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Risk in cattle production

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As a beef producer, you invest time and money in a project, either a cow/calf pair or steer production and run into risk by the time the product is finalized. Risk is any factor that can potentially make you lose money in a particular project. In a recent publication from Texas AgriLife Extension related to stress, Nykole Kafka indicated that farming and ranching can be stressful professions, and that stress can have a multidimensional effect on a person. There are numerous uncontrollable factors, such as unpredictable weather, unfortunate equipment breakdowns, time limitations, and economic markets that cause stress in the lives of farm families. Stress is a physical response to perceived life-threatening events. Each person responds differently to stress, but some common symptoms of chronic stress include changes in a person’s sleep patterns, fluctuation in a person’s weight, fatigue, restlessness, and physical health conditions such as headaches, ulcers, or high blood pressure. Besides the physical effects, stress can also hinder interpersonal relationships at work and home.  Chronic and uncontrolled stress can be harmful to your health and well-being. Many of the stress caused by ranching is risk. There is a chance that an animal can die for any particular reason. There is also a chance that a crop can suffer and not produce as expected. All those factors and many others increase risk and stress as a consequence. It is important to learn how to control stress because stress is not good for you. One way to reduce stress is to reduce risk. Risk reduction in beef production can be very complicated, mainly because we, as producers, benefit from running that risk. If we make a crop when other farmers fail our crop will probably have more value. One of the factors affecting the beef industry is price. One of the top issues discussed often in beef producer meetings has been the price of beef. To get a better understanding of what lies ahead with regards to pricing and availability, Dr. David Anderson, AgriLife Extension livestock economist, gave an outlook on the livestock markets for 2015 during a recent meeting in College Station. Anderson said beef cattle prices are expected to remain on the upside (higher) as cattle producers continue to rebuild herds following drought of 2011. He said beef cattle inventories are at levels not seen since the 1950s and that herd expansion is a slow process.

“We’ve got the fewest cattle in decades, and that’s going to stay with us,” Anderson said. “It’s going to get even tighter as producers attempt to expand.”

Overall, Anderson said, trends in the market for 2015 are tight supplies of fed cattle and cows, but expansion is underway.

“We are looking at a couple of years before production increases,” he said. “You are looking at a longer time period for heifer production. The expansion is underway, which is going to take a couple of years for those heifers to mature and have calves. When you talk to rancher audiences, they really like this as it will keep prices high. Overall, there are two ways we are going to expand: We’ve got to quit killing cows and start holding back heifers.” Anderson said in 2015 it’s likely there will be less beef production as cattle producers expand herds.

“As we hold more heifers back and turn them into cows having calves, that’s even less beef production. I think in 2015 we will have a few more cows than we did this year and in 2016 even more cows. But big droughts in big production areas of cows would hold us back further and keep us from being able to expand.”Weekly prices for wholesale boneless, 90-percent lean beef have been priced at $3 per pound or $300 per hundredweight.

“There’s not much relief in sight with tight supplies of cattle,” Anderson said. “That’s coupled with slaughter steer prices of $1.72 per pound or $172 per hundredweight. We produce 23 billion pounds of beef here in the U.S. It would take 26 billion of pounds to get prices down to $210 per hundredweight or $2.10 per pound for fresh 90-percent lean weekly prices.”

NorthEast Texas Cattleman’s Conference, January 28, 2015 Winnsboro City Auditorium.Organized by Wood, Rains, Titus, Camp, Upshur, Delta/Frankin and Van Zandt Counties. Registration starts at 7:45 AM. Registration cost:$20 lunch included. 3 CEU’s for private applications. Register by caking the Hopkins County Extension Office at 903-885-3443.

Mario Villarino DVM, Ph.D.
Hopkins County Extension Agent for Ag and NR
1200B Houston Street
Sulphur Springs, Texas 75482

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