Staying Current Is Key To Cattle Feeding Profits - Derrell Peel Explains

May 25, 2016

By Dr. Derrell Peel,

Oklahoma State University Extension Livestock Marketing Specialist

Cattle feedlots are continuing to see a quicker turnover rate as they market cattle more aggressively, and Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, says staying current could mean staying in the black moving forward.

“The supplies are there; the price relationships have adjusted - that’s a big key to that,” he says. “In fact we’re at the point now where from this point forward, feedlots can see some potential for positive margins.”

Peel says as long as the futures market continues to distant months relative to the current cash market, feedlots will have incentive to pull cattle forward.

“It keeps us caught up with numbers, which are going to continue to trend up, but also importantly, what’s it’s done is pull the carcass weights down over the last few months,” he says.

Peel says feedlots staying current helps the overall market balance itself.

“This industry in many ways, from top to bottom, I think now is sort of working historically the way we think it ought to work in some sense,” he says. “We’ve been through a lot of stuff the last couple of years where that simply wasn’t the case. For various reasons, the sectors just really didn’t seem to kind of in balance with each other.”

As herd numbers continue to increase, Peel says cow-calf producers can expect revenues to come down. He says that can be mitigated by reducing costs and managing margins.

When it comes to the stocker sector, Peel says current corn prices mean cheaper cost of gain.

“There’s not as much margin at the stocker level as there has been in the past, and stocker producers need to be aware of that,” he says. “Keep an eye on that corn market; that’s the one thing that could change that as we go through the year.”

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