Forum goers find ways around obstacles, both short and long term.
By: Miranda Reiman
Cattle feeders know their business is full of risks. At the 2014 Feeding Quality Forum, held last week in Kearney, Neb., and Amarillo, Texas, attendees learned more about immediate and long-term threats to profitability.
The "bio boom" is over, global meat consumption is flat and grain supplies are up, Dan Basse, president of AgResource Company, said. He predicts a 14-billion-bushel crop this fall and an average 2014-15 price of $3.60 per bushel.
"We’re back to waiting for a significant climatic event to cause a rally," Basse said.
With feed costs under control, the real risk turns to cattle supplies.
"The market is screaming for feeder calves," the analyst said. It’s going to take five to seven years for herd rebuilding to catch up with demand and for profitability to return to the feeding sector. "Cows hold the opportunity."
Scott Brown, ag economist with the University of Missouri, said during herd rebuilding the numbers show that it pays to focus on not only building quantity, but quality.
"Statistically pork and chicken make better substitutions in the Select market," he said. "We don’t see the same substitution competition for Choice and Prime."
A 10% increase in Prime prices equates to very little change in consumption, but that same 10% increase in Select price moves the consumption down at a much quicker pace.
"Quality can become a risk management tool for the industry in the long run," he said. "Investment in the genetics of that herd will pay dividends."
When feeders get good cattle into the yard, it’s important to take care of all of the details to make sure they’ll live up to their potential.
Fred Vocasek, senior laboratory agronomist with Servi-Tech, talked about the importance of feed testing.
"Too many people just go by the NRC [Nutrient Requirements of Beef Cattle] tables and assume corn silage is average," Vocasek said. "Our data shows it ranges from about 7.5% to 9% crude protein and there are other differences as well. On many grains and feedstuffs, we can look up an average range over time by the first 3 numbers in a zip code, so a producer can see where his feed ranks in the area."
It’s important for feeders to know these variables, he said, as the content of each load could vary widely, especially if equipment fails to provide an even delivery to the bunk.