Profi t Trends by Industry Segment During the 4 Phases of the Cattle Cycle Cow/Calf Stocker
(1) Up Cycle
(2) Downward Transition (3) Down Cycle
(4) Upward Transition Source: CattleFax
Signifi cant Profi ts
Declining Profi tability Signifi cant Losses
Improving Profi tability
profi t trends for each sector of the cattle industry during each phase of the cycle. “With cow numbers continuing
to decline and prices remaining strong it would appear that now would be the time for producers to begin increasing their herd,” Ho- meyer says. “However, the drought conditions that have plagued Texas in recent years persist, resulting in less forage and lower-than-normal water supplies. These conditions along with higher costs of replace- ment heifers and inputs like supple- mental feed and hay have managers
Moderate Profi ts Signifi cant Losses
Feedlot
Moderate Profi ts Signifi cant Losses
Narrow/Negative Margins Narrow/Negative Margins Signifi cant Profi ts
Signifi cant Profi ts
taking a wait-and-see attitude.” While this situation may not be
ideal for retaining ownership, the situation will change, making the question of whether to retain own- ership cyclical as well. As producers revisit the question, it is important to consider all of the implications of their answers — both opportunities and challenges.
Benefi ts and challenges of retained ownership “Retained ownership provides
opportunities that selling calves in the fall doesn’t,” Homeyer says.
One of the biggest, but most often overlooked, benefi ts is that retaining ownership provides performance information directly to the person who is making genetic decisions for the cow herd, prompting improve- ments quickly, if necessary. “Producers can talk to feedlot
operators about the performance of their cattle in the lot, and the conversation may prompt them to make changes to the breeding program,” he says. “But when the cost of production, the slaughter price and the person controlling the breeding program are linked, the
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tscra.org November 2013 The Cattleman 47
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