According to Cattle-Fax’s Randy Blach, the cattle cycle as we have known it is on life support.

RENO, Nev. (Feb. 6) — During a Wednesday morning session of the Cattlemen’s College in Reno, Nev., Cattle-Fax Executive Vice President Randy Blach said the most often asked question he hears is, “Do we still have a cattle cycle?” Blach and fellow market analysts discussed some of the reasons why cattle markets have strayed from their usual patterns. Also offered were suggestions for improving profitability under current and future industry conditions.

“I think it’s safe to say the cattle cycle we’ve grown up with is on life support,” Blach stated. “The present [government] farm policy, food policy and energy policy don’t support the cattle cycle.”

A couple of years ago, the U.S. cattle tally was low enough that analysts expected producers to start retaining more females to rebuild the national herd. It hasn’t happened, Blach said, due to several factors. Weather was a significant reason with drought affecting large portions of cow country, creating shortages of grazed and harvested forage. Land values have climbed higher, with grazing land values in many areas increasing more than 100% during recent years.

Ethanol production, encouraged by government mandates and production subsidies, has shifted corn utilization from feed to fuel. Increasing amounts of land formerly in pasture or hay production is now

Producers who will be able to cope with the current situation are those who can maximize price while minimizing production cost, said Colorado Stae University's Tom Field, who also addressed attendees of the Stair Steps to Profitability" Cattlemen's College session.

being planted to corn. Additionally, some grazing lands are being claimed by alternative uses such as recreation, wind farms and urban sprawl.

It all sets the stage for high grain and forage prices, and until some of these things change, Blach said, the cattle cycle won’t work. To remain profitable, he added, producers will have to find a way to cope. According to Colorado State University (CSU) animal scientist and Cattle-Fax consultant Tom Field, some producers are doing just that. He cited results of a survey indicating the most profitable producers excel at controlling costs and maximizing the prices received for their cattle.

Blach predicted higher grain prices are here to stay. Consequently, the feeder cattle market will favor heavier cattle that won’t have to be fed as long as lighter calves. And that will be unfavorable for many producers selling calves at weaning. He advised producers to consider ways to own their calves longer to add weight and value.

Blach also recommend considering of practices by which producers can differentiate their cattle from average or commodity cattle. The stair steps to profitability he noted included creating a herd performance history, through collection of feedlot and carcass data, to attract buyers.

Blach called preconditioning a proven practice, noting how preconditioned weaned calves brought a $5- to $8-per-hundredweight premium to bawling calves. Additional steps for adding value to cattle include source- and age-verification and participation in process-verified programs (PVPs) or “natural” programs with potential for added premiums.

— by Troy Smith