Oklahoma County Cooperative Extension Service
Beef Cattle Information
Feeder Cattle Production and Marketing
Beef we eat comes from both beef cattle and dairy cattle. Eighty to 85 percent of the calves produced for the purpose of being fed grain in feedlots come from beef cows. Beef cow herds are widely distributed throughout the United States. Oklahoma ranks 4th in beef cow numbers. In 1993, Oklahoma had 27 beef cows per square mile, making it the third most densely populated beef cow state (behind Missouri and Kentucky). In Oklahoma, the highest concentration of beef cows are in the south central, northeast, central and east central counties.
Typically, producers of feeder cattle are relatively small-scale operators. In 1993, nearly 77 percent of Oklahoma farms with beef cows had herds of less than 50 head. The remaining 23 percent of farms accounted for two-thirds of all beef cows in Oklahoma. These data for Oklahoma are relatively typical of most feeder cattle producing states.
Feeder Cattle Characteristics
Important factors in marketing feeder cattle are characteristics of the cattle themselves. The set of cattle generally referred to as feeder cattle (i.e., the feeder supply) is very diverse, due to differences in sex, weight, frame size, muscle development, finish and health. In reality, this group of animals represents a continuum of stocker and feeder animals. Stocker animals are those which will be used in some type of forage intensive growing program to produce feeder cattle. Feeder cattle are those cattle with sufficient weight/finish to enter feedlots and finish on high concentrate diets.
The distinction between stocker and feeder cattle is not a simple matter of age or weight. While it is obvious that lightweight calves are stockers and heavyweight yearlings are feeders, animals in the middle of the range may go either way, depending on location, time of year, animal type, and a variety of market factors. As a general rule, animals over 600 pounds, especially if they are reasonably fleshy, will be considered feeders. Thinner and lighter animals will likely enter some sort of grazing/backgrounding program before going to a feedlot for finishing.
Marketing Challenge
Feeder cattle are diverse and produced by relatively small, geographically dispersed cow herd owners. Calving is seasonal and reflects short and long term weather patterns throughout the United States. Production is cyclic, consisting of 7-9 years of increasing cow herd numbers and 3-5 years of decreasing beef cow numbers.
Feeder cattle are bought by cattle feeders to be fed to slaughter weight. Cattle feeding operations usually are larger than cow-calf operations. Cattle feeding is more geographically concentrated than feeder cattle production and cattle feeders demand a regular flow of feeder cattle at different times and, like cow-calf producers, respond to high or low market prices in making feedlot placement decisions.
Sandwiched between the cow-calf and feedlot are stocker operations. Stocker operations take calves that are not big enough, old enough, or of sufficient quality to be feeder animals and utilize forage to turn those animals into feeder cattle. The stocker industry provides considerable flexibility to the industry in distributing animal supplies over time, utilizing excess forage, and providing an economic balance between cattle, grain and forage markets.
The marketing task or challenge is how to coordinate feeder cattle production and marketing with the demand for feeder cattle. Specific tasks include: (1) efficiently moving feeder cattle from cow-calf producing areas to stocker production and cattle feeding areas; (2) assembling small sale lots of feeder cattle from small-scale cow-calf operations for efficient shipment to cattle feeders who demand much larger lots of cattle; (3) smoothing the seasonal marketing pattern with the less seasonal demand for feeder cattle placements; and (4) matching feeder cattle having specific characteristics (sex, weight, frame, size, etc.) with the demand for those cattle.
Marketing Methods
Market coordination dominates the movement of feeder cattle from cow-calf producers to cattle feeders. There is considerable evidence of vertical integration when stocker or growing operations are considered a separate production stage. In Oklahoma, and elsewhere, the stocker enterprise is important. It adds marketing flexibility to cow-calf producers who can retain ownership of feeder cattle rather than selling them at weaning.
Research suggest more profits are possible at times if cow-calf producers also can have a stocker enterprise. To some, producers are vertically integrated if they raise feeder calves and graze them on grass over the summer. Similarly, cattle feeders are vertically integrated if they buy feeder calves and graze them over the winter on wheat pasture or over the summer on grass.
Even considering the extent of cow-calf stocker integration and stocker-feedlot integration, the majority of the total feeder cattle supply is coordinated with demand by market prices. Many times feeder cattle are bought and sold two or more times between the cow-calf producer and the cattle feeder.
Primary marketing methods (coordination methods) include auction markets, satellite video auctions, order buyers and sellers, livestock dealers, and direct sales between individual buyers and sellers, either spot or contract sales. Each of the various marketing methods has advantages in terms of coordinating supply with demand.
Significant changes have occurred in feeder cattle marketing institutions in the past couple decades. The number of cattle traded through public stockyards, or auctions has declined by about 50 percent since 1978. Conversely, confirmed direct sales of feeder cattle have nearly doubled over the same period. Although publicly reported data are not available, satellite video auctions have established a significant share of feeder cattle markets.
