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: Upward Trend Lines Unbroken4-22

    Doane Cotton Close: Futures Continue Slow, Steady Ascent4-22

    DTN Livestock Close: Futures Move Higher4-22

    AFB Grain-Soybean Close: Beans Continue Decline, Corn, Wheat Move Higher4-22

    AFB Cotton Close: Prices Continue Higher4-22

    AFB Rice Close: Unchanged to Slightly Higher4-22

    Welch on Grain: Modest Increase in Planted Corn Acres4-22

    Cotton: Smaller Pima Plantings Expected for 2014/154-22

    Welch on Wheat: Condition Decline Continues4-22

    DTN Cotton Close: Strong Old-Crop Gains4-22

    Mississippi: MSU Extension Marks Its 1st Century4-22

    DTN Grain Close: Corn Rebounds with Export Help4-22

    USDA: Weekly National Peanut Prices4-22

    Ethanol Campaign Ramps Up as EPA Decision Nears – DTN4-22

    Senate Expected to Pass Upcoming Tax-Extenders Bill – DTN4-22

    DTN Livestock Midday: Cattle Futures Hold Strong Gains4-22

    Mid-South Ag, Environmental Law Conference Set May 16 in Tunica, Miss.4-22

    DTN Grain Midday: Soybeans, Wheat Slide Lower4-22

    AgFax Grain Review: Chinese Rejections Continue; Still Time to Plant Corn4-22

    DTN Fertilizer Trends: Prices Higher for 9th Straight Week4-22

    DTN Cotton Open: Posts Triple-Digit Old-Crop Gains4-22

    DTN Livestock Open: Firm Start for Meat Futures4-22

    DTN Grain Open: Futures See Early Turnaround4-22

    Keith Good: Winter Wheat Conditions Worsen; Planting Progress Sluggish4-22

    Pinnacle Acquires Harvey’s Agricultural Solutions4-21

    Livestock: U.S. at Disadvantage in Japan Trade Deal – DTN4-21

    Chemtura AgroSolutions Acquired by Platform Specialty Products4-21

    Indiana: Beck’s Hybrids Expands with $60M Investment4-21

    Wheat Resistance Gene Found Against Stem Rust Pathogen4-21

    Wheat: Study to Develop Climate-Resilient Varieties4-21

    North Carolina Wheat: Head Scab Alert Issued For Eastern Areas4-21

    Good on Grain: How Many Soybean Acres Do We Really Need?4-21

    4 Factors That Have Reshaped Agriculture in Last 10 Years — DTN4-21

    Texas Explosion Prompts Subtle Changes in Fertilizer Industry — DTN4-21

    Flint on Crops: Reniform Nematode Continues to Plague Us4-21

    Southern Grain: Freeze Effects? Corn Planting Slogs Along – AgFax4-19

    Arctic Warming Tied to Our Extreme Weather? Maybe. – DTN4-18

    Do Soybeans Need Nitrogen?4-18

    Is There An Advantage To More Corn Acres in Your Rotation? Yes and No.4-18

    Texas Rice: Garry McCauley Retires After 39 Years and Many Accomplishments4-18

    Rice Farmers In Midsouth Looking For A Break In The Weather – AgFax4-18

    Cleveland on Cotton: Nervous Market Nellies; Chinese Plant 20-25% Less4-17

    Grain TV: River Basis Levels See Large Rise4-17

    Chumrau on Wheat: World Supplies Get a Lift, but U.S. Stocks Look Tight4-17

    Mississippi: MSU Offers Four Deer Management Workshops This Summer4-17

    Mapping the Farm Bill: Voting Changes in the House of Representatives4-17

    USDA: Peanut Price Highlights4-17

    Texas: Grain Grading Workshops, Amarillo, May 6-74-17

    Mississippi: State Soybean Value Grew $1B Since 20064-17

    U.S. Drought Outlook: Improvement Expected in Midwest, Central and Southern Great Plains4-17

    Farm Finances Rate an ‘A’ For Now, but Questions Linger — DTN4-17

    Mississippi: Top of the List for Water Resouces4-17

    U.S. Grain Transportation: Upper Mississippi Navigation Improves4-17

    Resistant Palmer Pigweed: What People Need To Know Before It Hits – AgFax4-17

    Chemical Safety Board Plans Meeting in West, Texas — DTN4-17

    West, Texas, Recovers and Rebuilds with Cautious Approach — DTN4-17

    U.S. Energy: Oil and Gas Spending Favors Exploration, Development4-17

    Gasoline Prices: Average Jumps 6 Cents4-17

    Propane Stocks: Increase by 0.8M Barrels4-17

    Diesel Prices: Average Down a Penny4-17

    Victims of Texas Fertilizer Plant Explosion Remembered — DTN4-17

    Keith Good: Beige Book — Observations on Ag Economy4-17

    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