OPTIMISTIC OUTLOOK Cattle Business Looks Brighter Moving into 2022 from Biozyme Incorporated
For cattle producers looking for a little good news in the future, look no further than the first part of 2022. Although challenges will exist – drought, cost of gain, labor shortages – enough changes are happening to help, especially those in the stocker sector. Derrell Peel, Endowed Professor of Agricultural Economics at Oklahoma State University, recently offered his perspective on the big picture of the beef industry as a whole before addressing more specific topics on the stocker and feedlot side. Cow herd size is shrinking after a cyclical expansion that peaked in 2019, with the height of the calf crop coming in 2018. The combination of timelines in the beef cattle industry with all that has happened the last 18 months with COVID and the pandemic, feedlot numbers didn’t really peak until early in 2021. However, now due to lower supplies and heightened demands, all segments of the beef cattle industry should experience higher prices moving into 2022. “The supply side is supporting the market and will continue to support the market in 2022. Part of the optimism is coming from the supply fundamentals,” Peel said. “Beef demand has been very good across wholesale, grocery stores, retail, even with disruptions. Exports will set new records in 2021. Even with two months left to report this year, we are well on the way to beat the old record that was set in 2018.” The Stocker Segment What does all of this mean for those who run stockers and background calves? According to Peel, they Utah Cattleman Seedstock Edition 50
are going to have ample opportunities to feed calves and realize added profit potential. With grain, especially corn, prices higher at least through harvest in 2022, the feedlots are experiencing higher costs of gain, and looking to buy calves at heavier weights than normal, meaning fewer days on feed. “That affects price relationships across feeder cattle. If feedlots want bigger cattle, someone has to put that weight on them before they go to the feedlot, and that is the stocker sector. So, with high feed prices and high feedlot cost of gain, that increases incentives for stocker production in general, and we have certainly seen that,” Peel said. “The value of gain on 500-600 pound to 800-pound calves is elevated. Generally, stocker producers are looking at some good opportunities, and the futures market has optimism built into it.” Although Peel said many feed yards might want to buy stocker calves at heavier weights to keep their cost of gains to a minimum, he iterated that feed yards also run feed mills, so they also need to keep a steady supply of calves on hand. Therefore, he projects there will be a divide in the number of feeders who do buy at heavier weights and those who buy at more traditional weights. However, for those who do buy at heavier weights, the stocker segment offers great versatility in how they put gain on those calves. With a delayed wheat planting and then continued drought in the southern plains, Peel said that calves that are traditionally grazed on wheat pasture through the early part of the year will likely need ...CONTINUED ON PAGE 52 VOLUME 8
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FEBRUARY 2022
