Nebraska gaining in cattle-feeding comparison

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By ART HOVEY / Lincoln Journal Star

Nebraska, already a $6.5 billion force in annual cattle sales, is asserting itself in early 2007 in its battle for market share with Texas and Kansas.

As high corn prices take their toll, Texas and Kansas producers cut their January feedlot placements by more than 35 percent from a year ago. Nebraska, the other member of the big three of beef production, held virtually steady.

Analysts Darrell Mark, John Harrington and Jeff Stolle agree that Nebraska’s relative stability connects to its booming ethanol sector and to the ready availability of ethanol byproducts as a cheaper feed source.

The emphasis on corn and ethanol is less farther south and the cost of shipping byproducts over long distances rises rapidly.

“I do think we do see a growing feed advantage, a cost-of-gain advantage in the north,” said Harrington, based in Hastings as a livestock analyst for the Data Transmission Network, “because of the use of distillers grain.

“It’s more prevalent, more available for us in the north than in the south,” he added.

Harrington, Mark, a livestock marketing specialist at the University of Nebraska-Lincoln, and Stolle, vice president of marketing for the Nebraska Cattlemen, have been keeping a watchful eye out for a potential ethanol-beef bounce for months.

While they’re satisfied they’re seeing one now, it’s hard to quantify because of other factors. Those include drought, which hurried more than normal numbers of grazing cattle into feedlots last year, creating a statistical spike, and snowstorms and mud, which have slowed down cattle weight gains and driven cattle numbers down early this year.

“The weather has just been so awful, it’s just not been very attractive to place feeders,” Harrington said.

Mark also treats comparisons of January feedlot placements with some caution. But he said cattle on feed reports from as long ago as November suggested a possible shift toward Nebraska.

“Part of the shift — and we’re not sure how big a part yet — is related to ethanol production.”

He called it “a feather in the cap of Nebraska” that the state has moved past Kansas in the cattle-feeding category. The top spot may be within reach eventually, “although there are some advantages to feeding on the southern plains as well.”

Winter, for example, is usually shorter there.

Stolle said it’s hard to get too pumped up about state comparisons when Nebraska feedlots are dealing with a real head scratcher: Losses as high as $150-$200 a head despite market prices for live animals in the usually appealing range above 90 cents a pound.

He’s not sure he’s seen that happen before. “The combination of $3.75 to $4 corn (per bushel) and poor performance due to a tough winter has us in quite a soup,” he said.

However, he said, “I do think that our access to corn co-products is an advantage.

“Cattle tend to move toward the most economical cost of gain. And, at this point in time, it would appear to me that Nebraska, Iowa and the Corn Belt states . . . right now have a bit of a competitive advantage from a cost-of-gain standpoint.”

As a result, “we’re adding pen space in a good many feedyards in Nebraska.”

Reach Art Hovey at 523-4949 or at ahovey@alltel.net