HUNTIN' DAYLIGHT -- SCORING OPPORTUNITY

by: Wes Ishmael

There's nothing new about cow Body Condition Scores (BCS), what they are or how to use them as a guide to herd nutrition—specifically a gauge of excess nutrients stored as body fat.

However, given the increased equity requirements of cow ownership, in tandem with market volatility that's beyond extreme, it would be hard to argue that the value of utilizing BCS in management has ever been more important.

“There are several critical success factors in every beef cattle operation, including managing cow costs, weaning weights and percentage calf crop, explains Rick Funston, a beef reproductive physiology specialist at the University of Nebraska. “The most critical time period for opportunity to influence these factors is just prior to and after calving. Management decisions made during these time periods will greatly influence profitability of beef cattle operations.” That's from a fact sheet—Managing the Postpartum Interval—you can find at the eXtension.org website.

Funston explains that minimizing a cow's postpartum period—the time between calving and rebreeding—is essential to giving cows the opportunity to cycle early in the breeding season, which sets the stage for higher conception rates compared to cows cycling later in the season with fewer opportunities to conceive.

“Body condition score at calving is the single most important trait determining when a cow resumes heat cycles and therefore when she is likely to re-conceive for the next calf crop,” says Glenn Selk, Emeritus Extension animal scientist at Oklahoma State University (OSU), in a recent issue of Cow-Calf Corner. “However, it is also very important to avoid condition loss between calving and the breeding season to maintain excellent rebreeding performance.”

Consider a two-year OSU study. Selk explains there were 75 cows randomly allotted to lose or maintain body condition from calving that began Feb. 11 to April; 70 cows likewise allotted in year two.

The cows were exposed to fertile bulls for 90 days beginning May each year. Pregnancy rates were determined 70 days after the breeding season.

“Cows that were fed to maintain body condition from calving until the beginning of the breeding season averaged 94 percent pregnant, while those that calved in similar body condition but lost nearly one full condition score were 73 percent rebred,” Selk explains. “The body condition that was maintained throughout late pregnancy until calving time must be maintained until rebreeding to accomplish high rebreeding rates.”

Although the study reflects spring-calving cows, Selk emphasizes the lessons learned apply equally to fall-calving ones.

Moreover, all of this is before considering the added value of cows that calve in the first 21 days.

“Keeping other factors constant such as genetics, age of dam and nutrition, cows conceiving early in the breeding season will have older calves that will have heavier weaning weights,” Funston explains. “The length of breeding season will influence uniformity of your calves and therefore influence their value at weaning. To have a short breeding season it is vital that cattle cycle early in the breeding season.”

Markets Look for the Bottom

As for the market volatility mentioned at the outset, cattle prices continue to slide in all sectors.

On a regional basis, according to the weekly stocker cattle summary from USDA's Agricultural Marketing Service, cash calf and feeder prices declined an average of $15-$22/cwt. the first two weeks of November.

Cash prices followed free-falling cattle futures. On Nov. 13—compared to two weeks earlier—Feeder Cattle futures closed an average of $16.62 lower across the board. Live Cattle futures were an average of $9.39 lower.

Wholesale beef values and Cash fed cattle prices continued to slide for a variety of reasons that include:

Beef exports struggle—according to the most recent data from the U.S. Meat Export Federation (USMEF), beef exports were 21 percent less in terms of volume, compared to September of 2014, and value was 28 percent less. Export value per head of fed cattle slaughter was $233.80, which is $80 less than the previous September.

Competing meat supplies are growing—Next year, analysts with the Livestock Marketing Information Center (LMIC) expect record-large red meat and poultry output of about 96.6 billion lbs. That would be up 2.0 percent to 2.5 percent from this year.

As it is, there were more pounds of frozen beef at the end of September than ever recorded for the month, going back to when the data series began in 1915, according to the most recent monthly USDA Cold Storage report. There was six percent more beef in freezers compared to the previous month and 31 percent more than the same time a year earlier. Total pork supplies in cold storage, as well as total red meat in cold storage were also record large.

Heavyweight cattle continue pressuring—Cattle placed on feed in September weighing 800 lbs. or more increased 7.8 percent year over year, representing 43 percent of placements. That continues a trend that began at the beginning of this year.

Depending on how feedlots ultimately handle these heavyweight placements, they have the opportunity to keep kicking the proverbial can down the road, creating more of the over-heavy cattle that fueled the latest price decline.

Cyclical transitions in progress—Herd expansion is underway, of course, which means that for the first time in years the market is reacting to the promise of increased cattle numbers. However, there are also signs of transition away from a cycle that underpinned commodities overall.

“While I am optimistic toward agriculture, it could be argued that commodities in general are on the downslide as this commodity super cycle winds down. This will mean more pressure on profit margins, especially for grain farmers,” explained an Illinois banker, as part of the recent Agricultural Finance Monitor published by the Federal Reserve Bank of St. Louis.

Restaurant sales are slowing—Although same-store sales and customer traffic remained positive, the National Restaurant Association's (NRA) Restaurant Performance Index (RPI) was lower in September.

Feedlots losses are historic—According to the most recent Focus on Feedlots survey, estimated closeouts for steers in September were a massive loss of $357.39 per head; heifers sold at losses of $332.57. These are the deepest losses on record in this series since January 2002.

Glynn Tonsor, agricultural economist at Kansas State University, who compiles the estimates, notes that projections are on a cash-to-cash basis, which doesn't account for risk management.

“Currently, the net returns projected for closeouts in October are losses of $462.51 per head and $448.31/head for steers and heifers, respectively,” Tonsor says. “The projections continue to suggest upcoming closeout months will be at record setting losses. These projected losses primarily reflect significant declines in projected fed cattle prices relative to previously established feeder cattle prices.”

Beef demand continues strong

At least consumer beef demand remains stronger than many anticipated, given the anemic U.S. economy and increasing supplies of competing meats.

“The third quarter of 2015 showed continued positive shifts in All Fresh Beef demand (AFB),” say LMIC analysts in the most recent Livestock Monitor. “The demand index stood at 94, up almost seven points compared to last year and the highest it has been since 1991.”

More specifically, Tonsor explains the gain stemmed from two percent more per capita consumption and real prices that were six percent higher.

“Anytime we observe both consumption and price increases we know demand improved as consumers clearly were willing to pay more for beef than in the past,” Tonsor says. “In economic jargon we know the demand curve shifted in a positive way for the industry. This strong demand estimate suggests the widely-stated concerns with demand strength in September may have been overstated or at least were offset by prior strength in July and August.”

Roll everything together and, on an annual basis, LMIC analysts forecast fed cattle prices will drop year-over-year by three percent to five percent in 2016 and another one percent to four percent in 2017.

“In calendar year 2016, calf prices may decline 10 percent to 12 percent year-over-year,” LMIC analysts say. “Importantly the percentage drop from 2015's level could be smallest in the fourth quarter. Calendar year 2017 is expected to bring further erosion in calf prices, down one percent to five percent from 2016's.”







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