With current inventory levels and producers beginning to think about expansion, the value of young cows and heifers is increasing as demand for breeding stock increases, said Hannah Baker, University of Florida Extension economist, in a Livestock Marketing Information Center letter called In The Cattle Markets.
As discussed yesterday, pastures in the majority of the country are in better condition, which could play a key role in producers’ ability to start expanding.
However, there still are no strong signs of strong retention efforts, Baker said. The next quarterly Cattle on Feed report in October will provide more insight into whether more heifers are starting to be retained.
COST VERSUS COST
On average, bred heifers are selling from $3,500 to $4,500 per head, she said. Alternatively, the cost of raising replacements may not be much different when considering the opportunity cost of keeping a weaned heifer calf.
Prices for a 500-600-pound heifer in the cash market were about 30% higher year-over-year in July, Baker said. Whether buying replacements or raising them, rebuilding efforts will be large, upfront investments in the current market moving closer to a period of expansion.
Looking past the initial investment of buying or raising replacement heifers, the hardest year for a heifer to get rebred is with her second calf, she said. A first-calf heifer needs to get rebred within about 83 days after calving — while still growing and raising her first calf.
So, the follow-up question would be, “is it financially feasible to make the necessary investments and/or changes to increase the chances of her getting bred that second time? Baker asked.” Below are a few considerations when thinking about the long-term productivity and profitability of replacements.
- Are there solid nutrition and forage programs in place that will meet the nutritional requirements of a growing, first-calf heifer?
- Is there a plan to implement management practices, like early weaning, to lengthen recovery time and improve the chances of rebreeding?
- Do breeding season protocols need to be altered to best accommodate first-calf heifers?
An open cow is costly when calves are bringing $4 a pound, she said. An open cow, regardless of age, often costs more than she earns over time, even if cull cows are selling for $1.60 a pound.
Market prices inevitably fluctuate, influencing profitability, but not having a calf to sell results in a more significant draw on profitability, Baker said.
There are many factors – some controllable, some not – that influence a cow’s reproductive performance, she said. Adopting management strategies that improve the likelihood of having a calf every year is essential in today’s market.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $238.00 per cwt to $245.28, compared with last week’s range of $242.51 to $246.00 per cwt. FOB dressed steers and heifers went for $378.85 per cwt to $384.43, compared with $381.50 to $385.49.
The USDA choice cutout Wednesday was down $4.44 per cwt at $388.18 while select was down $6.80 at $366.37. The choice/select spread widened to $21.81 from $19.45 with 119118 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $437.90 per cwt, and 50% beef was $153.06.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.05 to $1.20 a bushel over the Dec corn contract, which settled at $4.26 3/4, down $0.02 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $361.36 per cwt, down $0.27. This compares with Wednesday’s Sep contract settlement of $355.02, down $3.30.