Steve Paisley: Evaluating options for this year’s calf crop
I’ve discovered over the last few years that May articles are difficult to write. College students have been turned out for the summer, spring pairs are often branded and turned out on summer grass, and mentally many ranches have, for a short time, moved on to other priorities. For many early spring calving operations, breeding season is close at hand, and for those who synchronize and artificially inseminate (AI) heifers, calendars, protocols and schedules are set.
I was struck this past week by how the cow-calf industry is adapting, or in the process of adapting, to high grain prices and high input costs. In the late 1990s, and early 2000s, grain prices were low, drought was staring us in the face, and early weaning was a practical tool in our management toolbox to extend grass and maintain condition of the cowherd. While it still may be a management tool to keep in the back of our mind, the focus this spring has been almost the opposite: how can we develop calves to heavier weights for sale or entry into the feedlot? This week at our station feedlot, we received a set of 770-pound steers wintered on grass, ready for the feedlot. I’ve spent much of my office time trying to reduce the amount of corn that we are feeding while still getting respectable gains. In our personal herd, I’ve decided to retain all of our fall-born calves through the early summer grazing season at our ranch, pushing our forage resources a little. While I’m ready for a little spring warm-up, I’m also hoping for some continued showers in May and June to maintain all of the grass cattle I see turned out all over the state.
To some extent, this upcoming fall market situation still needs to be determined. Spring corn planting is delayed, but may recover. Demand remains strong, but we are all watching the dry conditions in Oklahoma and Texas wondering if it will turn around. Concerning this year’s calf crop, I feel that it bears repeating that it is important to consider all potential marketing options before this fall rolls around.
• Branding is an important time to consider participating in third-party source- and age-verification QSA or PVP programs. This is especially key if calves are routinely marketed through Internet or video auctions, as source- and age-verified programs may be an important way of creating additional value. The Wyoming Verified PVP program has routinely shown a $3-$7 per hundredweight premium for weaned calves enrolled in the program. If retaining ownership through the feedlot, these premiums have increased if the cattle are eligible for the Japan market.
• Marketing flexibility is becoming increasingly important. Because of increased price variability, it will become more and more important to have the ability to market calves as weaned calves in the fall, backgrounded calves in February, ready for grass yearlings in the spring, or 900-weight yearlings the following fall. Some of these decisions may need to be considered prior to summer turn-out. Calves from first calf heifers may be weaned and marketed early, prior to the seasonal October price decline. Heavier calves that were born early in the calving season may either be marketed early, or considered for direct placement into the feedlot this fall. Considering marketing options now, prior to going to pasture, may help reduce the amount of work this fall.
• Understanding markets and reducing price risk is becoming increasingly important. As grain prices become more volatile, we have witnessed dramatic swings in calf prices. Watching futures markets and forecasting fall prices will be worth the effort. Reducing price risk may mean working with a broker to evaluate futures and options, diversifying your calf marketing options, backgrounding calves for 90 days or retaining ownership to capture the maximum value for your calves. All of these options require planning and homework.
• Evaluate feedlot options, and work with the manager to determine your feeding and marketing options. Many feedlot managers are happy to discuss ownership options, break-even prices, and feedlot cost of gains. Working with your feedlot and determining your fall calf breakeven price is great information to have before deciding to sell, background, or retain ownership through the feedlot.
It often seems like cow-calf production has dramatically shifted to minimizing inputs to the herd. Certainly, evaluating all costs and inputs to the herd is a healthy exercise, but short-term seasonal benefits, such as reduced winter feeding costs, can have long-term implications such as reduced calf crop, decreased fertility, and reduced herd conception rates which may lead to reduced size of subsequent calf crops. Pushing the limits on cow condition, stocking rate, or winter feeding ultimately exposes us to more risk, and makes the operation more susceptible to weather and unforeseen challenges.
Grain, feed and fuel prices have certainly had an impact on our industry. Adapting to the current situation is important for sustainability, but changes need to be evaluated for not only short term benefits but also long term viability.
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