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Published January 28, 2013, 10:06 AM

Optimism

Cattle feeders looking up despite economic uncertainty.

By: Mikkel Pates, Agweek

PIPESTONE, Minn. — With drought-wary corn prices exceeding $7 a bushel, economists are watching to see how the beef industry will react.

With optimism, predicts Jerry Reisch of Luverne, Minn. He saw some of that optimism at his special annual sale at the Pipestone (Minn.) Livestock Auction on Jan. 7.

Reisch has held the sale on the first Monday of January every year for about 25 years. He formerly held the sale at his smaller Luverne Livestock Auction Co., about 24 miles south, but Brian Schneider, owner of Pipestone Livestock, has invited him up to Pipestone to hold the sale for the past three years. Reisch is involved in all of the Pipestone sales, overseeing feeder cattle, fats and cows.

Consignors for Reisch’s special sale came from about a 50- to 100-mile radius of Pipestone.

“The same people sell here every year after the first of the year,” Reisch says. “We’ve got a good market. We promote ourselves and we do a good job of selling a producer’s cattle for them. We’re getting more and more every year.”

Feeder prices strong

Not long ago, a 500-pound steer brought $150 per hundredweight (cwt.), and now they’re bringing up to $180 per cwt., Reisch says. There’s an abundance of 650- to 800-pound cattle. Lightweight cattle would be of interest to producers looking to background-feed or grass-feed.

The cost of inputs doesn’t seem to put a damper on the feeder cattle market, Reisch says. “They want to buy them,” he says. .“Feeders look high. There’s a lot of optimism. Cattle feeders are eternal optimists, you know.”

Reisch’s early January sale had 65 consigners, selling 3,030 head — the most he’d ever had for that sale. On Jan. 10, Schneider had another 103 consigners and 1,448 on a regular feeder sale. Schneider and Pipestone Livestock sell slaughter hogs and slaughter cattle every Tuesday. On the second and fourth Thursday of every month, he’ll sell stock cows and feeders.

Among the 3,000 consignments, about 185 were Reisch’s own cattle, custom-fed in feedlots around the region, he says. He normally doesn’t sell cattle as feeders, but takes them to marketweight.

“I got $149.75 (per hundredweight) for steers weighing an average of 864 pounds,” Reisch says. “When they’re worth that much, it seems better to sell them.”

Cow-calf, feeder area

Southwest Minnesota is home to a number of cow-calf producers, as well as numerous feedlots. Schneider thinks typical beef cow operations are 50 to 100 cows. Hog operations are big and dairies are big.

“All I know is that in the past year, we’ve done more in terms of numbers than we ever have,” Schneider says. About five years ago, he invested in updating his auction facility. He’s planning to revamp the corrals to make the cattle flow better.

“Maybe we’re just getting a bigger area, I don’t know. Last year was the best year we ever had and this year looks like it’s going to be bigger.” He says total livestock numbers were up 10 percent in 2012.

The Pipestone market sells slaughter hogs for anyone who brings them in, every Tuesday at 8 a.m. “We sell 600 to 1,000 every week,” he says. “A lot of them are sows, cull hogs, whatever.” Three main buyers for hogs acquire them for three or four slaughter customers each, so they’re representing about 12 to 14 destinations. It’s the same story for the cattle.

Schneider says older cattle feeders may quit feeding because of drought concerns and once they do, they probably won’t re-start.

“There are some people that expand and get bigger, but there’s less young guys in agriculture than there used to be. So it seems like you deal with less people, but the people who are in the business are bigger.”

The fat market has been poor for the past six months, Reisch says. Lately, he figures he’s been losing $150 to $300 a head on market-ready cattle.

“I sell cattle fat cattle every week of the year,” Reisch says, calling that a built-in hedge.

Since the Jan. 7 sale, Reisch has been accumulating cattle for his custom yards. He recently bought 400- to 500-pound cattle in eastern Minnesota for feedlot placement.

Depending on the time of year, he feeds 5,000 to 10,000 at numerous locations in Minnesota, Nebraska, Iowa and Colorado. “The cattle feeding business is not for the weak at heart,” Reisch says, smiling. “You’ve got to take the ups and downs.”

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