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Published October 07, 2013, 11:21 AM

Cattle industry shows signs of regrowth

Corn prices have come down and the cattle numbers have been coming down, so the prices have continued to rise through the summer and are edging higher into the fall.

By: Mikkel Pates, Agweek

BILLINGS, Mont. — Ty Thompson is cattle sale manager at Billings Livestock Commission, and is a coordinator of the Northern Livestock Video Auction — currently the largest-volume cattle auction in the state of Montana. The video auction is in the top three nationally.

Thompson, a 2009 World Livestock Auctioneer champion who also serves as an auctioneer at the market’s famous horse sales, says the cattle market has been “outstanding, as good as we could ask for.” Corn prices have come down and the cattle numbers have been coming down, so the prices have continued to rise through the summer and are edging higher into the fall.

“The fat cattle market hasn’t changed a lot but the feeder cattle market has raised due to the hopes for cheaper feed costs,” Thompson says. “The bred female deal has really turned around. We’ve gotten a lot of hay around us in the northern part of the country and they’re getting a lot more rain in the southern part of the country. And we already had a lot less heifer retention to begin with. We’ve also got a lot of green regrowth in the northern country with the fall rains.”

On the company’s summer video sales, the calves in the 400-pound size range were up to $2.25 to 2.35 a pound. They had 500-pound range steer calves at $1.85 to $2 a pound and a lot of the 600-pound range calves were at $1.65 to $1.75, and even $1.80 per pound.

Amazing resilience

“I’d say it’s amazing the resilience of the cattle feeding sector to give that much for cattle on the heels of losses that they took last year,” Thompson says. “The cattle actually do ‘pencil’ better now with tight supplies and the hopes of lower feed. But we still need to get the corn crop in the bin and the feed in the bed. The only risk would be a risk of a freeze on the corn crop. There is an abundance of roughage which we did not have last year.”

On the futures market, cattle producers have been able to hedge feed inputs cheaply enough so that it makes sense to buy the feeder cattle at the higher levels.

The Billings area and Montana in general was in dire straits earlier in the summer because of drought fears. “We got some very timely rains in May and early June and some areas got tremendous amounts of rains to the point where we have a lot more forage and roughage around us to the point where the bred cattle market will be very good and very strong. People who had to sell down on replacement heifers, older cows, later ‘calvers,’ really culled down on their herds. If we had even just a normal type of year (weather-wise), I don’t think we’ll see lots of cows coming to town.”

There hasn’t been much rebuilding of the herd. “We will start to see that if the weather cooperates with us, we’ll definitely see some herd expansion with the price of these feeder cattle. It makes it more economically viable to do so,” Thompson says.

The cattle auction runs 105,000 to 115,000 cattle a year, depending on the year. To compare, the video auction handles about 250,000 a year in four summer sales and one in January. The video sales take a lot less labor on the ground and in the yards.

Video auction action

“We have a lot of representatives who work with us who do a lot of the leg work,” Thompson says. The representatives solicit the cattle and film them. The films come into Billings where they are edited. They put out a cattle catalogue and the films go on the Internet. They beam it all up on Dish Network’s “Sale Day” program. They sell the cattle and then send contracts to both buyers and sellers who take it from there.

“It’s basically, forward-contracting using the auction method,” as Thompson describes it. “The producers really like it and farmer-feeders like it for purchasing. They can buy something and know the exact date it’s coming. They can get prepared.”

The Goggins family took over ownership of Billings Livestock about 11 years ago and has more than doubled its numbers since that date. That’s when the company started the video auction. Pat Goggins initiated a video auction in the 1970s.

“We kind of took a regionalized approach — specializing in more of these northern type cattle: North Dakota, Montana, and Wyoming as mainstays, but also in Nebraska, South Dakota and Idaho, Thompson says. “We handle a national buyer base with a local management team.” Billings Livestock claims pioneer predecessor companies dating to 1934, starting with a horse and mule auction and later adding cows and bulls. The Pat Goggins family bought the facility in 1984, sold it to Jack McGuinness and repurchased it in 2003.

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