Artificial insemination of heifers leads to easier breeding, easier calving and higher profits
“It is important to reiterate that in our current situation, we continue to have a pull down in herd numbers and have historically tight supplies,” emphasized Kansas State University Livestock Economist Glynn Tonsor during a Nov. 5 webinar. “We are less certain on beef production.”
Tonsor linked production uncertainty in the beef cattle industry with increasing levels of political uncertainty, which results in a complicated future for the cattle industry.
Supply and demand
“Available feeder cattle supplies,” he continued, “are tied directly to the cow/calf herd size, which is at historic lows, as well.”
Other complicating factors include the beta-agonist discussion and added uncertainty.
“When we alter dressed weight, we tweak beef production,” Tonsor said.
By 2014-15, he added that expectations show that supplies will continue to tighten, and per capita consumption will hit the lowest levels in 50 years.
“Beef demand is a confusing concept,” Tonsor explained. “It has been more positive than expected, but much more work is needed.”
With improvement in feeds prices and pasture conditions, Tonsor said there is also uncertainty in a number of arenas.
“We have heightened levels of uncertainty in politics, regulations and use of technology,” said Tonsor.
The government shutdown has continued to have widespread implications on the ability of economists to collect data. From the lack of reported prices to the ability to get disaster prices to producers impacted by winter storm Atlas, Tonsor added that producers are feeling political and governmental uncertainty.
“Related is the political discussion around the Farm Bill and country of origin labeling,” he noted. “It is hard for me to see the end in sight on uncertainty.”
“The issue of use of beta-agonists has also been elevated,” Tonsor continued. “The temporary removal of Zilmax fits into the broader discussion of uncertainty.”
At the same time, Tonsor noted that the removal of Zilmax results in a lack of comfort and risk aversion as to what technology may be available in the future.
“We have reduced certain technologies because of public perceptions and political ramifications,” he explained. “The use of rBST in milk production and irradiation of beef for safety are things that provide an example.”
“Technology uncertainty is holding back a little of optimism,” he noted.
In beef production, Tonsor marked some optimism in the cow/calf segments.
“Overall, 2004 and 2013 were really good years from a historical context,” he explained. “At $140 to $150 per cow, those returns are higher than in other years.”
At this point, he added that economists predict returns to be double that in 2014.
General optimism in the cow/calf sector is held up by increases in feeder steer prices.
“Futures for calf prices are ending in the $170s and low $180s,” he said. “The current contract has showed up at $163, and that is up about three dollars.”
Stockers and feedlots
“In the stocker segment, from a historical perspective, we have a high value of gain,” Tonsor said. “We are seeing value of gain at $115 to $125, and most producers have a cost of gain below that, so there is optimism.”
At the same time, notable returns in the feedlot sector may be inhibited by expansion.
“We are coming out of a couple years of historically bad, monster closeouts,” he said, “and the improvement is well received.”
However, if producers decide to expand and retain heifers, feedlot operators will be faced with the underlying issue of excess capacity.
“We have too much concrete bunk space relative to the calf crop,” Tonsor noted. “Those concerns put downward pressure on margins.”
He commented, “The feedlot situation has improved, but I don’t think we are out of the woods yet.”