6 CALF News • February | March 2022 • By Larry Stalcup, Contributing Editor With the forecast for higher cattle prices this year, most cow-calf producers will likely sell their calves and hopefully enjoy a little profit. If they have proven genetics and are preconditioned and vaccinated, there’s greater profit potential. Another option is retaining ownership of calves through the feedyard to help take advantage of their full value to packers and retailers. Whether or not to retain ownership (RO) depends on several factors. Calf prices, feed prices and cattle genetics are the keys. And the continued drought in the Southwest and whether those dry conditions creep toward the Midwest will impact all decisions. Major herd liquidation like that seen in the drought eight to 10 years ago will impact all cattle markets, says David Anderson, Texas A&M University Extension economist. “Does the drought resemble what we saw in Texas and Oklahoma a decade ago, and does it expand into the Corn Belt to hurt feed crop yields and force much higher feed costs? Those are key questions heading into 2022,” he says. Profit potential can vary for any set of calves or pen of cattle. In mid-January, fed cattle were trading in the $135 to $138 per hundredweight (cwt.) range. For cattle placed at 750 lbs. six months earlier, the typical closeout in the Southern Plains showed a profit of about $3 to $4 per cwt., or about $40 to $50 per head. For cattle placed in mid-January, there was a projected loss of nearly $7 per cwt., or $100 per head, based on higher feed costs. Mid-January feeder cattle sold for about $165 per cwt. for six- to sevenweight steers in Oklahoma City. Five-weight calves brought about $185 per cwt. There was a little profit there, depending on cattle quality and production costs. In all cases, cattle with higher performing genetics and high quality grades at the packer probably generated a premium. Cattle that didn’t perform may have seen lower profit margins. An RO program often rewards producers of cattle with strong-performing genetics. There is opportunity to capture added value through the production cycle. “I think there is a place for RO this year, but I think it will take a thorough evaluation of your particular situation,” Anderson says. “Cattle performance risk should be a major area for concern in RO, especially if you are new to it.” Tighter Supplies The January cattle inventory report was expected to indicate a smaller beef herd. Those tighter cattle supplies will mean higher calf prices, “which tends to mean a cow-calf producer is better off to sell and let someone else feed them,” Anderson says. “The impact of tighter supplies of calves will become increasingly important over the next couple of years by pushing calf prices higher. Tighter supplies will also force higher fed cattle prices as supplies decline. Given the strong beef demand situation, that allows the chance for even higher prices.” He says one effect of a smaller cow herd and fewer calves, feeders and fed cattle will be more packer capacity. “That means higher cattle prices and packers Retained Ownership Will It Work in Today’s Market? RIGHT: Texas A&M’s David Anderson sees profitable fed cattle in 2022. High fed cattle prices could help producers capture the full value of their genetics through retained ownership. Photo courtesy Texas A&M University Calf prices are stronger, but maybe it’s time to place them in a feedyard retained ownership program to determine how your genetics are performing. COVER STORY Market Drivers