Growing cattle inventories mean more stocker opportunities

Wednesday, October 18, 2017

As of mid-October, calf and stocker cattle prices are down only about 2 percent from August, compared to the typical drop of 4 percent, while Oklahoma auction volume has been 11 percent higher year-over-year for the past six weeks.

All indications point to strong stocker demand despite large calf supplies, said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

“It appears that abundant supplies of other forages have permitted stocker purchases despite delays in wheat pasture this fall,” he said. “Fall armyworms have either damaged early-planted wheat or have prompted delays in wheat planting to reduce the risk of damage. Nevertheless, it seems that significant numbers of stockers are waiting in the wings on other forages until wheat pasture is ready.”

Big feeder cattle – animals weighing more than 700 pounds – have not only failed to decline seasonally but have increased thus far this fall. Current prices for heavy feeders are about 8 percent above August levels.

“Strong feedlot demand for bigger yearlings is more than offsetting increased feeder cattle supplies,” Peel said. “Feedlots continue to have an incentive to place and feed cattle and, with bigger feeder supplies, to focus more on yearlings than calves at this time.”

Feedlot operators have the ability to be more selective about the kind of cattle they want to feed and the resulting demand for yearlings relative to middleweight feeders produces a more pronounced stocker signal in the form of a higher value of gain.

“It’s typical this time of year to see middleweight feeder price weaken relative to heavy feeders but the tendency is even more evident with larger feeder cattle supplies,” Peel said.

The stocker industry provides a number of production and marketing values for the cattle industry. It adds value to calves by assembling dispersed calf supplies into larger lots; sorting for uniformity; adding weight and age to feeder cattle, thereby improving health; and moving cattle closer to ultimate feedlot demand in the middle of the country.

As a general rule, the stocker industry provides flexibility in cattle production with more or less forage-based gains compared to grain-based gains in the feedlot as relative feed and forage values change.

“One of the most important roles of the stocker industry is to balance the flow of cattle into feedlots against the flow of calves coming from the cow-calf sector, both seasonally as well as across years,” Peel said. “This shock absorber function is more critical when cattle numbers are growing.”

Feedlot preferences to “buy pounds” in the form of heavy feeders rather than placing lighter feeders and adding more weight per animal in the feedlot necessarily translates into a signal for stocker producers to provide that additional weight gain on feeder cattle.

“As stocker producers respond to these signals, they are not only adding weight to feeder cattle but are spreading out feeder supplies over time,” Peel said. “Larger cattle supplies allow feedlots to focus more on feeding yearlings and that, in turn, provides more opportunities for stocker producers to profitably add weight to calves to meet that feedlot demand.”

Oklahoma ranks fifth nationally in total number of cattle and calves produced, according to USDA National Agriculture Statistics Service data. The state also ranks fourth nationally in the number of cows and third nationally in terms of calves produced.

The Oklahoma Cooperative Extension Service is one of two state agencies administered by OSU’s Division of Agricultural Sciences and Natural Resources, and a key part of the university’s state and federally mandated teaching, research and Extension land-grant mission.