Feeder Cattle Adjust to Limited Fed Cattle Opportunities and Higher Feeding Costs

May 14, 2021

By Stephen R. Koontz

Futures price for most the live cattle and feeder cattle contract have shown substantial weakness through much of April 2021. Optimism from late in the winter and early in the spring is being replaced by realism that it is going to take another 2-3 months to work through the large front-loaded fed animal inventories, that fed animal slaughter is at capacity, and that costs of gain are now substantially higher than the past several years. Futures prices now reflect more the conditions that the underlaying cash market has been showing since the beginning of the year. The cash market has been much less optimistic than the futures market – although the futures have changed over the prior month.

Fed cattle slaughter has been persistently high for much of the year and Saturday slaughter has been routinely over 60 thousand head. Combined fed steer and heifer slaughter has been just short of 525 thousand head per week. And it is likely that this is a reasonable maximum that the packing industry can process. Packer margins are strong but there is little incentive to pay more for fed cattle when plants are operating six days per week. There is little to no possibility to process more cattle regardless of the incentive to do so. There are a lot of historical relationships that are irrelevant when the packing industry is essentially at capacity. Market-ready inventories need to be reduced. This appears to be happening in that the last Cattle on Feed report communicated drops in both cattle on feed over 120 and 150 days. But supplies will likely be abundant into late summer.

The other market event complicating feeder cattle and calf market outlook is the substantial rally in feed prices. The corn futures market increased $2 per bushel between August of last year and mid-January. The July contract held steady at about $5.25 until the Prospective Planting report surprises. Since the end of March, the contract has increased an additional $1.50. This market is clearly rationing old crop among users of corn. The formula cost of gain for cattle this summer is well above $1 per pound. The feeding margin between OCT live, JUL corn, and MAY feeders is breakeven – the details depending on the basis. If live cattle have little upside and the corn market continues to ration old crop, then it is feeder cattle that have to adjust. While margin calls are uncomfortable, forward pricing in a rallying spring feeder cattle market again proves to be a smart perspective.

Source : osu.edu

Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”