July 4, 2016
U.S. cattle and beef: the most complex market of all
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
In the midst of a constantly changing set of short term market forces, it is easy to overlook the enormous market challenges that are inherently part of cattle and beef markets. Many factors make the cattle and beef industry arguably the most complex set of markets known.
The cattle industry has a single primary objective: to produce cattle ready for slaughter. This production takes place in multiple production sectors by different producers across many regions. Coordination across cow-calf, stocker and feedlot sectors is primarily accomplished by independent and unrelated producers through market transactions. Cow-calf, stocker and feedlot production occur in diverse production environments ranging from sub-tropical to sub-alpine which affect how, where and when production is completed.
Both supply and demand in cattle and beef industries are subject to strong seasonality that add challenges to cattle and beef markets. The forage-based production of cow-calf and most stocker production is characterized by seasonal forage production, which results in calf production bunched at certain times of the year. These animals are ultimately spread out into a relatively constant flow of animals to slaughter throughout the year. The dairy industry influence on total beef production is significant and is sometimes complementary to beef markets and sometimes counter to beef market adjustments.
The ruminant nature of cattle biology provides both advantages and disadvantages. Cattle are able to use diverse feed resources and adjust production systems in ways not possible for monogastric animals. These adjustments in production can be used to change the timing of beef production by moving cattle more quickly or more slowly to market.
Cattle have slow reproductive processes including long gestation periods and one offspring per gestation. These biological realities contribute, along with other factors, to slow herd size adjustments over time and the tendency for the cattle industry to exhibit cycles of production and prices that cover multiple years.
The focus of cattle production sectors is the production of a single animal ready for slaughter. The focus of the packing industry is the disassembly of that animal into hundreds of different products, each of which is marketed in separate markets which interact and often compete with each other. Beef products frequently pass through additional layers of fabrication and further processing into additional products before reaching final consumer markets. This contrasts with most industries in which inputs are combined into a single final product with a rather simpler market structure.
The beef marketing challenge is enhanced by the fact that most beef industry products are perishable and are typically consumed quickly after processing. This vast array of beef products are marketed in many diverse product markets both domestic and international. These product markets include retail grocery; hotels, restaurant, and institutional (HRI) markets; and exports. It is an enormous marketing challenge to identify markets that maximize value for each of the many beef products in very dynamic and volatile U.S. and global market conditions.
The miracle of cattle and beef markets is that consumers can take for granted that fresh beef is reliably available in grocery stores and restaurants every day without considering the fact that the beef they consume is the result of decisions made more than 2 years earlier when a cow-calf producer somewhere turned the bull in with the cows. In most cases, the cattle and beef moved across large distances before and after processing and likely changed ownership three to six times before being purchased by the consumer. The market coordination to achieve such a reliable, constant and high-quality supply of beef is impressive and is accomplished through a relatively simple set of cattle and beef market price signals. The process is quite amazing and it is no wonder that cattle and beef producers constantly struggle so hard to understand what they should be doing and adjust how they should be doing it.
Most consumers won’t think about any of this as they enjoy steaks and hamburgers on Independence Day; and that is as it should be. Cattle and beef producers all across the country work hard every day to make it look easy to be part of the most complex set of markets I can imagine.
This year test the forage before you cut!
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Summer has definitely arrived in Oklahoma! Hot, dry summer weather brings about heat and drought stress on summer annuals. Stressed plants such as the forage sorghums can occasionally accumulate dangerous concentrations of nitrates. These high nitrate plants, either standing in the field, or fed as hay, can cause abortion in pregnant cattle, or death if consumed in great enough quantities.
Nitrates do not dissipate from suncured hay, in contrast to prussic acid, so once the hay is cut, the nitrate levels remain constant. Therefore, producers should test hay fields before they cut them for hay. Stop by any OSU County Extension office for testing details.
Testing the forage before cutting gives the producer an additional option of waiting and allowing for the nitrate to lower in concentration before harvesting the hay. The major sources of nitrate toxicity in Oklahoma will be summer annual sorghum type plants, including sudan hybrids, sorgo-sudans, sorghum-sudans, millets, and Johnsongrass. See OSU Fact Sheet PSS-2903.
Some of the management techniques to reduce the risk of nitrate toxicity (Note: the risk of this poisoning cannot be totally eliminated), include:
- Test the crop before you harvest it. IF it has an elevated concentration of nitrates, you still have the option of waiting for normal plant metabolism to bring the concentration back to a safe level. And experience tells us that we cannot estimate nitrate content just by looking at the field.
- Raise the cutter bar when harvesting the hay. Nitrates are in greatest concentration in the lower stem. Raising the cutter bar may reduce the tonnage, but cutting more tons of a toxic material has no particular value.
- Know the extent of nitrate accumulation in the hay and the levels that are dangerous to different classes of cattle; ie, pregnant cows, open cows, or stocker steers. If you still have doubt about the quality of the hay, send a forage sample to a reputable laboratory for analysis, to get an estimate of the nitrate concentration. This will give some guidelines as to the extent of dilution that may be necessary to more safely feed the hay.
- Allow cattle to become adapted to nitrate in the hay. By feeding small amounts of the forage sorghum along with other feeds such as grass hay or grains, cattle begin to adapt to the nitrates in the feed and develop a capability to “digest” the nitrate with less danger. Producers should avoid the temptation of feeding the high nitrate forage for the first time after a snow or ice storm. Cattle will be stressed, hungry, and unadapted to the nitrates. They will consume unusually large amounts of the forage and be in high risk for nitrate toxicity.
- Be sure to read “Nitrate Toxicity in Livestock” OSU Fact Sheet PSS-2903 closely before cutting and feeding any summer annual hay.
Cow-Calf Corner is a weekly newsletter by the Oklahoma Cooperative Extension Agency. More information is available at sunup.okstate.edu/category/ccc.