Marketing and feeding cull cows
August 13, 2010
As we approach late summer/early fall, it is a good time for cow-calf producers to start thinking about their culling decisions. Should you wean calves early and cull early? Should you cull and sell in October or November? Should you feed the cull cow from November into February or March? Three factors should be considered when making the culling decision: (1) seasonality of cull cow prices, (2) price differences between slaughter grades and number of cows in each grade (their body condition score), and (3) cost of feeding cull cows.
Cull cow prices generally follow a consistent seasonal pattern. Prices normally are the lowest October through January and are the highest from April through August. If overall cattle prices are rising/declining sharply in a year, then this price pattern may not be as apparent. However, from 1980-2009 there was only one year when the price for cull cows was higher in November than it was in August. This seasonal price pattern has remained fairly consistent over time, is fairly consistent among all cull cow grades and is consistent over many markets I have analyzed.
Understanding seasonal price patterns can help you plan your marketing strategy. However, a cautionary note here, selling at the highest price will not guarantee the largest profit nor will selling at the lowest price necessarily lead to the least profit. There is a cost to feeding animals into future time periods and culling early may not be feasible for some operations.
Prices for cull cows are based on their USDA carcass grade or their expected carcass grade. The most common grades, in order of the least amount of marbling to the greatest amount of marbling are: Canner, Cutter, Utility and Commercial. Frequently, the grades are not reported but Canner and Cutter are reported in the Lean market class and Utility is reported as Boner or Breaker. If cows have been grain-fed for some time, those in the Commercial grade may qualify for the Premium White Fat market class. The corresponding body condition score (BCS) of the cows in each market class is BCS 3-4, Lean Class; BCS 5, Boner Class; BCS 6-7, Breaker Class; and BCS 7-9, Commercial or Premium White Fat Class.
Price differences between these grades impact the price of cull cows. These price differentials vary from year to year and also from month to month within a year. The differential is wider in higher priced years and in the fourth quarter of the year. Average price differentials between market classes at Torrington, WY from 2005-2009 show Boner cows were 7.5 percent higher than Lean cows and Breaker cows were 3.5 percent higher than Boner cows. The Commercial grade or White Fat market class is frequently not reported. When it is, the price is typically 10 percent higher than the Breaker prices at the same auction.
Depending upon the weight and frame of a cow, it requires about 60-80 lbs. of weight gain to increase one BCS. A cow with a BCS of 3 in the Lean Market Class would require about 140 lbs. of gain to get to a BCS of 5 and into the Boner Market Class. A cow with a BCS of 4 in the Lean Market Class would only require about 70 lbs. of gain to get to a BCS of 5 and into the Boner Market Class.
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At different times of the year a cow may be gaining weight or losing weight based on the quantity and quality of the forage they are consuming. Considering the fact that many cows may be losing weight and BCS during the fall, they may be sliding from the Boner to the Lean market class. Furthermore, the seasonal price pattern is that prices are typically declining through the fall. Therefore, where possible, culling earlier in the fall rather than later will likely result in a higher market price and more weight being sold.
A cautionary note on weight change, cow grade and market price is needed. Weight is objectively measured by the scale. A market observer at the auction assigns the grade or market class based on a subjective visual appraisal of how he/she thinks the cow will grade. Buyers bidding against one another determine the actual price and they may see the cattle differently than the market reporter. Each buyer may also have a different preference for thin versus fat cows, depending on if they intend to feed the cow or butcher the cow. One more caution on weight and cow price: different packers have different market outlets for cow beef. Therefore, some will want fatter cows and others will desire leaner cows. If you are planning on selling your cull cows direct to a packer, it is probably worth your time to determine if they are paying more for fatter or leaner cows.
If a producer culls a cow in the fall and wants to feed her to take advantage of seasonal price increases, what is the optimal rate of gain and how long should the cow be fed? The answer to these questions will depend upon the initial cow weight and BCS, the availability and cost of various feed sources and the current price of cull cows.
Let’s quickly look at three different rations: an alfalfa/grass hay ration with an average daily gain (ADG) of 1.25 lbs., an alfalfa hay-corn silage ration with an ADG of 2 lbs., and an alfalfa hay-corn grain ration with an ADG of 3 lbs. I will assume that the cows weigh 1,050 lbs., have a BCS of 4, and the market price for Lean cows is $40/cwt. in November. Alfalfa is $90/ton, grass is $76.50/ton, corn silage is $33.75/ton, and corn grain is $3.75/bushel. The cows are fed for 90 days and sold in February.
A cost of $0.30 per day is charged for yardage and interest on the value of the cull cow. The net return to feeding cows with these assumptions would be $27.49, $67.89, and $65.93 per head for the hay, silage, and corn grain rations respectively.
Cull cow receipts are a valuable source of income to most cow-calf enterprises. By timing cull cow sales to take advantage of seasonally higher prices, and by feeding thin cull cows to improve their slaughter grade, revenue from cull cows can be increased significantly. Feed costs vary from year-to-year, and from operation to operation. They also vary within each year, depending upon the feeding program. I encourage you to look at your own resources and evaluate carefully what options you have with your cull cows. Compared to the traditional culling and marketing in November, it is often the case that returns will be greater if the cows are culled in late summer/early fall or if they are fed for some time after culling.