Cattlemen suffering from rising feed prices
http://www.pntonline.com/news/rising_14089___artic [2008-7-2]
Tag : Cattle Feed
With the rising cost of corn and other grains, local cattle growersare struggling to stay afloat.
U.S. beef producers now spend a whopping 60-70 percent of theirproduction costs on Cattle Feed and are seeing that number risedaily as corn prices hover near an unprecedented $8 a bushel, upfrom about $4 a year ago.
“This is not sustainable. The cattle industry is going tohave to get smaller,” said James Herring, president and CEOof Amarillo, Texas-based Friona Industries, which buys 20 millionbushels of corn each year to Cattle Feed 550,000 cattle.
Corn prices were already rising before the Midwest floods, drivenup 80 percent over the past year as developing countries like Chinaand India scramble for grains to feed people and livestock. U.S.production of ethanol, an alternative fuel that can be made withcorn, has also pushed prices higher, prompting livestock owners tolobby Washington to roll back ethanol mandates.
Bob Sims, owner of Tri-State Cattle Feeders in Hereford, Texas,said he decided to sell his Cattle Feed yard last winter when costs startedovertaking profit.
Sims said his lot is one of the smaller operations, feeding amaximum of 15,000 cattle to get them up to size before they aresold to the meat packing plants.
“You can’t feed 14 dollars worth of corn to an animalthat brings a dollar,” he said. “I did not see itcoming. Not to this magnitude.”
Cattle losses can run more than $150 a head, he said, after thecosts of feeding.
“Something really outstanding’s got to happen ...there’ve got to be enough people out there to buy beef; towant it worse than they want it now,” he said.
A poor economy has dropped the value of beef while costs of feedinglivestock have risen, he said.
“I’m not trying to be a pessimist but I’ve beendoing this long enough that it’s something else to bet $100something a head ... It’s like playing craps.”
After more than 30 years in the business, Sims said selling is theonly thing that makes sense.
“I can’t answer the question for people that keep(feedlots) full. They’ve got a magic wand that I have not had... The best thing for me to do is quit,” the 70-year-oldsaid.
And it’s not just the feedyards that are suffering, said GailMorris, general manager of Bovina Feeders.
Livestock owners can’t get rid of their animals fast enoughbecause they don’t want to take the risk associated withfeeding them.
“Everybody’s hurting (because of) high feed ... peopleare trying to get rid of them quicker, trying to stop thelosses,” he said.
“The feeding end hasn’t made any money since about sixto eight months ago.”
Since the first of the year, Morris said the cost of feed has risenby $30 to $40 a ton, with corn nearly doubling.
“Customers are more interested in selling their feeders thanfeeding them — normally a producer will run his cattle onpasture and anymore he wants to sell them,” he said.“Consequently we’re losing customers and our numbersare going down (and we’re) also trying to manage all ourinput costs.”
Tim Foote, owner of Bouziden Cattle Company in Pleasant Hill, saidhe watches the futures market and hedges his herds, trying toreduce losses.
Just about everybody in the industry is feeling it, he said.
“It’s kind of hurt the farmers too because their inputcosts have gone up so much — fertilizer, water, diesel— then they’re locked in a process... they’vebeen having to put a lot of money into the cattle,” he said.
Foote, who’s been in the business almost 25 years, said hehas been grazing his cattle more.
“I don’t try to feed a lot of them. We feed cattle outhere but most of the ones we feed (out on pasture). I get themready, put them together and then sell them to thefeedyards,” he said.
Foote said when he does feed, he finds alternate sources of feedfor his cattle, using by products and pellet feed.
“Most of the cattle are out in the country on the pasturesand then they end up coming into the feedyards. Most ofthat’s going into bigger, larger entities that feed,”he said.
“Small guys like me are getting to be a thing of the past -(Most people) would normally feed more and take their profit now,then later. (But now) they sell them to somebody else and let themtake the risk and feed them.”
But it isn’t all dismal, Morris said. “If you’vegot enough equity you can ride it out — it just tries to makeyou a better buyer of feeders,” he said. “Cattle alwaysgoes in cycles. It’ll be down and hopefully you’re(still) around when it comes back up.”
