Beef Buzz News
High Forage Value Gives Beef Producers More Options, Peel Says
Tue, 05 Feb 2013 14:29:44 CST
One of the consequences of high priced grain for the beef cattle industry is the higher value put on forage than ever before. Oklahoma State University Livestock Market Economist Dr. Darrell Peel says this means producers need to approach their production of hay, pastures, and grass a little differently than they have in the past.
"We're so caught up on where cattle numbers are, where the drought has taken us, particularly the last two years. It's all very short-run-short being in the next one to three years kind of a time frame, but behind that is this fundamental change in grain prices in this country and crop values in this country makes forage take on a different role in the beef industry. We're already in that process. We're dealing with that as well, but it's something that will extend well beyond the immediate concerns of cattle numbers and the drought impact. So, I think that's an ongoing issue.
"What it means, ultimately, is this industry will try to do more things trying to use forage. That's the way we can stay as competitive in a world where grain is more expensive. Ultimately, it means things like higher placement weights for cattle going into the feedlot, reducing the time they spend in the feedlot a little bit. And that's the way, as a industry, we can use less grain. Right now we're having a hard time doing that because there are so few cattle, we're using whatever we can get our hands on today. But, eventually, we'll have more cattle and we'll able to more fully respond to those long-term signals that are out there."
Peel says with the value of forage skyrocketing along with grain prices, there are opportunities that are created.
"High grain prices makes forage worth more. It makes the value of putting weight on feeder cattle worth more. So even cow-calf producers it enhances the possibility for retained ownership and taking those calves to bigger weights and utilizing your forage that way.
"Obviously, if you're caught up in a drought, that's your immediate concern in terms of trying to survive and then recover from the drought. And I think what it all says is that forage has more value and it's also got a lot more ways we can utilize that forage, if you will, be it in weaned calves or retained calves or in stocker cattle. Producers need to be evaluating those opportunities or planning for them if it's a matter of waiting until the drought breaks and then it's really going to come down to how do you optimize the value of the forage you produce in a world where that forage is worth more?
Peel says producers need to put pencil to paper to be certain, but this year appears to favor grazing out over harvesting a wheat crop in some areas.
"If there's any wheat out there to graze out, I think the graze-out value is going to be pretty high. Again, that forage has a lot of value, absolutely. If you look at the market today, the most valuable 200 pounds you can put on a feeder animal are from 600- or 650 pounds up to about 850 pounds. So, if you've got those animals out there and you've got the opportunity to take them up to those bigger weights than we have been able to do historically, that's where the value is right now."
In the long-term, Peel says there are some concerns about the health of the beef industry and its future in this country, but demand for beef is solid.
"The issues right now are really all related to the production side, as far as I can see. It's the drought across the country. It's the challenges of trying to produce something. I think the market itself is very limited by supply. There's tremendous opportunity in this market in terms of the value of forage in particular, but export markets have lots of potential. There's tremendous opportunity, if we can just produce something.
"And, so, I think most producers are struggling right now with producing something. If you can produce something and have something to sell, it's going to sell pretty well. I don't think marketing is going to be a big challenge. I think it's all about production challenges."
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