Beef Fact Friday: Current Cattle Markets

Today’s #BeefFactFriday is all about the markets!

Learn more about the current beef cattle markets with nationally-recognized Extension Ag Economist Dr. Derrell Peel at the 73^rd annual ACA Convention and Trade Show. Register for Convention today by clicking here.

---Disclaimer:The below article and picture is from Drovers Cow/Calf---

CattleFax predicts market shock is nearly over, turbulence still ahead

Insights about the recent market price shocks and potential for future turbulence were discussed today with more than 2,000 beef producers at the CattleFax Outlook Session held during the 2016 Cattle Industry Convention and NCBA Trade Show.

The downward spiral from the late 2014 and early 2015 record-high cattle prices has been tough for many in the business, but CattleFax CEO Randy Blach said the steepest portion of the market correction has passed. He explained that tighter protein supplies and stronger exports created the ‘perfect storm’ for the cattle market to reach the extreme highs. Animal health challenges limited poultry and pork production in 2014 – creating the tightest per capita U.S. net protein supply in the last 20 years.
“We are coming off historic highs in the cattle market, created by unique conditions in both the global and domestic protein markets,” said Blach. “Dynamics, specifically larger protein supplies, led to a significant correction in price in 2015. A large portion of the market down trend is over now. However, the cycle shows prices continuing to trend lower in 2016, 2017 and 2018.”

Analysts predicted the cattle feeder – after losing about $200 per head in 2015 – will be slightly profitable this year. Stocker operators will experience tighter margins, and cow/calf producers will remain profitable. The team of economists expect fed cattle prices will average $130 to $135/cwt. in 2016.

“Cow/calf producers will still be profitable, but at substantially lower levels than the past two years,” said Kevin Good, Senior Analyst and Fed Cattle Market Specialist, CattleFax. “We predict the cattle feeder will have tight margins for the year with potential for profitability by mid-year.”

A two-year El Nino weather pattern has replenished moisture conditions across the country, specifically the West coast, which saw some relief recently. The weather outlook appears favorable, especially moisture conditions for grasslands, according to the weather outlook from Art Douglas, Ph.D., Professor Emeritus at Creighton University.

“As we head into 2016, a split jet stream pattern will favor above-normal precipitation from California to the Southern Plains and the Southeast through March,” said Douglas. “In the Corn Belt, spring will be wetter-than-normal, which will be accompanied by slower spring warming. Delays in fieldwork and planting dates are likely to result.”

Analysts predicted $294 per head added value from exports for 2016 – a $66 drop per head from 2014 values. This decrease in export potential is caused by a combination of a stronger U.S. dollar, slowdown in global markets and challenges with market access. China and other global markets are still the biggest opportunities for U.S. beef, but trade restrictions will continue to limit potential in the year ahead.

Beef imports are predicted to be down 8 percent due to the combination of lower trim prices and increasing domestic cow slaughter. The United States is in a rebuilding stage and females are being held back for the cowherd. Analysts predict the U.S. cowherd will grow another 600,000 head in 2016 following a 1.1 million head increase in 2015.

Beef Fact Friday: Heifer Replacement Considerations

As heifer replacement begins to weigh on producers’ minds, Dr. Bob Weaber, a Kansas State animal scientist, says that genetic components, birthdates, mature size and many other factors play into selecting heifers with the best likelihood of becoming productive and efficient cows. Learn more with today’s #BeefFactFriday.

Contributed, Drovers Cattle Network:

Producers focus on replacement heifer selection

By Connor Orrock, K-State Research and Extension

Picture by the ACA

As the air turns crisp and the leaves change color, replacement heifer selection begins to weigh on cattle producers’ minds. The process can be confusing and stressful for producers, as the decisions made can directly impact the future of their program. Kansas State University animal scientist, Bob Weaber, offers tips to aid producers in selecting heifers with the best likelihood of becoming productive and efficient cows for years to come.

Genetic components

Weaber encourages producers to make appropriate sire selection decisions for building quality replacements. If a producer plans to keep more replacement females, tactical selection of bulls to be sires of replacement heifers that emphasize maternal traits versus other traits is a must.

“If you’ve made an investment in genetics,” Weaber said, “either via bull purchasing or through an AI (artificial insemination) program over the last year, and these replacement candidates are a result of those decisions, certainly those females produced by bulls that have been selected for their maternal traits – maternal calving ease, appropriate mature weight, lactation, stability EPD (expected progeny difference) – should be given priority in your selection criteria.”

