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OSU Extension BEEF Team
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Previous issues of the BEEF Cattle letter
Issue # 894
July 16, 2014
Management Decisions and Marketing Opportunities for Replacement Females - John F. Grimes, OSU Extension Beef Coordinator
Summer is moving along which can mean a variety of things depending on your perspective. For the sports fan, there are plenty activities such as the recent World Cup in soccer, the All Star game in baseball, and training camps for college and professional football. If you are interested in fairs, county fair season is in full swing and the Ohio State Fair is just around the corner.
This time of year is important for the cow-calf producer as well. Depending on the timing and duration of your calving season, most spring calving operations have already or soon will be wrapping up the breeding season in their herds. Regardless of when you decide to conclude the breeding season, there are some important decisions that need to be addressed that can greatly impact the future profitability of your herd.
Sometime shortly after the breeding season concludes, an important management practice that should be implemented by every cow-calf producer is a pregnancy check of the breeding herd. Today, there are three basic technologies available to the producer for pregnancy checking: traditional palpation, ultrasound, and blood testing. Depending on the technology utilized, pregnancy checks should be made 30-60 days after the conclusion of the breeding season.
Determining the pregnancy status of beef cattle continues to be one of the most underutilized yet relatively easy to implement management practices available to beef producers. The most obvious reason for pregnancy checking is to identify non-pregnant or open females for sale as a means to reduce feed expenses. The relatively inexpensive cost of a pregnancy check of $5-$10 can lead to major savings in feed costs in any given year. A significant feed bill can accumulate in the time it would take for an open female to become pregnant, calve, and wean a calf before it can be sold to cover expenses. It would have to be a very "special" open female to justify keeping her around to calve at a much later date.
A timely determination of pregnancy status can greatly benefit the producer in making marketing decisions. There are tremendous marketing opportunities for pregnant and open females in the immediate future. The decision to cull an open or unproductive female for whatever reason should be easier than ever given today's market prices. Prices for cull cows, market heifers, and heavier heifer feeder calves are at record levels so take advantage of this opportunity. If you want to maintain herd numbers at a relatively constant number, a producer would be wise to cull the open female and replace her with a purchased bred female.
Given the record high prices for all classes of beef cattle, there should be strong demand for bred females this fall. If you have extra bred females in your herd, consider marketing some replacement females this fall. Marketing opportunities can be realized through private treaty sales off the farm, sales through local auction markets, or with other consignment sales available in the region.
The Ohio Cattlemen's Association (OCA) is providing an opportunity of potential interest for both the buyers and sellers of beef breeding cattle. On Friday evening, November 28, the OCA will be hosting their second annual Replacement Female Sale. The sale will be held at the Muskingum Livestock facility in Zanesville and will begin at 7:00 p.m.
The 2014 Ohio Cattlemen's Association Replacement Female Sale will provide an opportunity for both buyers and sellers to meet the need for quality replacements in the state. Consignments may include cow-calf pairs, bred cows and bred heifers. Females must be under the age of five as of January 1, 2015 and may be of registered or commercial background. Bred females must be bred to a bull with known EPD's and calves at side of cows must be sired by a bull with known EPD's. Pregnancy status must be verified by an accredited veterinarian through traditional palpation, ultrasound or by blood testing through a professional laboratory. Analysis must be performed within 60 days of sale. Consignments will also be fulfilling specific health requirements.
Consignments for the sale are due to the Ohio Cattlemen's Association by October 1, 2014. Sale information can be obtained by contacting the Ohio Cattlemen's Association at (614) 873-6736 or at their web site located at www.ohiocattle.org . If you have any questions about the sale, you can call me at my office at (740) 289-2071, Extension #242 or contact me by e-mail at firstname.lastname@example.org. Please consider this sale as an option for both buyers and sellers to help contribute to the improvement of Ohio's beef cow herd.
Mixed Emotions in the Beef Industry - Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
The beef industry is experiencing a wide range of emotions at the current time. The level of excitement is obvious as cattle and beef prices have pushed even beyond record levels of earlier this year.
Cattle prices are at values unimaginable just a few years ago. Higher cost of production and reduced herd sizes notwithstanding, many cow-calf producers will experience record returns in 2014.
Coupled with the excitement, however, is a certain level of disbelief of current price levels. There is almost a "pinch me to see if I'm awake" feeling among many cattle producers. Though producers have been expecting strong prices as a result of declining cattle inventories and reduced beef production, the recent meteoric rise in cattle and beef prices is even beyond what only a few imagined and none would predict.
Coupled with disbelief is a growing level of skepticism, especially regarding beef demand. The most common question I get from producers is "when do we price ourselves out of the market?" or "when do people stop eating beef?"
