Dr. Barz: More time could mean more return
September 27, 2016
Fall has finally arrived. We have already had plenty of moisture, but harvest is progressing rapidly. The warm winds are drying the crops rapidly. The only problem is crops aren't worth much. Even with adequate yields returns won't be great. Sadly, our beef operations aren't faring any better economically.
The rains have decreased the hay cost but pasture rent was still high this spring and hay was higher last winter. Many producers are approaching $2 per day to run a cow. That means many producers are spending $700 plus on cow costs for a year. Couple this with the decreasing calf prices and we have a scenario for negative cash flow.
Many producers sell calves at weaning. This year the weaning marketing strategy will allow most producers to show very little profit if any at all. In 2014 this sales strategy returned approximately $800 profit per head. Last year it was only $200 per cow. The decreasing prices this fall will force many producers to feed their calves to increase profits.
Weaning and feeding calves may be important to the financial well being of your herd. Even delayed sales may add pounds. Supplemental feeding cows and calves or even creep feeding may be economical in your operation this fall and winter.
The lower feed prices help generate profits from adding weight to your calves. The cost of gain on weanlings to eight weights is 60-65 cents per pound of gain. Those backgrounded calves are selling for $1.30 per hundred and even with the weight slide you will increase your equity by 50 cents per pound or about $100 per head.
We have not heard much about retained ownership or custom finishing for several years, but this year may be a time to investigate its possibilities. The negative for this scenario is that it changes your marketing plan and you won't sell calves this fall to repay your operating loan. The sale will take place next year. It appears it will cost 70-75 cents per pound of gain to bring these animals to market weight. The steer weight of slaughter animals has increased. At the livestock market steers weighing less than 1,350 pounds are getting re-implanted and going back to the feedyards. Even with fat cattle prices at about $1 those 1,500 pound fats will return you close to $200 per head extra value.
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This year many cow-calf producers will experience low returns from their calf sales. There are several marketing options you can use to generate more income in these times of depressed feed and calf prices. Consult with your veterinarian, nutritionalist and extension specialist to determine whether backgrounding, custom finishing or retained ownership will help add profits to your cow-calf operation. Then visit with your lender and determine if you will be able to capture some additional equity for your herd.