Parts of the country are fortunate to have excellent pasture conditions. Large portions of the Eastern and Southeastern US are well above normal for rainfall which has kept pastures conditions in the good to excellent range for most of the grazing season. I have not seen this much grass in mid-August in the area I travel in several years. For the most part producers have built up hay inventories. Other parts of the country have not been as fortunate and will need to begin feeding hay earlier than desired.
Risk Management in Calf Marketing Decisions
The calf, feeder and fed cattle market are trying to find a balance now that herd expansion is well under way. Calf prices have declined from the record highs. Current forage inventory will give some producers the opportunity to add some low cost weight to weaned calves and sell a heavier feeder calf later. Historically, the calf run at fall weaning is often the low point for calf prices. There are several ways a cow calf producer can add value to the calves they market. Every year the decision to retain ownership, background, pre-condition or sell at weaning is debated. The answer is often, “It depends”.
Managing risk is key to profitability for all sectors. Green calves weaned onto the trailer and taken to the sale barn will be the highest risk animals anyone has sold or purchased in many years. Calf buyers are still purchasing an animal that is historically high priced. Sickness and death loss can eliminate any profit potential quickly. With the given market mentality buyers will be careful. Pre-conditioned calves will continue to bring a premium, especially this year with the current economic conditions. This year, forage availability for cow calf operation will impact calf marketing decisions as we approach weaning season. Consider the following factors when managing your risk related to calf marketing decisions.
- Weaning management to reduce morbidity and death loss.
- Pre conditioning options that add value to the calves.
- Forage availability for pre conditioning and backgrounding programs.
- Cost of gain for the backgrounding program.
- Realize the rate of gain target is not the same as feed lot rate of gain.
- Potential price movement of feeder calves.
Low stress weaning programs such as fence line weaning and weaning nose rings can greatly reduce calf stress levels by minimizing the social changes associated with weaning. Another item that can help with the social and behavior changes is the use of CRYSTALYX® stress formulas such as Brigade® and Battalion®. Using the barrels prior to weaning helps the calves acclimate to the product. When the animals are moved into the weaning pen the barrels move with them. The nutrition delivered by CRYSTALYX® Brigade® or Battalion® helps stimulate appetite, gut health and promote feed intake. If a cow calf producer can successfully manage the risk during the weaning period, the decision to pre-condition and/or background is easier.
Do you have forage available to carry the calves to a heavier weight? If so, there are many options available for low cost gains using forage and a CRYSTALYX® protein supplement. Grazing excess pasture or stock piled forage with a CRYSTALYX® barrel will be the least cost of any program due to reduced daily hand feeding and equipment expense. Cost of gain is the primary consideration NOT rate of gain.
Value of Added Weight and Potential Market Movement Considerations
Will the value of the added weight be more or less than the change in the price of the cattle? Historically, there has been a good opportunity to make more money by selling more pounds. Keeping the cost of gain be low gives you marketing flexibility even as the feeder market changes? Exports and the cost of corn will be two factors to watch as they have a significant impact on the profitability of the feed lot and what they are willing to pay for feeder cattle. Exports have been on the increase and the corn crop looks to be very good.
We have a lot to keep track of this year when it comes to marketing decisions. It is time to start planning your weaning plans and marketing programs. There are many options to consider and there are several CRYSTALYX® products that can help you manage the risk.