Drought and the Cattle Cycle - What It Means For Cow Culling and Calf Sales

With drought reduced feed supplies staring everyone in the face, many cattlemen who haven't already will soon have to make some tough choices on what to keep and what to fold. Here's my top 6 sale barn choices for commercial cattlemen faced with limited feed supplies. Unlike Letterman, lets start with number 1 and work our way down.

(1) Old and/or Unproductive Cows - No need to give a reason here but woe-be to the cattleman who can't identify these cows in the herd!

(2) Steer and Bull Calves - Faced with limited feed supplies this is not the year to hold on to steer calves much, if any, past weaning. Before the drought and recent drop in calf prices this didn't shape up as much of a year to stocker calves, but those with feed or pasture may have a shot at picking up some calves on the current weak market and holding into late winter or early next spring when I expect prices to at least equal their 1997 price levels. Still, if I've got to choose between a mama and her calf based on the long therm outlook - the calf goes.

(3) Heifer Calves - Same reason as above except heifers provide better sotcker return potential than steers. The reason is that heifer discounts (relative to steers) become smaller at heavier weights. With the possibility for some replacement premiums showing up in 1999, this makes the rational for rolling the steers before the heifers even stronger.

(4) Older Productive Cows - If she's got fewer calves in her I'd rather have the bred heifer with (hopefully) better genetic potential.

(5) Bred Heifers - See number four.

(6) Young Productive Cows - It is this group of cows which has the most profit potential in the herd. If this price cycle progresses as past - and guess what, to date it has - 1999 and 2000 give us the best possibility for moving into a higher price level. We'll have 3 to 4 years of liquidation behind us, and as soon as some reason for optimism shows its face, the cattle market could jump fast. The only way to be able to catch the wave will be with a productive cow herd putting as many calves as possible on the ground during the good times.

One other though on the feed situation--Grain and soybean meal prices look to be significantly lower than last year as the weight of a large crop in the Midwest looks more and more likely. This will eventually help the feeder calf market, but that's not the point. Cotton, on the other hand, has been more affected by the Southern drought. Bottom line, come this fall, cotton seed may be more expensive as a supplemental feed than the equivalent of grain and meal. Watch what you buy based on this year's prices and not on tradition.

(John McKissick, Professor and Extension Economist - Livestock, The University of Georgia)

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