Story Whitney Phillips
Greeley, Colo.

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December 5, 2013
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After 'worst' year ever in 2012, outlook much better for Colorado livestock feeders heading into winter

Colorado livestock industry officials say they’re seeing reasonable feed prices and enough fodder to go around for their animals as they head into the winter — an 180-degree turnaround from this time last year, when they were weathering what many of them called the worst year ever.

This past year, the entire state experienced some degree of drought and water was limited, resulting in feed crops like corn and alfalfa hay being in short supply. Livestock owners and feeders across Colorado scrambled — turning out of state and even out of country — to find what they needed to feed their animals through the winter, all paying record-high prices to get it.

With a drop in the amount of product on the market, prices for commodities like corn and hay jumped, but farmers saw much-improved yields on their crops this year, driving prices back down.

That, coupled with improved grazing conditions this past summer, has turned things around for many area livestock owners and feeders.

“This was the worst experience I ever had a year ago, and now I’m sitting better than I’ve ever been as far as moisture,” said Terry Walter, who owns Walter Angus in Weld County, Colo.

Affordable feed is a critical component for the health of the $1.5 billion ag industry in Weld County, which ranks eighth nationally for its value of ag production, with approximately 535,000 cattle and calves, about 73,000 milk cows and hundreds of thousands of head of sheep and lamb, among other livestock.

“We’ve got a responsibility to feed the livestock we purchase,” said Mike Harper, whose feedlot near Eaton, Colo., stands as one of the largest in the West and can feed up to 200,000 sheep and lambs when at full capacity. “You do that at any cost, which is exactly what we did in the last two years.”

While improvements in the availability and price of feed have made things a bit easier on those in the livestock industry this year, that doesn’t mean they’ve fully recovered from the hard times they’ve seen in recent years.

Local livestock owners and feeders said it could take several years to get back to normal margins.

Still, things are much improved.

Katelyn McCullock, dairy and forage economist for the Denver-based Livestock Marketing Information Center, said the state is drastically better in terms of moisture.

She said one of the most notable shifts this year as a result of more moisture and water and better crops is the decline in the price of corn, from an average of nearly $7 per bushel last year to just more than $4. That’s still not a rock-bottom price, but it’s a welcome relief to those in the livestock business.

“(Corn is) the basis of our ration,” Harper said. “That’s made a huge difference.”

To put that in perspective, Harper said he was losing about 95 cents per pound on the sale of each animal last year. Now, with the leveling out of prices and more demand than supply in the sheep market, Harper said he’s looking at much-improved margins.

“We’re seeing more money out of (the animals), and it actually makes sense to be a feeder again,” he said. “That was kind of lost.”

For JBS Five Rivers Cattle Feeding, the largest cattle feeder in Colorado with feedlots near Kersey and Gilcrest, this year has also brought a much better situation.

This time last year, a JBS Five Rivers official reported that the company took in 35 percent less corn silage than it had targeted, even leading the company to experiment with beetle kill, or “pine fiber,” as a supplemental feed source.

This year, cheaper feed has increased the profit margin per steer.

“Grain prices have eased significantly this year, which reduces our overall costs per finished steer,” Mike Thoren, JBS Five Rivers CEO, wrote in an email. However, “this has caused an increase in the cost of feeder cattle and calves.”

Steve Gabel, an Eaton, Colo., resident who runs Magnum Feedyards with about 25,000 head of cattle, said the drop in feed prices is good news, but the spike in cost per head of cattle poses another financial challenge.

“Margins are extremely tight,” Gabel said. “Even though we’re gonna get substantial relief in our feed costs, what we’re paying to replace cattle coming onto the feed lot is near a record-high price.”

More moisture this year helped fortify grazing lands, and livestock owners who send their animals to forage didn’t have to supplement their feed during the summer like they had to last year, McCullock said.

Walter said he’s having trouble finding corn stocks to graze his animals — a problem largely due to flood waters destroying some fields — but his cattle, which forage about 95 percent of the time, are still in much better shape this year heading into winter.

“In every place we had awesome grass,” he said. “The result of that is that our cows came back fat, which is a huge factor in wintering them.” ❖

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The Fence Post Updated Dec 6, 2013 01:30PM Published Dec 18, 2013 02:28PM Copyright 2013 The Fence Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.