castrate early; and remember marketing healthy cattle is the number one key to making a profit.
Dhuyvetter also told the group that marketing certified organic cattle might not be their best interest as well. He suggested instead of going through the costly process of being certified, instead market the cattle as being locally grown, grass fed and hormone free.