Nalivka: BIG Cattle!
March 31, 2016
Fed cattle weights are HEAVY! That may an understatement, but at the same time, it shouldn't be too surprising. Yet, as a common theme in many discussions, it always seems to be somewhat of a mystery. I hit on the topic at nearly every presentation that I give and after all, slaughter times carcass weight equals production. Carcass yields from these heavier cattle are also significantly improved. Consequently, the combined steer and heifer carcass weights year-to-date through mid-March averaged 874 pounds, 18 pounds heavier than a year earlier.
The simple explanation for heavy fed cattle is that cost of gain is 75¢/pound, fed cattle prices are around $1.30/pound and breakeven prices are currently hovering around $1.50/pound. It makes sense to make the cattle bigger when cost of gain is only 58 percent of the finished price, particularly when the breakeven price is 20¢/lb. higher than the finished price. But, in addition, it becomes even more "reasonable" when one views the feedlot as producing pounds of beef rather than simply feeding head of cattle. It is feed and yardage cost for pounds of beef produced judged against pounds and value of beef sold.
The beef industry is yield driven and yield is pounds of beef. The consumer buys pounds of beef, the packer sells pounds, the feedlot sells pounds, and the ranch sells pounds. The ranching business is built on converting grass to pounds of beef. Two of the primary EPDs are yearling weight and birth weight. Once you consider the entire supply chain, the issue of weight is huge, so to speak.
Other than it takes fewer cattle to produce the same or more pounds of beef, there are two very important points that need to be considered. First, with regard to cut size; bigger carcasses equal bigger primal cuts = bigger sub-primal cuts, i.e. steaks. This is a consumer issue. I think I have said it several times, but consumers do not want 16 oz. steaks. Half that size is just right – at least in foodservice. Second, are the implications of cow size (they are bigger, too). Large framed cows that weight 1,600 lbs. have a higher maintenance cost. Grazing more smaller-framed cows may have the potential to produce the same pounds of beef per acre at a lower cost – economic sense.
It's an uphill battle, but it is time to start thinking more about the implications of these weights rather than looking at the USDA reported statistics and every week, saying, "they'll go down next month" because with current industry economics, that isn't going to happen!