Wintering grass cattle and good prices
February 10, 2014
And the wind blows…and then it blows more. I am not sure with all the air exchange we have had whose environment I am living in now. I have learned to lean on the wall after going indoors, so I can stand upright. Fortunately soil moisture is either frozen or covered so hopefully it will be there to get grass started this spring. Of course we will need more help from mother nature to assure good early grass growth.
What about these cattle prices? We seem to continue to set price records at all levels, stimulating a lot of conversations as to how long it will last, how high it will go and where it will be maintained – or will it? I don't believe in my career we have seen such profits in all segments of the industry. I have often stated when one segment of the industry makes a profit it is at the expense of another part of the industry. When the cow calf producer makes a profit the feeder loses or the feeder profits the packer loses, etc. Fortunately that is not occurring now leaving the majority of the higher beef price at the consumer level with some stress on the corn farmer.
As I have written before I never talk about good cattle prices without pointing out our costs, except grains currently, continue to go up as fast or in some cases faster. I realize at the recent Range Beef Cow Symposium considerable emphasis was concentrating on increasing value of output – amount and price, however obviously we cannot ignore costs to assure profits. I recently saw a report from Kansas State University where they estimated annual cow costs to be $1,134. I know some will scoff at this figure and I am sure some can maintain a cow for less but I also know that some are paying more than that annually. I reviewed their assumptions and even though I could argue with some of the figures to a small degree I would say most assumptions are very realistic. The facts are that most of us don't know what it costs to run a cow a year – we just don't like that part of the business. I would argue that in spite of that it is just important today as when we are challenged in making a profit to watch and lower costs – especially feed costs whenever possible – without significantly lowering reproduction.
Several are wintering calves now and often the question is raised what is the appropriate winter gain for grass cattle. This question often revolves around costs of wintering and subsequent gains on grass or compensatory gains. For years cattlemen maintained calves on winter forage with just enough supplement to keep them healthy and gaining slightly – perhaps .5 pound per day. Ranchers experience and research data seemed to show that summer gains were rapid and cheap enough to offset the slow winter gains. This was often evaluated by looking at yearling weights.
A recent report in the 2014 Nebraska Beef Cattle Report has an article that challenges that thinking especially when the finishing phase is considered. Their research evaluated two rates of winter gain (0.57 versus 1.40) per pound per day) on subsequent summer and finishing gain and overall profits were estimated in the system at various wintering and corn costs for finishing. This research consisted of six trials with a large number of cattle. As would be expected the calves that gained the slowest during the wintering period gained the fastest during the summer grazing period (1.39 versus 1.06 pounds per day). What was surprising to me was that the calves that were wintered at a faster rate gained 0.18 pounds more daily than those wintered at a slower rate in the finishing phase. This resulted in 81 pounds more live weight when finished which has a large impact on the overall economies – especially at today's finished prices. In the economic analysis they evaluated corn in the finishing ration at $5.50 or $7.50 per bushel and winter supplement (wet distillers' grain) was priced at 85 percent or 105 percent of the price of corn and the supplement was fed in the winter at two pounds per head or five pounds per head for the slow and fast wintering period.
They produced various scenarios but in general they found the cattle that gained faster during the winter were about $55 more profitable when finished and in their analysis they found that corn would need to be priced at $11.70 per bushel or higher before it would favor the lower winter rate of gain. It is a little troubling to me that their summer gain was lower than often experienced in the inter-mountain hard grass country but both groups of cattle were handled the same so I feel this data applies to our region.
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I hope for those of you that have or will start calving soon the best. For those of you northwest of me I would really appreciate it if you would stop sending that wind. F