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By Lana Robinson
Field Editor
Strong prices for calves and feeders, available forage, inexpensive feed costs and slightly weakening calf prices, compared to improving feeder cattle prices, have some producers thinking about retained ownership this fall.
"The situation has some producers sitting on a fairly good quality calf asking, `How can I capture more of this value-added, closer-to-the-consumer price?'" said Dr. Joe Pena, Extension economist at Uvalde, in a recent interview with Texas Farm Bureau Network Director Curt Lancaster.
Whether or not it will work for you depends on your financial conditions and where you're going with those calves for the stocker phase, said Pena.
"Obviously, if you've got fall calving, you've got to get those calves off their mothers, and wean them, and do something with them. If you could bargain with somebody who has some good small grains, ryegrass or something like that to carry them into the winter, you could make a few more dollars," Pena suggested.
While current market prices appear to indicate that retained ownership enterprises may be profitable, price roll-backs of 10-15 cents per pound between current calf prices and next spring's price forecast for feeder cattle and the risk that prices may weaken increases the risk for retained ownership enterprises, the economist noted.
"The situation could change very dramatically. Already the calf prices have dropped a bit because of the season lows. Feedlots want to reduce their risk. And if the ban on Canadian beef imports opens up, which it is likely to do after the elections are settled in November, that means the Canadians will bring in more feeders, creating more supply," Pena explained.
While U.S. consumer beef demand appears to remain strong, Pena said it also appears stalled from further gains.
"So there's a market risk associated with retaining those good calves," he said. "But if you do your planning right—a lot of yellow pad calculations—I think you will do well, and you can make some money. But if you go in semi-blind, and don't have the right kind of calves, and the right kind of pasture, they're not going to gain as well. You may put at risk a whole lot of value. If you do it right, you can make $75 or $80 more per head for a three-, four- or five-month investment."