It's almost as if we have no confidence in our product or our consumers. There are a multitude of beef products and some adjust more than others but it is becoming more apparent that many beef products are less price-sensitive than we might have imagined. Beef wholesale prices have pushed sharply higher the past month and the impacts will be felt in retail prices in the coming weeks. It takes time for retail markets to fully adjust and, while wholesale prices may cycle lower again after Independence Day, general upward pressure on wholesale and retail prices will continue for many months. Pork prices, partly due to impacts of the Porcine Epidemic Diarrhea virus (PEDv), and poultry prices have also increased.
How those industries respond in coming months will be important. Certainly we are challenging beef demand in a manner unlike ever before and we must be sensitive to how retailers and consumers respond to rising price levels but both domestic and international beef demand are proving to be quite robust so far.
Disbelief and skepticism lead, understandably, to a certain level of caution in the industry. Among some producers (and lenders) there is caution, directed, not so much to the current price levels, but for how long we may experience them. There is a feeling that whatever is happening now, it cannot last. The wisdom of the old adage that "the best cure for high prices is high prices" should not be forgotten and will likely be true at some point in the future of the beef industry.
The cattle cycle may have been deeply masked in recent years but it still exists and will be evident at some point. In the meantime, the multitude of factors that have masked the cattle cycle and extended herd liquidation for several years have left cattle inventories so limited that herd rebuilding and recovery of beef production will take several years.
The cyclical response of the industry that will lead to lower prices cannot happen much before the end of the decade. Along the way, the industry is still subject to a host of potential external shocks and that, along with increased values in the industry, mean that financial and market risk is still an important consideration. Production and marketing plans should certainly include appropriate risk management components.
Caution should not, however, prevent producers from taking advantage of the opportunities in the current market. The temptation to sell everything at current market prices should not cloud the implementation of a well developed production and marketing plan for the next several years.
In situations where herd expansion is likely at some point in the future (especially in situations of drought recovery), rebuilding is likely to be a multi-year process and should be guided by a plan based on resource management as well as production/marketing considerations.
Other producers, tempted by high feeder prices now and cautious about high breeding animal values, face the greater risk of waiting to see how long high prices last then jumping in and being among the last to pay high prices for heifers or cows. Additionally, high cattle prices now should not be viewed as a substitute for pursuit of better cattle management and quality.
While most any animal standing will bring record dollars today, there is considerable additional value potential in improved genetics and management and with alternatives such as preconditioning programs; added stocker weight gain; and marketing heifers differently and separately from steers. Producers have considerable flexibility to utilize forage in a variety of ways to realize additional value for cow-calf and stocker production and should not become complacent with current high prices.
All too often cattle producers are defensive marketers and are thus content with covering production costs plus a little more rather than taking full advantage of rare opportunities when they're in the driver's seat.
Cattle producers thrive on adversity, an essential quality in an industry so fraught with adversity. Certainly it has been several years characterized by a variety of adverse conditions which have precipitated the current market situation. Despite the best efforts of producers (hampered by drought most recently) to respond to intensifying market signals, beef production will fall for the next couple of years; and the process of rebuilding cattle inventories, which appears to be just beginning, will take several years.
Lack of supply is the major issue in the industry and cow-calf producers are the source of industry supply. In a rare circumstance for the industry, high cattle prices seem just as inevitable as the challenges of weather, disease, and managing the cost of production for the foreseeable future. Cattle producers not only thrive on adversity; they sometimes seem ill-equipped to handle prosperity.
The current situation provides an opportunity for cow-calf producers to add an often underutilized feeling to the mix of emotions - the ability to really enjoy cattle markets.
Effective Biosecurity Planning - Regularly Changing Needles - Doug Bear, Director of Industry Relations, Iowa Beef Industry Council
The goal of a biosecurity plan on both beef and dairy farms is to protect animals from disease and maintain herd health to proudly produce a safe, wholesome and healthy beef product for our consumer's plate. This may be accomplished by preventing, minimizing or controlling cross-contamination either directly (animal-to-animal) or indirectly (animal-to-feed or animal-to-equipment-to-animal). Therefore, the five components of an effective biosecurity plan on the farm include A-RITS: assessment (A), resistance (R), isolation (I), traffic control (T), and sanitation (S).
One component of biosecurity that we will address is sanitation. What is our only direct connection to the cattle that we are vaccinating, treating and/or implanting? If you replied, "Through a needle!"- You would be absolutely correct. But, how often do you change your needles when working cattle? How often should you be changing needles? If your answers contrast in the slightest, then a management change must be implemented. In accordance with Beef Quality Assurance (BQA) guidelines, a needle should be regularly changed at least every ten to fifteen head of cattle.
While it may not have immediate consequences, look at effects that may be experienced by not regularly changing needles and implementing this easy method of sanitation. In the Midwest during the past couple of years, there have been an increasing number of documented cases of Anaplamosis. While not contagious, it may be spread through the use of contaminated needles or dehorning or other surgical instruments (Merck Veterinary Manual, 1998). Therefore, one way to inhibit the disease transmission cycle from occurring on cow-calf farms is to encourage changing needles more frequently, even to the extreme management that a separate needle may need to be utilized per cow.
