Feed yard manager says cattle are big business

By MONETTE TAYLOR | South Central Texas

January 3, 2002 -- "We have a highly liquid, mobile market in the cattle business, and there's a lot of investors and those are the folks that are taking a position on the cattle on any given day, seven days a week. You'll find someone to buy your cattle that will give you a check that is good," said Jay Gray, Graham Land and Cattle Company general manager in Gonzales.

Gray, along with speakers from Texas A&M University (TAMU) and the Texas Beef Council, met with producers in the area in the second of three meetings concerning feed yards and cattle growth held recently in Gonzales.

"The cattle business in the United States ... there's not many acres that you go by that there's not any cattle on there. It's a big country and it's big business. That means there's a lot of sellers and there's a lot of buyers out there," said Gray.

Dr. Rick Machen, Extension Livestock Specialist from TAMU, led the group in a discussion concerning the growth patterns of calves purchased by the group in July.

Grids were available to follow the calves from purchase in mid-July until mid-December. The cattle are scheduled for harvest in early January at TAMU in College Station.

Each calf, which was purchased by different groups involved in the three workshops, was followed from time of purchase and weigh-ins through out the fall. Daily, average gains along with projected weights, values and estimated ribeye size and carcass weights were noted.

"It's interesting as you look across there. You can began to get some idea of your financial picture, and I hope most of you have already done your Christmas shopping ... You can see the handwriting on the wall," said Machen.

"Go down to the bottom line. That's what we're interested in. We still don't get away from the bottom line ... which is a survey of everything above it," said Gray.

Gray said producers should always be watching for ways to improve the bottom line and to make room for "added value" in their herds.

The group of producers reviewed photographs of the calves purchased in the summer and surmised why they made the choices they did. Color patterns and genetic composition along with weight, conditioning and muscle patterns were at the top of the list as reasons for choices made by the groups.

"On the 17th of July, if you compare the lightest to heaviest, there was 160 pounds spread in those 14 calves. If you compare that spread, today, it is exactly doubled, 320 pounds," said Machen.

He said that uniformity and predictability in size are important issues to consider from the standpoint of the packer or the feed yard managers.

When asked by a producer if it was "... profitable for a feed yard" with prices as they stand, Machen answered it was because "they are in the business of selling feed."

"Retaining ownership is an area you might use these classes to value these cattle when you go in, It's not always good to feed cattle. It's not always good to take them to a salebarn. The percentages are more in your favor by retaining ownership," said Gray.

According to the grid presented, the cost per pound of gain was at 53 cents, at that point.

"There's no question that the events of September 11 have had a significant impact," said Machen.

Gray said that in the marketplace, every day, there is someone who thinks they're going to make money 150 days from the purchase of a calf. He said if it wasn't so, the industry would not be where it is, today.

Concerning retained ownership, Gray said that those producers, according to past records, will make money 13 out of 15 years, or 70 percent of the time.

"As a general rule of thumb in retained ownership, when grain's cheap, cattle are going to be high. The relationship is just there and always going to be," said Gray.