Saturday, October 19, 2013
150px_tx_cattle_calf

Louisiana Cattle: A Year For Good Winter Stocker Returns?

AgFax.Com - Your Online Ag News Source


This year appears to be another strong year for winter stocker returns. While returns are estimated to be greater than last year, there are some significant differences compared to last year.

The first difference is that the number of cattle available is smaller than last year. Although there is no Cattle on Feed report being issued by USDA this month, analysts estimate that the total number of cattle on feed is 7.3% smaller than last year. The number of cattle placed in September is also thought to be 1% higher compared to last year which was the lowest number of cattle placed for September since 1996.

The second primary difference is the substantially lower cost of grain compared to last year. Corn futures are 39% lower than a year ago. Cash prices were showing approximately the same decline prior to the government shutdown ending the flow of USDA information on cash grain prices throughout the country.

DTN is reporting cash corn prices that are ranging from the mid $3/bu to $4.50/bu early in this week (DTN corn index was $4.23/bu tues). The decline in corn prices have provided feedlots the ability to bid up feeder cattle prices. With feedlots facing lower input costs and higher purchase prices for cattle, they may have already bid the potential profit our of feeder cattle barring an increase in the price of fed cattle.

With the above factors considered, procuring the right type of cattle to excel in a stocker program this winter may be difficult. The benefit of a stocker program is that there is flexibility present in what is purchased and marketed.

Tight supplies of cattle will provide producers who retain calves an easy option to procure cattle than those who purchase calves and may not be able to do so as uniformly and at a price they want as in the past. Even if calves are retained to stocker, the cost of production should be known as it serves as a proxy for the purchase price of calves.

The table below indicates the potential returns available for those interested in a stocker program, but doesn’t include any risk management strategies. Forecasts from the Livestock Marketing Information Center are projecting $157/cwt to $163/cwt for feeder cattle in the second quarter 2014, lower than what feeder cattle futures for that quarter are currently suggesting.

Adjusting some of the assumptions below with regards to how long the cattle are retained, death loss, and average daily gain can result in higher returns as the expected cost of gain decreases. With the May feeder cattle futures contract at a slight premium to the April contract, it may make sense to consider extending the grazing period to take advantage of heavier cattle sold for a higher price.

Adding thirty additional pounds to the cattle in the scenario would drop the cost of gain ten cents per pound and result in a program that on a cost basis would be very competitive to winter wheat grazing in the Southern Plains.

Ryegrass grazing (Cash Costs) Ryegrass grazing (All Costs)
Beginning Weight

512 lbs

COG1

$1.00/lb

$1.13/lb

Days in Program

132 days

ADG

1.92 lbs

Death Loss

2.00%

Transportation

$38.78/head

Marketing

$15/head

Ending Weight2

750 lbs

Selling Price3

$167.28/cwt

Estimated Revenue

$1,254.56/head

Total Cost

$295.15/head

$326.56/head

Returns to Stocker Phase

$959.42/head

$928.00/head

Cow/Calf Production Costs4

$446.04/head

$670.90/head

Returns above Cow/Calf Costs

$513.38/head

$257.10/head

1 Operating note of 4.50%, cash costs of $241.37/head
2 Includes 2% shrink
3 Closing price for April feeder cattle contract on Friday plus historical Oklahoma City April basis of $1.92/cwt above futures
4 $577.21/hd cash costs ($787.10/hd total) minus $116.20 in non-calf revenue adjustments from LSU AgCenter enterprise budgets

Tags: , , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    Grain TV: Shortcovering Rally in Soybeans7-24

    DTN Livestock Close: Hog Contracts Clobbered Again7-24

    Ethanol: Final 2014 RFS Release ‘Imminent’ – DTN7-24

    Doane Cotton Close: Prices Break Out of Range Lower7-24

    AFB Grain-Soybean Close: Good Exports Boost Soybeans, Unable to Lift Corn7-24

    AFB Cotton Close: Breaks Support with Sharp Losses7-24

    AFB Rice Close: Another Low Move7-24

    DTN Cotton Close: Plunges to new Contract Low7-24

    DTN Grain Close: Exports Help Boost Soybeans7-24

    Rice – Arkansas, Mississippi – Blast Becomes Major Concern – AgFax7-24

    New Rural Infrastructure Fund Established — DTN7-24

    U.S. Grain Transportation: Wheat Demand Increases, Inspections Rise7-24

    DTN Livestock Midday: Pressure Redevelops in Hog Complex7-24

    2014 Farm Bill Decisions: Base Acre Reallocation Option7-24

    DTN Grain Midday: Corn, Wheat Drift Lower7-24

    Midwest Grain: Pull the Fungicide Trigger Now? It Depends. – AgFax7-24

    DTN Cotton Open: Trades with Modest Losses7-24

    Louisiana: Sodium Nitrite Explored for Wild Hog Control7-24

    U.S. Energy: Refineries Running at Record Levels7-24

    Gasoline Prices: Show 4-Cent Decrease7-24

    Propane Stocks: Continue to Rise7-24

    Diesel Prices: Average Declines by 3 Cents7-24

    DTN Livestock Open: Meat Futures Headed in Opposite Directions7-24

    Keith Good: House Ag Committee Chair Prods USDA on Crop Insurance7-24

    Doane Cotton Close: Prices Mixed in Light Trade7-23

    Corn: Pollination is One of Nature’s Miracle – DTN7-23

    Wheat Tour Sees One of the Best Crops in Years – DTN7-23

    10 Arkansas and 2 Tennessee Counties Designated Natural Disaster Areas7-23

    AgFax Grain Review: Chinese Soy Imports to Climb; Best Crop Conditions in Decades7-23

    Soybeans: Is the 2014 Average Yield Headed for a New Record?7-23

    Drones Monitoring the Garden or Your Crop? One is Legal, one is not.7-23

    DTN Grain Midday: Soybean Futures 8 to 13 Higher7-23

    Cotton In The Midsouth – Plant Bugs Persist As Bollworms Arrive – AgFax7-23

    Cotton – Plant Bugs, Stink Bugs Overlapping In Parts Of Southeast – AgFax7-23

    Cotton in Southwest: Blooms Spreading; Fleahopper, White Fly on the Move7-22

    USDA: Don’t Forget Farm Bill Conservation Compliance Changes7-22

    USDA: Weekly National Peanut Prices7-22

    AgFax Cotton Review: Worst Price Slump in 55 Years; Weather Delays Development7-22

    Good Reports on Corn; Wet Weather Stressing Beans — DTN7-22

    Cattle: Nebraska Study Finds No Ill Effects from Zilmax — DTN7-22

    South Korea Importers Returning to U.S. Corn, DDGS — DTN7-22

    Oklahoma Farmer Modifies Business Choices Due to Wet Spring – DTN7-21

    Cover Crops a Good Replacement in Weather Damaged Fields – DTN7-21

    AgFax Rice Review: UN Prescribes Arsenic Levels; Armyworms Abound in MS7-21

    Arkansas: Emerald Ash Borer Turns Up to Threaten Ash Trees7-21

    Good on Grain: Corn Price Premiums Continue to Fade7-21

    It’s Been 18 Years – What’s Happened in Herbicide Tolerant and Insect Resistant Crops?7-21

    USDA Creates Soybeans Out of Thin Air, Sorta — DTN7-21

    Mississippi Wheat: MSU Releases Variety Trial Data7-21

    Flint on Crops: Bacterial Blight Makes a Comeback in Cotton7-21

    Sunbelt Ag Events

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney