By Stan Smith
Regardless what aspect of agriculture – or life – we might be involved in, occasionally we all slip into the “same old, same old” trap. That is, doing it the way we’ve always done it simply because we always have. As the extraordinary cattle prices we enjoyed in recent years have settled back to levels that many might now call normal, perhaps it’s time to take another look at ways to enhance profitability in the cow/calf sector. In fact, today, let’s explore marketing and approach it not by thinking about the next high in the beef cattle market, but instead simply trying to avoid some very predictable annual lows.
With calving season upon us and even underway in some places, it’s never too early to consider how and when the 2017 calf crop will be weaned and marketed. However, often when I suggest such a thought I get a look in response that suggests something like, “What are you thinking? This fall I’m going to wean them on the truck as they travel to market, like always.”
At least, that seems to be a common trend throughout Ohio. And, we all know trends occur because it’s what the majority do. And, when the majority all does the same thing in the market place, simple factors like supply and demand suggest we are likely to be selling into an over supplied, deflated market along with the rest of our peers.
While I’ll be the last to tell you I can predict the annual high in any commodity market, I can tell you with a fair amount of certainty when the lows will be in the feeder calf market. Let’s think about some common Ohio beef cattle management patterns along with our annual forage growth, and then later we’ll add some consumer eating preferences into the cattle market equation.
First, it’s a given the vast majority of Ohio’s 284,000 head cow herd calves in the spring. The reasons are obvious. If calves are on the ground early in the spring we have an opportunity to utilize our traditional spring forage flush at a time when cows are milking the heaviest, and calves are beginning to forage. It also allows us to get cows bred back before intense Ohio summer heat sets in to challenge conception rates.
Unfortunately, this also means most calves reach the market place in the fall at a time when little pasture for foraging remains. That said, to the contrary it also suggests that feeder calf supplies are at their lowest in the spring just as the forage flush is reaching a peak. It results in simple economics that translate easily and logically into a supply and demand structure dictating strong calf prices in spring and seasonal lows in the fall.
While we’re looking at annual calf marketing trends, let’s also explore how this might translate to the fed cattle market. Knowing when most calves are born, it’s easy to see that many of Ohio’s fed cattle are reaching market weight in late summer and fall as they approach 15 to 18 months of age.
While this allows fed cattle supplies to increase late in the summer, what’s the consumer doing? They’re putting away their grills for the year and preparing to enjoy turkey for Thanksgiving and ham for Christmas. Yet, in the spring when our consumers are pulling their grills back out and looking for burgers and steaks to grill, fed cattle supplies are shrinking.
In spring when annual consumer beef demand might be increasing, the market place is using up the yearlings that were on feed over winter, and is waiting for calf fed supplies to become available. It further complicates ground beef supplies when we remember there are few cull beef cows coming to market from our spring calving herds this time of year. Again, simple supply and demand tells us we’ll likely see stronger cattle prices in the spring than we will in the fall.
Since it’s not realistic to expect Ohio’s cattlemen to suddenly switch from spring calving to fall calving herds in an effort to better match our calf supplies to historical demand, perhaps as individuals we can look at options that will allow us to avoid selling at times of traditional low annual prices. While in coming years we might be able to flex calving season forward or back a month or so to help avoid selling calves into these annual lows, it seems that finding a way to retain ownership of our spring born calves later into fall or winter becomes a logical alternative.
This gets us back to where we began. As calving season commences are there things today we can be planning to do that will allow us to avoid selling the 2017 calf crop when the supply is at its greatest this fall? Perhaps it’s as simple as changing the creep feeding program – or maybe beginning one – in order to flex the date the calves go to market. Instead of weaning on the trailer, is there a grass pasture that could be isolated beginning in mid-summer in an effort to grow some high quality forage to wean calves onto this fall? Can we find a neighbor with the facilities, feed resources, and the management skills to assemble several neighbors’ weaned calves for backgrounding and preconditioning for later marketing in pot load quantities?
I can’t predict when the calf market highs will come this year, but I’m comfortable in suggesting calf prices will be near their lows this fall when the majority of your neighbors are marketing theirs. Take some time now to explore what you might do throughout this coming year in an effort to simply avoid traditional calf price lows this fall! And to accomplish that, if a backgrounding program is a consideration for your calves, be sure to join us for the next session of the Ohio Beef School on February 7 when Dr. Francis Fluharty will address two distinctly different systems.
Source: osu.edu