Second wave of ‘mad cow’ impact expected

The effects of the BSE (mad cow disease) situation initially were felt in the feedlot sector. The cow-calf and stocker industry will feel the second wave of effects when the run of fall stocker sales begins.
Currently, fed cattle are backing up in the system, causing a shortage of space, feed, and money in the feedlot industry. The situation must improve before feedlot producers are able to buy calves or stockers this fall.
Markets may be considerably depressed, delayed, or absent this fall. This means you need to be looking at your options now so that, come fall, you will be in a position to make informed choices.
The average market may be well below the Cost of Production (COP) for many producers. Make sure you know your own COP and use it as a base for your decisions.
Anything you can do over the next few months to lower your COP may help offset a lower return this fall.
If you decide to sell, do whatever you can to make your calves more attractive to the buyer. This includes verifiable documentation of herd health, tagging, and vaccination.
Make sure your programs match what the buyers want. Feedlots may be very selective—give them no opportunity to discount your calves.
If your calculations show your sale income will not meet your financial obligations, now is the time to discuss your credit needs and make arrangements with your financial institution.
The markets may run much later than we are used to. Until the feedlots can move cattle out, they can’t look at refilling. It’s possible the big run might not happen until late fall. That means you may be holding cattle that you normally would just take off grass and ship.
Such a scenario will require a number of adjustments. First, you will need additional feed. Consider purchasing or harvesting extra forage and feedgrains now, or when they are in abundance.
Housing requirements also will come into the picture. Younger cattle will require better shelter than older cattle. Cash flow will be restricted and changes in feed and housing will come at a cost.
If this will cause extra credit requirements, talk to your financial institution now.
If you are dealing with a class of cattle with which you have no experience, revised management and health programs will be necessary. Consult with your veterinarian early to develop health programs that may prevent a health wreck come fall.
Due to the border closure and subsequent market interruption, and with continued restrictions on live animal trade, it’s quite possible that some producers will not be able to market their calves.
You will need to plan for holding calves or for arranging a custom feeding situation if this happens. Look at possible contracts and feeding yards well in advance of when you would need them.
Consider financing that will be required and discuss this with your lenders well in advance.
While none of these possibilities may be very appealing, it will be better to consider your options now and, if possible, make arrangements that will give you some control over your choices this fall.

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