U.S. Stocker Cattle Production
08/19/2009 11:16AM
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The total demand for feeder cattle stems from two sources: (1) demand for cattle to place on pasture and (2) demand for cattle to place in feedlots for finishing. These demands are seasonal, with pasture demand being heaviest in the spring as pastures begin growing, and in the fall, as wheat pasture becomes available. Calves that have been weaned and are intended for sale as commercial feeder cattle, but that have not yet been placed in the feedlot, are commonly referred to as stocker cattle. Immediate demand for stocker cattle is largely determined by forage availability and stocker and feeder cattle prices.
Stocker cattle production is an economically viable enterprise characterized by inexpensive weight gain relative to the cow-calf and finishing phases of beef production. Stockers typically weigh between 300 and 800 lbs. “Stockering” calves chiefly serves to increase their weight, and in many cases, quality, while often offsetting seasonal cattle price volatility. More importance is placed on animal growth versus fattening to achieve animal weight gains, and forage-based production systems are emphasized instead of high-grain, fattening rations.
Production occurs under a diverse array of production strategies and systems, yet profitability in the stocker operation typically stems from two major sources: (1) cattle management and upgrading of cattle quality and (2) strategic marketing of cattle and speculation by holding cattle over time. Feeding costs are often high enough that stocker producers face relatively narrow profit margins, often exposing them to more market risk because of typical pricing patterns where prices per unit (e.g., per pound or cwt) typically decrease as weights increase.
Several production possibilities exist for stockers. Most calves go through a post weaning growing program in which they are stockered until reaching weights suitable for placement in feedlots on finishing rations. Stocker programs can involve feeding calves growing rations either in “backgrounding” dry lots or small pastures, or placing them on pastures where they are grazed prior to feedlot placement. After weaning, some calves may go directly into feedlots where they are fed intensively until they reach slaughter weight and are marketed. This strategy is more common when grain prices are relatively low, since the feeding period can extend over 8-10 months. A cow-calf operator may also choose to add value to weaned calves by pursuing a post-weaning growing strategy. Ownership of cattle may be retained into, or in some cases even beyond, the finishing stage. At times, feedlots may hold full ownership of stockers in a preliminary phase before feeding.
Beef cattle producers may also choose to engage in stocker production as an independent commercial enterprise, buying calves after weaning and later selling them at heavier weights to cattle feeders for placement in feedlots. Value is added to light or poorly managed feeder cattle by emphasizing animal health and by upgrading cattle quality and performance. The quality of feeder cattle is improved when the weight they gain makes them appear more attractive to prospective buyers or when they can be sorted and sold in more uniform groups.
Cattle prices generally move in tandem, with events affecting one end of the pricing spectrum generally affecting all feeder cattle prices to some extent. However, seasonal factors have a strong effect on relative prices among cattle weight groups. Demand for lighter cattle is predominantly to stock pastures, and demand for heavier cattle is for placement in feedlots for finishing. Lighter weight feeder cattle typically sell for a higher price per hundred weight (cwt) than heavier feeder cattle due to the lower cost of weight gain when the cattle are on pasture. When grain prices are high, heavier cattle can sell at higher prices per cwt than lighter cattle, as it takes less total grain to achieve the finished weight. When the dominant demand for calves is for lighter weight animals to stock pastures, prices for lighter weight calves will be relatively higher than prices for heavier calves. Demand for lighter calves is strongest in November when wheat pasture is available for grazing and in May when summer pastures begin to grow.
Cattle prices generally move in tandem, with events affecting one end of the pricing spectrum generally affecting all feeder cattle prices to some extent. However, seasonal factors have a strong effect on relative prices among cattle weight groups. Demand for lighter cattle is predominantly to stock pastures, and demand for heavier cattle is for placement in feedlots for finishing. Lighter weight feeder cattle typically sell for a higher price per hundred weight (cwt) than heavier feeder cattle due to the lower cost of weight gain when the cattle are on pasture. When grain prices are high, heavier cattle can sell at higher prices per cwt than lighter cattle, as it takes less total grain to achieve the finished weight. When the dominant demand for calves is for lighter weight animals to stock pastures, prices for lighter weight calves will be relatively higher than prices for heavier calves. Demand for lighter calves is strongest in November when wheat pasture is available for grazing and in May when summer pastures begin to grow.
Stocker cattle are typically grazed either seasonally or year-round, depending on regional variations in forages across the United States. Cattle may be grazed throughout the summer (season-long), while others are double-stocked, or placed in pastures at twice the stocking density, and removed from summer pasture midseason (intensive-early). Winter production systems typically employ either perennial cool season forages or annual cool season forages, such as small grains pasture. The wheat-stocker enterprise is a common annual cool season production system. Stockers may also be completely confined and fed a growing ration that is often dominated by harvested forages. Mineral, protein, and/or energy supplementation is generally practiced, depending on forage conditions and the
production system. Year-over-year seasonal patterns of feeder cattle numbers outside feedlots are nearly constant and demonstrate the seasonal nature of stocker production. In late spring, the number of feeder cattle outside feedlots is at a minimum, since most have recently been removed from small grains pastures and placed in feedlots for finishing. In mid-summer, when there is an ample forage supply, the number of cattle on pastures is at a maximum. The supply of feeders outside feedlots in July has averaged just under 40 million head for the last 10 years, nearly double the April level. The July inventories include fall calves from the year before, the current year’s spring calves, cattle that may have been considered too light to go to feedyards after removal from wheat or other cool season pastures, and other miscellaneous categories of feeder cattle.
Since important motivations for stocker production are often to upgrade animal quality and to increase performance, long-term stocker production will be contingent, in part, on the management practices of cow-calf producers. As long as inefficiencies exist in cow-calf operations, stocker-feeder price margins are profitable, and relatively inexpensive cattle weight gain can be achieved from available forages, stocker production will remain strong and viable in the United States.