Sunday, February 16, 1997
Cattle market in a strong recovery
By J.T. SMITH / Farm Editor
After a four-year slump in working out of an oversupply, the
cattle market is in a strong recovery cycle both nationally and
in the Abilene region.
Throughout the area, the cattle market has been a solid $10
per hundredweight or more higher than just two months ago and
far higher than in early 1996.
Randy Carson, president of Abilene Livestock Auction, said
although the better prices coupled with ample rain and snow will
mean far fewer cattle at his barn for the next several weeks,
he's thrilled for the area ranchers.
"I'm in the volume business as a livestock commission
barn," Carson noted.
"So I do a lot of volume when the weather is <I>dry<I>
and people have to get rid of their cattle."
But Carson would rather look at the big picture - what the
overall rebound in cattle prices and good moisture means to the
entire cattle industry.
"I would a whole lot rather sell their cattle when they
want to sell than when they have to," Carson said. "That's
good for everyone."
Liquidation brought price recovery sooner
The 1996 drought - especially in South Texas - resulted in
an overwhelmingliquidation of cattle.
Because so many of these were females that went to market,
the cow slaughter removed many reproductive animals from the overall
cattle herd. That, in turn, means far fewer calves will be born
this spring.
The recently released cattle inventory report from the Texas
Agricultural Statistics Service showed Texas with only 14.1 million
cattle as of January 1997 compared with 15 million cattle on hand
January 1996.
Roughly a million fewer cattle in the Texas inventory alone
didn't go unnoticed by the cattle market.
Abilene rancher Phil Guitar said that in addition to the multitudes
of reproductive cows that went to slaughter during the massive
liquidation in South Texas, many cows that escaped the slaughterhouse
still didn't get pregnant because they had such poor nutrition
during the drought.
"We received one load of South Texas cattle where less
than 50 percent of them calved," Guitar noted. "So there
were a lot of open cows in addition to the ones that went to market."
But now that South Texas has received several rains and their
moisture situation looks good, that creates an additional plus
for the Abilene area as cattlemen in South Texas look to rebuild
their herds with replacement females.
"I think you will see a lot of demand for our Abilene
area cattle," Guitar predicted.
Cattle experts and noted livestock economists had predicted
a strong recovery in 1998 since the cattle business is a cyclical
industry. The South Texas liquidation - in addition to major winter
blizzard problems in the Northwest cattle herds - simply brought
on the price recovery sooner.
Some wheat may be grazed for forage
If cattle prices strengthen in coming weeks, some of the wheat
in the Abilene area may be harvested by a cow instead of a combine.
Billy Vinson of Abilene said that when cattlemen and farmer-stockmen
put the pencil to it, grazing the wheat may be their best option,
rather than removing their cattle from wheat pasture in late February
or early March and letting the wheat produce grain for harvest.
"When cattle get the forage from wheat, that (weight)
gain is in the bag," said Vinson, a cattle raiser who serves
on the Texas Wheat Producers Board. "Wheat for grain harvest
purposes could be wiped out one day before harvest by one spring
hailstorm."
Vinson said ranchers who already had cattle on hand before
cattle prices started rising will be the most likely to graze
out their wheat.
He noted just how much cattle prices have changed.
"We bought some cattle in April and May of last year for
about 45 cents (per pound) and sold them just over a week ago
for 64 cents," Vinson said. "It's hard to beat that
... plus, we had the weight they had gained, too."
Guitar said Guitar Ranches will not graze out all their wheat
but will aim for grain harvest with some of their fields.
"We simply wouldn't have enough cattle for all our wheat
fields," Guitar said.
Guitar Ranches deals in cattle both ways. Guitar found out
how much prices had improved when trying to buy some Midwest cattle
recently.
"About two weeks ago, we were going to bid on some fancy
Angus heifers off a Nebraska ranch," Guitar said. "The
'cheap' end went for 97 cents per pound, while the top end brought
$1.02."
With a chuckle, Guitar said, "We didn't buy any that day
..."
In the Abilene area, lightweight stocker steers of top quality
also have broken the $1 mark in instances at several area auction
barns. Many stocker steers have fetched prices in the 90s. Helpful
weather
"This rain and snow are like the icing on the cake,"
Carson said.
B.C. Spraberry, a veteran Anson cattleman, was jubilant all
this past week.
"It truly was a million-dollar February rain and snow,"
Spraberry says.
As the weather warms up, Carson expects stocker cows, heifers
and cow-calf pairs to increase sharply in price.
The purebred and registered cattle operators also should feel
the benefits of the strong commercial cattle market.
"We've already sold heifers that are going to South Texas,"
said rancher Todd Johnson of Abilene.
Johnson agreed with Guitar that the South Texas situation clearly
has added extra regional demand for Abilene area cattle.
"Our Hereford sale in Fort Worth three weeks ago was better
than it has been in several years," Johnson said.
Johnson has witnessed an increased demand for British breeds
of cattle, such as Hereford and Angus, and the popular Hereford
and Angus cross. The English cattle are producing the type of
carcass that packing plants - and ultimately the retail stores
and consumers - demand.
"The bull (prices) haven't rebounded as much as other
cattle," Johnson said. "But that's because people who
already have bulls tend to hold on to them for a while."
People like good beef
In one year, McDonald's alone used 731 million pounds of U.S.
beef.
Besides demand by consumers in the United States, the taste
for good American beef is growing in nations with developing economies
like South Korea - now the third largest export market behind
only Japan and Canada.
And in addition to South Texas, Mexico will seek live cattle
to rebuild its drought-victimized herds.
So is cattle recovery for real?
After the rains, Guitar said he saw a lot of smiling ranchers
at the past week's annual Big Country Farm and Ranch Show in Abilene.
"Last year, I really didn't see any light at the end of
the tunnel," Guitar said. "But now I'm more optimistic
than I've been in more than two years."
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Abilene Reporter-News / Texnews / E.W. Scripps Publications
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