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Retained Ownership: Now is a Good Time to Gain more Value

August 30, 2010
By: Kim Watson Potts, Beef Today
 
 

Bonus Content:

Is retained Ownership for You?

Click here to access an online worksheet from the University of Mirrouri that evaluates the cost of retained ownership vs. selling calves at weaning.

Selecting a Place to Feed Cattle There are other considerations that you need to keep in mind when choosing a place to feed cattle.

1. Animal health program

2. Feeding performance

3. Marketing program

4. Climate

5. Geographic location

6. Finance options

Communication with the feedyard is critical throughout the process. Make sure the feedyard you select is participating in the health and breed programs that you want. You can find a list of participating feeders from the appropriate breed association or source verified programs.

Also the Texas Cattle Feeders offers a guide to retained ownership on their Website. You can access it here.

Match the smallest cowherd on record with an upswing in beef demand, and the stage is set for higher cattle prices across the board.

“Beef cow numbers have been declining since 2006 due to the high price of feed and terrible losses in cattle feeding in 2008 and 2009,” says Purdue economist Chris Hurt. “Beef cow producers are retaining 2% fewer heifers for replacements and that means the cowherd will be dropping even more. The earliest we could see an increase in cow numbers is mid-2011, but that won’t give us more beef in the marketplace until near 2013. That means at least three to five years of small beef supplies.”

That is helping to boost projected prices for all segments of the cattle industry in the coming years.

According to CattleFax, a member-owned information organization serving producers in all segments of the cattle business, cattle prices are projected to reach record levels by 2012 for calf, feeder and fed cattle.

That means there are opportunities for cattle producers who continue to control costs, implement risk management strategies and evaluate marketing opportunities. One of those marketing opportunities is retaining ownership, which means you wean calves, place them on feed and market at slaughter. The intended advantage is to feed calves at a lower cost and reap a higher profit margin.

“At our feedyard, we typically have 25% that are retained by owners,” says Bo Kizziar, feedlot manager of Hansford County Feeders in Spearman, Texas. “I’ve been managing feedyards for 25 years, and the number of cattle placed through retained ownership ebbs and flows depending on what calves and feeders are worth. As that margin gets tighter, the squeeze goes up.”

 

Is now the time? Retaining ownership on cattle is not for the faint of heart. Volatility in feed grains as well as cattle prices can send you on a roller coaster. But the coming years make it look like it might be worth it.

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FEATURED IN: Beef Today - September 2010

 

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