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

    Doane Cotton Close: Analyst Predicts 40 Cent Futures9-30

    AFB Grain-Soybean Close: Prices Lower Despite Bullish Soy Stocks9-30

    AFB Cotton Close: Futures in the Red9-30

    AFB Rice Close: Futures Fractionally Mixed9-30

    DTN Cotton Close: Slips to New Lows9-30

    AgFax Cotton Review: Global Supply Hurts Prices; Cotton Transition Assistance Program Deadline Looms9-30

    DTN Grain Close: Markets Move Lower Following USDA Report9-30

    USDA: Weekly National Peanut Prices9-30

    DTN Livestock Midday: Live Cattle Futures Slip Lower9-30

    USDA Grain Stocks: Corn Up 50%, Wheat 2; Soybeans Drop 359-30

    DTN Grain Midday: Wheat Futures 7 to 10 Lower9-30

    USDA Wheat: Production Drops 5 Percent from 20139-30

    DTN Cotton Open: Trades on Slight Loss Near Low9-30

    DTN Livestock Open: Cattle Futures Staged to Begin Higher9-30

    DTN Grain Open: Futures Start Out Lower9-30

    Keith Good: ‘Misinformation’ Muddles Clean Water Act, EPA Chief Says9-30

    Grain TV: Short Covering Ahead of Grain Stocks Report9-29

    DTN Livestock Close: Cattle Complex Soars to All-Time Highs9-29

    Grain Storage, Transportation Worries Mount — DTN9-29

    Soybeans: Protein, Oil Values Rate More Market Attention — DTN9-29

    Soybean Harvest Rises by 7 Points, Corn 5 — DTN9-29

    Growing Demand for Pork Likely to be Met — and Quickly9-29

    Peanut Stocks and Processing: Utilization Up 4%, Stocks at 1.4B Pounds9-29

    Peanuts: New Revenue Policy Implemented by USDA9-29

    Flint on Crops: What is a Good Variety Worth?9-29

    Southern Grain Crops In 2014 – Top 10 Trends, Issues, Setbacks – AgFax9-28

    Farm to Table: Something Old is New Again. – AgFax9-26

    Rice: Mexico To Restore Import Tariffs on Asian Rice9-26

    Rice Crop: Delta Area Harvests Picking Up Steam9-26

    Rice Market: Strong Friday Push Makes for a Positive Week9-26

    Rose on Cotton: Bearish News – We got plenty.9-26

    Cleveland on Cotton: Chinese Moves Send Market into Free Fall9-26

    Sizing Up Sudden Death Syndrome: Management Decisions to Fight Back – DTN9-26

    Nebraska: New Study Addresses Climate Change Challenges – DTN9-26

    GMO Wheat Appears in Montana as USDA Wraps Up Oregon Investigation – DTN9-26

    Welch on Wheat: Harvest Behind Normal, Conditions Decline9-26

    Louisiana: Ag Officials Ask for New Rules for Drones9-26

    Welch on Grain: Corn Condition Improves Slightly9-26

    USDA: Peanut Price Highlights9-26

    Shurley on Cotton: Carefully Consider Selling Options9-26

    AgFax Wildlife Review: S.C. National Park Confronts Wild Hog Problem9-26

    Crop Insurance Details Clearing Up — DTN9-26

    Crop Insurance: ARC-PLC Regulation and Decision Tools9-25

    Taxes: Definition of Insanity, Cheat the IRS on Land Sales – DTN9-25

    Kansas: Revised Edition of Midwest Cover Crops Field Guide Now Available9-25

    U.S. Energy: Weak Demand, Plentiful Supply Drive Drop in Oil Prices9-25

    Gasoline Prices: Average Down 6 Cents9-25

    Propane Stocks: Rise by 1.7M Barrels9-25

    Diesel Prices: Lowest in Over 2 Years9-25

    U.S. Grain Transportation: Inspections Highest Since May9-25

    Growing Cycles Differ Greatly from Iowa to Florida — DTN9-25

    Iowa-Based Company to Build Ethanol Plant in Brazil — DTN9-25

    Big Data Drives Smarter Decisions on Farm — DTN9-25

    Corn Belt Growers Eager to Get Harvest Rolling — DTN9-25

    Minnesota: 18 Counties Declared Natural Disaster Areas9-24

    Tennessee: 8 Counties Designated Natural Disaster Areas9-24

    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