Weaber also points out that crossbred heifers typically have a more productive life and possess greater reproductive qualities than their straight-bred counterparts. Therefore, crossbred heifers should be given special consideration as replacements.

Birthdate

Figuring out where heifers were born, in terms of the calving distribution and their weights and performance measures, are key pieces of information, he said.

“We know heifers born early in the calving season have a higher likelihood of themselves calving earlier in the calving season and lasting longer in your management system,” said Weaber, a cow-calf specialist with K-State Research and Extension. “They have more opportunities to become pregnant within the breeding season, because they cycle earlier and calve earlier. When mated in a defined breeding season, they have more wiggle room in their reproductive performance than do females that were born at the end of the calving season.”

Weaber provided an example to further explain: “Say you have a

heifer calf that was born the last day of your calving season. When she enters your breeding herd, she’s going to be one of the last females to reach puberty, have the fewest opportunities to become pregnant in your structured breeding season, and if she misses by two or three days in the breeding season, she’s out as a 2-year-old.”

“If you’ve invested $1,000 or $1,500 on development costs above her market value as a calf to get that heifer to have her first calf,” he added, “you don’t want to lose her because she missed by two or three days. That’s why we skew our selection heavily toward females born in the first 21 or 30 days of the calving season.”

Mature size relative to resources

Picture by the ACA

Feed and other input costs, has some producers concerned about mature cow size and lactation potential. Weaber said it is important to choose replacement females that fit the mature size and maintenance requirements appropriate to forage constraints of the operation.

Over time, he said, many producers have selected heifers that have higher performance and growth traits to meet demands further down the beef value chain. While cattle that grow quickly are an important contribution to the beef production system, producers must be careful not to go too far. With today’s genetics, it is fairly easy to build cows whose nutrient requirements can substantially exceed the nutrients available in a grazed forage environment.

For this reason, he recommends producers keep an eye on maintaining, or in some cases slightly decreasing, the mature weights of their cows.

“Replacement female selection has accelerated our path of maybe making cows too big,” Weaber said. “Our usual practice of walking into the replacement heifer pen leads to selecting ‘the standout.’ The biggest, nicest fleshed, easiest conditioned heifers in the pen are the ones that we naturally want to select.”

“Certainly older heifers have a tendency to be that way because of age,” he continued. “But, we have to be careful that we don’t select heifers that are the extremes in that group, because they represent the highest growth genetics, and likely the highest mature weight out of our cow herd.”

Another factor linked to selecting these “standout” replacements is that they are likely from cows with the highest lactation potential in the cow herd, Weaber said, which leads to increased production and maintenance requirements for these cows.

To combat this trend, he recommends that producers select replacement heifers that reside in the middle of the group for adjusted 205-day weight or adjusted weaning weight. The adjusted weight takes into account differences in age of the heifers and age of their dam.

“To keep the weights of your cows pretty constant, pick the middle third of the heifers in terms of weaning performance,” Weaber said. “Skew that selection to include heifers born early in the calving season to have this optimization of born early in the calving season and from the middle group in weight and performance. That should put a downward pressure on the increase of mature weight.”

An Excel spreadsheet is available at www.ksubeef.org that calculates adjusted birth weights, weaning weights and yearling weights. The spreadsheet requires producers to enter information on their heifers, such as the birthdate or birth week and age of dam.

Other factors

Another item to consider when selecting replacements is biology. Look for replacements out of mature cows that “fit” the system.

“They ‘fit’ in the production environment, and because of that ‘fit’ they have the ability to reproduce every year,” Weaber said. “Those cows are likely on target in terms of weight, body condition, lactation potential and have obviously been fertile.”

So when choosing replacement heifers, one from a designated “fit” mature cow should be toward the top. If a producer has to choose between picking a replacement heifer out of a proven mature cow or one out of an unproven cow, consider picking the daughter of the proven cow.

“About three-quarters of the genetic flow of the cow herd is driven by sire selection,” Weaber said. “That doesn’t mean female selection is not important. It can be particularly important if you are trying to limit supplemental feed sources.”

“I encourage producers to sit down and figure out the trajectory that they want to go, understand the data they may need to make that informed decision, collect that data, and then make an informed and thoughtful replacement heifer selection.”