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| Feed costs play role in herd improvement game |
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| It’s the biggest annual cost item in the cattle business, and it’s getting even bigger. Ding-ding-ding, “What is feed?”
That’s right. If you don’t keep a lid on it, profitability of your entire cowherd will be in Jeopardy. Cattle for $100. The main ingredient in many cattle rations, this grain is also the staple of all those ethanol production plants that are popping up like mushrooms. Ding-ding-ding, “What is corn?”
Right again. Oh, you want, “Cattle for $200?” It’s the “Daily Double,” and you’ll wager everything. Fewer soybean, sorghum, wheat and hay acres, higher land prices and more ethanol by-products in cattle feed…”What happens when corn prices double?”
Close enough. But that’s only the beginning of an economic chain reaction. With its growing infrastructure and links to the multi-trillion dollar oil industry, ethanol’s effects will be far-reaching. Even if tax policy changes, that train has enough momentum and critical mass to keep on rolling. Not only your herd, but the entire beef industry could be in jeopardy.
Oh Alex, enough drama. If The Price is Right, we can trust producers to do the right thing. Look at the difference in boxed beef values between USDA Choice and Select beef. Is it $6, $12 or $18 per cwt.? Most observers see
it widening past $20 again. So, of course, producers will respond by generating more cattle that grade “Choice” and higher.
Time for some reality ranching. Most producers pay no attention to the Choice-Select spread, because they sell calves at weaning.
But each rancher’s Wheel of Fortune can lead to unintended crimes against beef quality. When the wheel isn’t kind to a producer, he may not have enough money to buy a vowel, let alone $4 bushel corn. He |
| 4/18/2007 |
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