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

    Midwest Corn And Soybean Yields – Our Readers’ Reports – AgFax11-22

    Rice Comment: The Case for Neonicotinoid Seed Treatment11-22

    U.S. Rice: Rain Stalls Texas 2nd Crop Harvest; Crop Sales Continue11-22

    Rice Market: Sale to Iraq Moves the Market11-22

    AgFax Grain Review: Syngenta Lawsuits Pile Up; GMO Seed Companies Sue Hawaii11-21

    Rose on Cotton: Looking for the Positives This Week11-21

    Grain Drying: 6 Questions About Effects Of Sudden Drop In Temps11-21

    Is Your Lifestyle Costing You the Farm?11-21

    Grain TV: Lower Barge Rates Boost Basis Levels11-21

    DTN Livestock Close: Cattle Futures Solidly Higher11-21

    Farmers Storing Grain Need to Weigh Risk Management Factors – DTN11-21

    Peanut Harvest Updates From Southeast, Delta And Southwest – AgFax11-21

    Cleveland on Cotton: 57 Cents – ‘The Bottom is In’11-21

    Ag Labor: Immigration Order Provides Little Long-Term Benefit – DTN11-21

    Doane Cotton Close: Decline in Chinese Production Offers Support11-21

    AFB Grain-Soybean Close: Strong Soybean Gains, Little Movement in Corn, Wheat11-21

    Southern Soybean, Corn Harvest Reports, Round One – AgFax11-21

    AFB Cotton Close: Futures Rebound11-21

    AFB Rice Close: Prices See More Slight Gains11-21

    DTN Cotton Close: Settles Higher on Light Volume11-21

    DTN Grain Close: Soybeans Boosted by Demand11-21

    USDA: Peanut Price Highlights11-21

    Oklahoma Pecans: Deliveries Remain Light11-21

    Georgia Pecans: Buying Interest Very Active11-21

    Ag Policy: Farm Bills Need Long-Term View11-21

    Cotton Market Weekly Review by Region11-21

    DTN Livestock Midday: Cattle Futures Surge Higher11-21

    A Closer Look at Impacts of Olympic Averaging of Prices and Yields11-21

    Arkansas Cattle: Ranchers Should be Alert to Acorn Poisoning11-21

    DTN Grain Midday: All 3 Commodities Go Higher11-21

    Economist: Livestock Industry Will Have Strong Rebound11-21

    DTN Dried Distillers Grain: Cheaper Feed Source for Beef Producers?11-21

    Mississippi Outdoors: Common Deer Parasites Do Not Affect Venison11-21

    DTN Cotton Open: Trades Higher after No Notices Issued11-21

    AgFax Wildlife Review: New E-Book Offers Tips for Gardening in South11-21

    DTN Livestock Open: Cattle Futures to Start Mixed11-21

    Weather Challenges Florida and Iowa Farms — DTN11-21

    Vilsack: Immigration Order Creates ‘Stability’ in Ag Work Force — DTN11-21

    DTN Grain Open: Lower Start Across Board11-21

    Keith Good: What’s Next for Meat Labeling?; Sugar Prices Take Tumble11-21

    Texas Cotton Harvest – Still Some To Go – AgFax11-20

    Mississippi: Water Conservation Summit, Stoneville, Dec. 1011-20

    Farm Internet Service Still Slow or Non-Existent, But Improving – DTN11-20

    Yield: Important Factor in Your Irrevocable Farm Program Choice11-20

    U.S. Grain Transportation: Weekly Inspections Reach Record11-20

    U.S. Drought Outlook: Improvements Expected for California, Southwest11-20

    U.S. Energy: Planned Refinery Maintenance Light in 201411-20

    Propane Stocks: Post Slight Increase11-20

    Gasoline Prices: Decrease by 5 Cents11-20

    Diesel Prices: Average Drops 2 Cents11-20

    Livestock: Arctic Chill Catches Markets Flatfooted – DTN11-19

    Farm Runoff Targeted for Regulation Following Algal Bloom Shutdown – DTN11-19

    Soybeans: China May Import More Non-GMO Beans – DTN11-19

    Mississippi Outdoors: Free Apps Can Aid Deer Hunters11-19

    Big River Rice And Grain Enhances, Expands Facilities In Arkansas, Louisiana11-19

    Farm Bill Commodity Program: Decisions and More Decisions11-18

    Young Farmers: USDA is the ‘Lender of 1st Opportunity’ – DTN11-18

    Tax Extenders: Farm Groups Push Congress to Renew Section 179 This Year – DTN11-18

    AgFax Rice Review: Iraq Passes on U.S. Rice; Australia, China Sign FTA11-18

    USDA: Weekly National Peanut Prices11-18

    DTN Fertilizer Trends: Prices Show Little Movement11-18

    North Carolina: Bt Resistant Armyworms Migrating North11-18

    Georgia Cotton Commission Meeting, Production Workshop, Tifton, Jan. 2811-18

    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