Oct. 30, 2017
Something for everyone in current feeder cattle markets
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
You know that old saying about a gift horse and its mouth… this is no time to be checking the teeth on current feeder cattle markets. Feeder cattle markets have stayed stronger than expected this fall and offer a number of opportunities for all types of cattle producers. Calf prices have dropped very little this fall from summer levels, much less than the normal seasonal decline. Oklahoma calf prices this October are about 27 percent higher than this time last year. Cow-calf producers are selling weaned calves for $150 to $200 per head more than last year.
Heavy feeder cattle prices have not declined seasonally rather they have increased this fall. Seven-weight steers are up about six percent in October from August and are 25 percent higher than last year. An increase in heavy feeder price relative to stocker price increases the value of gain and is a stocker signal to put more weight on cattle in the country. For example, adding 250 pounds to a 500-pound steer currently has a value of gain of about $1.35 per pound at current prices. Feedlots are bidding heavy feeders higher and that increases the signal for stockers to add weight to cattle prior to feedlot placement.
Of course, the current value of gain is only the buy signal and does not include the market risk between now and when the 750-pound steer in the above example will be sold. However, Feeder Cattle futures have been remarkably strong and currently offer an opportunity to lock in good margins for feeders sold in the March to May time period. The 750-pound steer will likely have a breakeven of $140-$145/cwt in March, depending on gain and costs. March Feeder futures at the time of writing this article were about $153/cwt. suggesting a rare margin opportunity for winter grazing. Stocker producers, and cow-calf producers with the potential to retain weaned calves as stockers, should pencil out the opportunities depending on beginning weight and expected timing and weight of later sales. While cash market fundamentals are solid, spring Feeder futures are arguably overpriced and subject to correction at any time. The best opportunities may be fleeting!
Earlier in the fall, feedlots were losing some money and appeared to be paying too much for feeder cattle and thus jeopardizing feedlot margins for the coming months. However, cash fed cattle prices have improved recently, increasing current margins. Cost of gain is expected to stay very favorable for the foreseeable future. Moreover, Live Cattle futures prices have pushed higher recently to levels that come close to supporting current feeder prices for cattle finishing through next April. As with Feeder futures, the Live Cattle futures pricing opportunity may be short-lived.
Strong demand is what makes all of this possible. Boxed beef prices have recovered about $10/cwt. from the early fall lows. Retail beef prices are holding close to year-ago levels despite a four percent increase in beef production in 2017. Demand is strong in both domestic and international markets, with year-to-date exports up more than 14 percent. Strong demand is the key to allowing all sectors of the industry to have decent margins simultaneously and will be the key as beef production continues to grow in 2018.
Can storage of vaccine affect its efficacy?
by Gant Mourer, beef value enhancement specialist, Oklahoma State University
Respiratory disease in cattle, also known as BRD, shipping fever, or pneumonia may cost the U.S. cattle industry more than $2 billion annually (Powell 2013). Management techniques can offset much of this cost and having a good vaccination program can maintain the health of a calf all the way through the production system. A vaccine can cost more than $3.00 a head, and if not stored properly, that vaccine can be rendered ineffective. Producers cannot afford to overlook the importance of how they store vaccine and handle it prior to injection.
Biological products should be stored under refrigeration at 35 to 45⁰ F unless the nature of the product makes storing at a different temperature advisable (APHIS 2007). If vaccines are not stored within this temperature range, efficacy to the calf can and will be reduced. Killed vaccines are especially susceptible to freezing temperatures. Freezing a killed vaccine will alter the adjuvant or delivery system of a killed vaccine. This, in turn, negatively affects the immune response to the antigen in the vaccine. Modified live viruses (MLV) are more stable but can be inactivated if they are repeatedly cycled above or below the required temperature range (Gunn et al, 2013). Also, once activated by mixing, MLV’s effective life will be reduced to 1-2 hours and need to be maintained at the 35⁰ to 45⁰ F. This can be accomplished by only mixing the doses that you will use at that time and use a cooler to maintain temperature while working cattle.
