What’s Ahead for the Cattle Market? Get Out Your Crystal Ball
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What should I do with my calves now that the market tanked? This is a question I have received fairly frequently in the past few months as the cattle market has declined steadily. With varying weather and pasture conditions around the region, it is generally not a question to which I have a cookie-cutter answer at the ready.
Industry experts keep punting the ball back and forth as to when the bottom will be found. For some people, they believe the annual summer slump will show us; for others, we may have to wait for fall and election season (that’s a whole different ball of twine). One thing is certain, we are in a decline from the tremendous prices we received a year, two, and sometimes three years ago. Many producers have seen lower prices in their career but we need to start thinking about how we retain value in our herds after the bottom is found.
The value-added sales of 5-8 years ago are going to be coming back in full force. Yes, I realize that in 2014 you could take a green calf straight off of mama and send him on to the stockyard – intact, unvaccinated, bawling, and crazy as a loon – and get top dollar for him. But we’re not in that market bubble anymore. The order buyer doesn’t need your calf this year – we have to make him want it. We do that by the following ways:
- BQA – Beef Quality Assurance certification is the industry standard for top quality calves. There is a consumer-driven push for animal health, welfare, and care taking top priority where beef is purchased. Some feedyards have been hinting that they will be purchasing only BQA certified calves in the future – which can’t help but show a bit of a premium for the first few years of trying to fill the yard.
- Defined Calving Season – Without a tight group of calves, we are marketing apples and oranges. Order buyers at the stockyard, or video auction, or pretty much anywhere want to see groups of calves that will go together and finish at relatively close time frames. Economies of scale play here – the more you’ve got to sell, the better your price will be. If you’ve got 50 cows that calve 12 months out of the year, you’ll be selling teenagers, babies, and everything in-between if you tried to market them in a group. Tighten that season up to 90 days, and you’ll have a fairly uniform crop of calves that will be close in age, and the buyer will be happy to take them off your hands.
- Hit The Feed Bucket – This is not meant to be a literal statement. The feed bucket isn’t just what you use to put a bag of feed, or corn, or your own home-mix in; you have acres of feed bucket at your disposal – in your pasture. Utilize annual grasses for weaning pastures to add gain to your calves at a lower cost than full purchased feed. By utilizing pastures, and supplementing with purchased feeds, you can add pounds to the animals and decrease your overhead (remember, lower overhead equals higher profits – nobody can complain about that). You are selling animals by the pound when you go to a stockyard or a video auction, so make sure they hit the scales with a little pressure.
- Be Aware of Input Costs – Utilize your county extension agent and develop a plan to understand your cost of gain. This goes in conjunction with the feed bucket statement. There’s no sense in adding weight if the cost of adding it is more than the benefit. For example, a 500 lb. steer at $1.10/lb. will be $550. From the same market report a 600 lb. steer at $1.00/lb. would be $600. With these figures, we need our cost of gain to be less than $1.50/lb. – which is easily accomplished when high producing pasture is combined with supplemental feed.
- Understand Your Genetics – Don’t think that you can’t do better. The name of the game for the cattle industry is continuous improvement. Increasing productivity is top priority. I cannot stress enough that genetics is the basis for getting the most out of your cattle herd. Start with the path of least resistance – your sire. Your bull (or bulls) make up 50% of your saleable product. If we can make quick changes, it’s going to start with utilizing high quality bulls. For almost all breeds, birthweight is not the only factor to consider when purchasing a new sire. Most breeds now have a handy EPD for calving ease – this factors in not only birthweight, but also number of dystocias and difficult pregnancies. Utilize this number to select a bull that will give you a live calf with the least amount of effort on your part. Birthweight comes into the picture when we start talking about calves. There is a positive correlation in birth, weaning, and yearling weights, in other words, if it’s a bigger calf at birth, it will most likely continue to be bigger throughout its life. You don’t want a 100 lb. calf, that’s understandable. However, in the same line you most likely don’t want a 50 lb. calf either. Don’t let your calf crop start out behind before they even get a chance to go.
Hopefully the talking heads and prognosticators are wrong, and the cattle market rebounds back to 2014 levels, but with respect to reality, these management tools will help your operation weather the storm of market decline and continue being profitable into the coming months and years.