MARGINS in US feedlots are continuing to tighten as drought bites, and this appears unlikely to change any time soon.
That was the powerful message coming out of the US during the Alltech Lienert Australia Beef Study Tour led by nutrition specialist Toby Doak, who said the impact of the drought was clearly evident in northern parts of the US.
Mr Doak said it was clearly evident US lot feeders were actively expanding the capacities of their operations, to achieve target production efficiencies.
However, it was less clear where the required cattle to go on to feed would be sourced, or whether abattoirs would increase their processing capacities.
A highlight of the Alltech Lienert tour was a visit to the 35,000 head Finney County Feedyard near Garden City in western Kansas, which is managed by Dave Pfenninger.
Western Kansas and its surrounding grain growing areas are recognised as one of the most important cattle feeding areas in the US.
An estimated one million cattle are on feed within a 100km radius of Garden City.
According to Finney County manager Dave Pfenninger, the ongoing reduction of the US cow herd because of the now two year drought was a major concern.
"Sourcing cattle and the right types of cattle is becoming increasingly difficult because the numbers of suitable weight for age calves are not being produced," Mr Pfenninger said.
"Slaughter capacity is also a concern as more US feedyards are expanding to target calculated production efficiencies.
"However, there doesn't appear to be plans in place for the major meat packers to lift their kill capacities in line with an increase in cattle numbers once the drought is over."
Mr Pfenninger oversees the day-to-day feeding of 35,000 head of mainly custom fed cattle.
"To stay competitive we have identified we need to increase the size of the Finney County yard and that's why we have plans in place to grow operation to 65,000 head on feed," Mr Pfenninger said.
"Once the drought breaks, the challenges will be sourcing the cattle to go on feed, feed costs, and then processing capacity."
Mr Doak said breaking down the maths a typical 270kg steer in the US cost about A350c/kg liveweight or A$1300/head - less than current Australian prices. A 425kg feedlot entry steer was valued at about A390c.
However, the cost of gain to take the steer from 425kg to a 680kg slaughter weight over 120 days was about A400c/kg, for an ultimate gross return of just under A$3000 live.
"From what we could see US prices were at least 10pc below Australian rates," Mr Doak said.
The typical feed cost is the equivalent of A$6/day for a 2kg liveweight gain. Typical intakes are 17.5kg of feed a day with 68pc dry matter.
Mr Doak said a typical US finisher ration consisted of about 70 per cent corn, 25pc triticale silage and 4pc distillers grain by-product.
"A dosing machine is used to add vitamins, trace minerals and other additives including beta agonists," he said.
"Currently, tallow is also used as an energy source in US rations, but Indonesian palm oil is seen as a likely alternative."
Finney County uses about 280 tonnes of corn a day. Before feeding the grain is soaked for 24 hours then steamed to increase the total moisture to 22pc, ready for the steam flaking process.
Mr Doak said the heat derived in the steaming process gelatinised the starch, increasing the yield of energy, which resulted in improved digestion and ultimately, increased liveweight gains.
Animal health and welfare are priorities at Finney County. Expansion of the new yard facilities and design includes the Bud Tub, a new bruise free handling yard for inducting cattle.
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