Researchers from the University of Arkansas and Idaho analyzed the consistency of temperatures for different types, ages, and locations of refrigerators over a 48 hour period. They found that only 26.7 and 34.0 percent of refrigerators were within the acceptable temperature limit 95 percent of the time, respectfully. Refrigerator location can also affect temperature. Refrigerators located in barns (35.6 ⁰F) were colder than in mud rooms (41.72 ⁰F) and kitchens (40.82 ⁰F). (Troxel and Barham 2009). The temperature within a 24 hour period can also be highly variable for individual refrigerators. Troxel and Barham (2009) demonstrated some refrigerators may take up to 8 hours to cool down to the 45⁰ F, while others will remain too cold varying from 24.8⁰ F to 35.6⁰ F.
Producers need to be aware of these variations in temperature so they are able to adjust refrigerator temperature as needed. Thermostats can also be very variable from unit to unit, so keeping a thermometer inside works well to monitor and to make adjustments as needed. Simple indoor-outdoor thermometers work well to achieve this goal. The outdoor unit can be placed in the refrigerator while the LCD display can be hung with a magnet on the door. This allows the temperature to be monitored without opening the door and many models will record the high and the low temperature in a 24 hour period so producers can adjust accordingly.
How a producer handles vaccine outside of the refrigerator is important as well. Coolers can easily be modified for syringes and are important to maintaining vaccine efficiency chute side. Using a 1 ½-inch PVC pipe or sink tailpiece purchased at any hardware store and a 1 ½-inch hole saw, inserts can be placed through the cooler and work well to keep syringes cool and out of light while in use. Either ice or freezer packs can be used as a coolant to maintain temperature for several hours, depending on outside ambient temperature. Make sure that enough coolant is used to maintain temperature while working cattle and extra ice may be needed if working cattle all day or during warm days. It may also take up to an hour for the cooler to reach the needed 45⁰ F, so producers may need to plan ahead prior to processing cattle. Details on the construction of a chuteside vaccine and syringe cooler can be found in Oklahoma State University Fact Sheet ANSI-3300: “Chute Side Vaccine Cooler”
These are a few simple suggestions that can help ranchers get the full value of the vaccine that they purchase. More importantly, positively affect the health of their herd, decrease sickness, and increase profit.
The impact of dressing percent on cull cow marketing
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Cull cows that are destined to go to the packing house are graded by their fleshiness. The fattest cows are called breakers, moderately fleshed cows are called boning utility, and thin cows are called leans or lights, depending upon the weight of the cow. There will be price differences among these four grades. However, within each grade, large variation in prices per hundredweight will exist because of differences in dressing percentage. Cow buyers are particularly aware of the proportion of the purchased live weight that eventually becomes saleable product hanging on the rail. Dressing percentage is (mathematically) the carcass weight divided by the live weight multiplied by 100.
Key factors that affect dressing percentage include gut fill, udder size, mud and manure on the hide, excess leather on the body, and anything else that contributes to the live weight but will not add to the carcass weight. Most USDA Market News reports for cull cows will give price ranges for High, Average, and Low Dressing Percents for each of the previous mentioned grades. As you study these price reports, note that the differences between High and Low Dressing cows and bulls will generally be greater than differences between grades. Many reports will indicate that Low Dressing cows will be discounted up to $8 to $10 per hundredweight compared to High Dressing cows and will be discounted $5 to $7 per hundredweight compared to Average Dressing cows. These price differences are usually widest for the thinner cow grades (leans and lights). See examples from last week’s sale in Oklahoma City National Stockyards at http://www.ams.usda.gov/mnreports/ko_ls151.txt.
As producers market cull cows, they should be cautious about selling cows with excess fill. The large discounts due to low dressing percent often will more than offset any advantage from the added weight.
Cow-Calf Corner is a weekly newsletter from the Oklahoma Cooperative Extension Agency.