With the rising cost of corn and other grains, local cattle growersare struggling to stay afloat.
U.S. beef producers now spend a whopping 60-70 percent of theirproduction costs on Cattle Feed and are seeing that number risedaily as corn prices hover near an unprecedented $8 a bushel, upfrom about $4 a year ago.
“This is not sustainable. The cattle industry is going tohave to get smaller,” said James Herring, president and CEOof Amarillo, Texas-based Friona Industries, which buys 20 millionbushels of corn each year to Cattle Feed 550,000 cattle.
Corn prices were already rising before the Midwest floods, drivenup 80 percent over the past year as developing countries like Chinaand India scramble for grains to feed people and livestock. U.S.production of ethanol, an alternative fuel that can be made withcorn, has also pushed prices higher, prompting livestock owners tolobby Washington to roll back ethanol mandates.
Bob Sims, owner of Tri-State Cattle Feeders in Hereford, Texas,said he decided to sell his Cattle Feed yard last winter when costs startedovertaking profit.
Sims said his lot is one of the smaller operations, feeding amaximum of 15,000 cattle to get them up to size before they aresold to the meat packing plants.
“You can’t feed 14 dollars worth of corn to an animalthat brings a dollar,” he said. “I did not see itcoming. Not to this magnitude.”
Cattle losses can run more than $150 a head, he said, after thecosts of feeding.
“Something really outstanding’s got to happen ...there’ve got to be enough people out there to buy beef; towant it worse than they want it now,” he said.
A poor economy has dropped the value of beef while costs of feedinglivestock have risen, he said.
“I’m not trying to be a pessimist but I’ve beendoing this long enough that it’s something else to bet $100something a head ... It’s like playing craps.”
After more than 30 years in the business, Sims said selling is theonly thing that makes sense.
“I can’t answer the question for people that keep(feedlots) full. They’ve got a magic wand that I have not had... The best thing for me to do is quit,” the 70-year-oldsaid.
And it’s not just the feedyards that are suffering, said GailMorris, general manager of Bovina Feeders.
Livestock owners can’t get rid of their animals fast enoughbecause they don’t want to take the risk associated withfeeding them.
“Everybody’s hurting (because of) high feed ... peopleare trying to get rid of them quicker, trying to stop thelosses,” he said.
“The feeding end hasn’t made any money since about sixto eight months ago.”
Since the first of the year, Morris said the cost of feed has risenby $30 to $40 a ton, with corn nearly doubling.
“Customers are more interested in selling their feeders thanfeeding them — normally a producer will run his cattle onpasture and anymore he wants to sell them,” he said.“Consequently we’re losing customers and our numbersare going down (and we’re) also trying to manage all ourinput costs.”
Tim Foote, owner of Bouziden Cattle Company in Pleasant Hill, saidhe watches the futures market and hedges his herds, trying toreduce losses.
Just about everybody in the industry is feeling it, he said.
“It’s kind of hurt the farmers too because their inputcosts have gone up so much — fertilizer, water, diesel— then they’re locked in a process... they’vebeen having to put a lot of money into the cattle,” he said.
Foote, who’s been in the business almost 25 years, said hehas been grazing his cattle more.
“I don’t try to feed a lot of them. We feed cattle outhere but most of the ones we feed (out on pasture). I get themready, put them together and then sell them to thefeedyards,” he said.
Foote said when he does feed, he finds alternate sources of feedfor his cattle, using by products and pellet feed.
“Most of the cattle are out in the country on the pasturesand then they end up coming into the feedyards. Most ofthat’s going into bigger, larger entities that feed,”he said.
“Small guys like me are getting to be a thing of the past -(Most people) would normally feed more and take their profit now,then later. (But now) they sell them to somebody else and let themtake the risk and feed them.”
But it isn’t all dismal, Morris said. “If you’vegot enough equity you can ride it out — it just tries to makeyou a better buyer of feeders,” he said. “Cattle alwaysgoes in cycles. It’ll be down and hopefully you’re(still) around when it comes back up.”
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