Two of the sanitation topics related to needle replacement are wear and biological contamination - Why do we need to replace needles after 15 head? What does a needle look like only after a few uses? Can't a needle be until it visually looks damaged? After a substantial number of questions were asked over a short duration of time, a small on-farm experiment was created to provide answers and examples of used needles to be used to remind of the importance of regularly changing needles in accordance with BQA guidelines.
The needle project was conducted by the generous assistance of a local feedyard operator and crew. The feedyard was provided a full box of 16 ga. X 1" needles for administering an intramuscular (IM) product to a group of calves sourced from a similar region of the United States. The working crew was instructed after a needle was used on one head to put it into a bag labeled (1 hd), used on two head put into a labeled bag (2 hd), and continued in this manner until a needle was used on fifteen consecutive head (15 hd) of processed cattle.
Each individual needle was evaluated and photographed under a high powered Scanning-Electron Microscope. The attached JPEG provide a snapshot of needles used on sequential number of cattle administered an IM product before changing to a new needle.
*Disclaimer: While there was an attempt to minimize on-farm variables by utilizing the same person to administer all injections, same box of needles and group of sourced cattle, these magnified results may not be representative in all situations. However, this resource demonstrates the importance of regularly changing needles on the farm.
Note the increase in biologic contamination and compromised structural integrity using a needle in sequential order. This information should encourage beef and dairy farmers to regularly change needles at least every fifteen head when administering injections.
Grimes to Speak at County Event, You're Invited
The Hocking County Beef Committee and OSU Extension would like to invite you to the annual Hocking County Twilight Meeting on Thursday July 31st at 6:30 p.m. Dave Crawford has generously offered to host this year's event at Natural Rockbridge Farm, located at 11462 Crawford Starner Road, Rockbridge, OH. Participants will enjoy grilled hamburgers and side dishes.
Ohio State University Extension Beef Specialist John Grimes will be the featured speaker. John will provide an overview of Ohio's beef industry including: animal health, pricing and trends, opportunities for receiving a premium price for your beef and also an update on the status of national beef herd.
Please RSVP by calling the OSU Extension office at 740-385-3222.
OCA Roundup is Set
This year's Ohio Cattlemen's Roundup will be held in Clark County on September 5 and 6, and is being hosted by the Clark County Cattlemen's Association. Find the details including registration information linked on the OCA website: http://ohiocattle.org/announcements/oca-summer-roundup
Kentucky Beef Cattle Market Update - Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
The feeder cattle market shows no sign of weakness and seems to shrug off most anything that could potentially be seen as negative. At the time of this writing (July 8, 2014), feeder cattle futures contracts through the end of 2014 were trading above $217 per cwt. The August contract has increased by more than $35 per cwt since March. Fall contracts were actually trading at a slight discount to August, which is an atypical seasonal pattern as August is typically the peak of the feeder cattle market.
Two developments have only worked to strengthen what was already a record setting market this summer. The first factor was that the fed cattle market never made the seasonal low that is typically made in the summer. Fed cattle prices increased when they typically decrease and as that happened deferred live cattle futures moved upwards, supporting feeder cattle price levels. The December 2014 live cattle futures contract has moved from the upper $130's in early April to the mid-$150's at the time of this writing.
Secondly, the increase in live cattle prices has occurred at the same time as a significant decrease in corn prices. A combination of higher than expected acreage and favorable weather conditions has moved both old and new crop corn prices from the low $5 per bushel range to the low $4 per bushel range. While the two major drivers of feeder cattle prices (live cattle futures and corn prices) have both worked to support the market, it is hard to imagine that feeder cattle are worth more than $35 per cwt more than they were this spring. For producers targeting fall feeder cattle sale, a key question will be whether the market was severely undervalue then or if it is overvalued this summer.
This market has also been one to illustrate a risk management truth that is becoming more apparent all the time - these markets are impossible to predict and risk management is becoming more important all the time. This is the third straight summer that we have seen major swings in feeder cattle prices. Feeder cattle prices dropped drastically during the summer of 2012 as the severe drought brought about major increases in corn price. They rose by just as much during 2013 as the massive corn crop led to much cheaper corn and a combination of factors discussed has resulted in the hottest feeder cattle market that has ever been seen in 2014. I have often shared that my philosophy on risk management prioritizes protecting the downside first, then worry about the upside. However, a market like we have seen in 2014 does drive home the importance of considering upside potential as well. Producers who purchases put options or used synthetic puts this summer have done much better than those who forward contracted or sold futures.
Visit the OSU Beef Team calendar of meetings and upcoming events
BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.
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