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Future of cattle industry bright, expert says

Cattle industry consultant Tom Brink sees the next few years of high prices as an opportunity for ranchers to set themselves up for the long haul by paying off debt and building their infrastructure and herd genetics.

By Debby Schoeningh

For the Capital Press

Published on January 14, 2014 12:43PM

LA GRANDE, Ore. — An expert painted a bright future for the cattle industry during the 10th Annual Cattlemen’s Workshop last weekend in La Grande.

Among the speakers was Tom Brink of Brink Consulting/Trading in Brighton, Colo., who said the calf market is on solid ground and calf prices hit a new high recently with the national average for a 550-pound steer at about $2 a pound.

He said even though producers are spending 2.5 times more on production costs than they did five or six years ago, “corn prices are very unlikely to go up” in the near future. He expects corn to stay in the $4-$5 per bushel range rather than the $7-$8 producers have seen in the recent past.

Higher calf prices, he said, could last several more years.

He said there are a lot of variations in the industry, but creating value for both the rancher and feeder is an area over which producers have a lot of control.

Since the cattle industry should have good profits for the next 3-5 years, he said, now is the time producers should spend money to position themselves to last long-term, paying particular attention to cattle genetics and production infrastructure, as well as paying off debt.

“Seek ways to capture more value,” he said. “This new era in cattle performance is amazing.”

He said the feed yards really want calves with immunity that gain fast and convert well to finish at a desirable weight.

He said if a steer goes in at 800 pounds and finishes at 1,250 pounds, that’s a heifer weight and it will garner a lower heifer price.

Too heavy is not good either.

“When you send the packer an 1,800-pound steer, they send it back,” he said.

He said the ideal finish weight for slaughter is about 1,400 pounds.

Carcass traits are also important, he said, and packers will pay the most for quality grade.

“Cattle that grow and grade are winners,” he said. “The essence of a successful cattle product is to create a highly valuable calf crop and then go tell people about it.”

This, he said, is called, “value creation and value capture.”

He said it’s not unheard of in today’s cattle market to see the occasional $100 per head premium, and now producers, with the right kind of cattle, can create these higher premiums predictably through genetics.

He said the next five years could be a game changer for many producers with the exceptional cow/calf profitability.

“Your challenge is to have above average growth and carcass value potential so people will want to buy your cattle,” he told the producers at the Blue Mountain Conference Center.

U.S. cattle numbers are the lowest they have been since 1952. The shrinking supply coupled with a domestic demand that is “doing well,” he said, has made for a “bullish market.” He predicts the market could continue to see a 1-2 percent growth.

However, closing of packing plants and feedlots due to the decreased cattle numbers will probably cause some volatility in the market.

“The main risk for increasing cattle numbers will be stressing the infrastructure,” he said.

Eventually though, he said, the cattle market will see heifer retention and producers need to be prepared.

He urged producers to look for programs that will help recognize the best of cattle, and that will help them to separate the superior cattle from rest of the herd.

He recommended DNA testing, especially on replacement heifers, followed by a breeding program using artificial insemination or high quality Angus bulls.

“Bull selection makes a tremendous amount of difference,” he said. Producers can get more per head from calves out of a higher end bull.

What constitutes the best genetics, he said, has really changed in the last 15 years.

“Top genetics are way better than everything we’ve experienced in the past,” he said. “Calves finish 30 days earlier at the same weight. These cattle do so much better they don’t fit the averages.”

Brink also encouraged producers, during this higher calf market, to help a young person get started or expand in the cattle business.

“We need to start a younger generation of producers,” he said.


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