Vet’s Voice with Dr. Dave Barz: This might be the year to change your strategy
August 29, 2014
Dakota Fest was great! We saw a lot of friends and gave out over 2,500 apples. This year everyone is pondering when to market their calves. No one has the answer for your ranch but you. Carefully examine the market for calves and backgrounded calves verses feed costs in your area.
I read the paper everyday and always check the corn price. Mr. Buffet and his rail cars are really causing some uncertainty about markets in our area. In late July I attended a feedlot meeting and a commodity broker presented some startling figures. In 2013 railcars were leased for $300-$400, but this year they are $3,000. Last year the corn basis was $ .60. What will it be with the more expensive cars this year? Producers in North Dakota are already reporting a basis of over $1.40. On a $3.50 market that makes corn worth $2. For most corn producers this year will be the largest yields they have harvested. Many are asking how they can add value to their corn crop and most are thinking of feeding yearlings, calves, or cows.
Lending institutions in the Mitchell area report many inquiries about feeding cattle from producers who have been without cattle for many years. In our area we are seeing several confinement feeding operations being built. With the increased value of fat cattle equity has been rebuilt rapidly among producers.
We can see the corn producer is striving to increase returns from his bumper crop. We cattlemen must also examine ways to increase our returns enabling us to not leave any "money on the table." The higher the stakes (market), the more returns from hedging your bets. There are several management procedures you can utilize to increase your returns:
1. Vaccination – Feed lots are willing to pay $2 – $3 per hundred more for properly preconditioned calves. Most are represented as vaccinated from the block at the auction market, but some buyers ask for a copy of the products used. It is best to have a listing of procedures and vaccinations signed by a third party. Be prepared when marketing to verify the herd vaccinations.
2. Weaning – If you plan to wean, you must feed the calves long enough to regain your shrink from weaning. Some specialty programs require them weaned and bunk broke for 21 days, while others require 45 days. Select a program that works for you.
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3. Implanting – When you administer the first round of vaccinations it is a great time to implant. Implanted calves on the cow gain at least 0.2 pounds per day more than non-implanted calves. If you own the calves for three months, you gain an additional 20 pounds. On a $2.50 market that is $40 return for every dollar invested in implants. The implant pays for itself unless you can get $4 -$5/hundred premium for non-implants.
3. Delayed Marketing – Feed costs have really come down this year. Some cost workups I have read using $4 corn and $150 hay show a cost of gain at 55-60 cents per pound. Even if you value 600# calves at $2.40 per pound you gain over $1 per added pound, including yardage and other costs. Some models show over $175 per head more dollars.
4. Background to 800 plus pounds – You need to plug in the values of your hay and corn. If you own your steers and feed them, Harlan Hughes predicts an additional profit of $129.
5. Finish your calves – This may be the year to retain ownership. Examine your feeding costs and the market next spring. Feeding your steers may provide the cash flow to allow you to develop additional heifers enabling you to expand your cow numbers.
Higher calf prices and relatively low feed prices make this year a great time to seriously consider adding pounds thereby increasing profit. Consult with your veterinarian, nutritionalist, or extension specialist to enable you to reap all available profits. You will be able to utilize these monies to add additional females to your herd, securing your future in the beef industry.