Is retaining ownership of feeder calves right for your operation, asked Mark Johnson, Oklahoma State University Extension beef cattle breeding specialist, in a letter called Cow-Calf Corner.
FIRST, SOME NUMBERS
The Aug. 1, Oklahoma Market Report indicated 525-pound steer calves were worth $1,475 a head, 861-pound yearling steers $2,040 a head, so with fed cattle worth $185 per cwt, a 1,400-pound finished steer had a live value of $2,600. Johnson said.
Recently, Derrell Peel predicted $4-a-pound weaned calves, $3-a-pound yearlings and $2-a-pound fed cattle in the future, Johnson said.
Overall, 2023 looks to be a very profitable year for all segments of the beef industry (cow-calf producers, stockers operations and cattle feeders), he said. Low inventories indicate high value for all classes for the next several years.
Great news!
THINGS TO CONSIDER
Having all segments of the cattle industry profitable at the same time is rare, Johnson said. And, when such times happen, it often makes economic sense to hold weaned calves until they are yearlings and/or fed cattle that will be marketed at a later date.
But, answering that question for an individual cow/calf producer means answering some economic questions and taking stock of the operation’s financial situation, he said.
If you are in this boat, Johnson said, consider the following:
- Can you afford to move a portion of your income into the next calendar year? Does your financial situation permit you to withstand the change in cash flow?
- Are you comfortable managing stocker calves? Does your schedule permit you the time to check on and treat calves during the high-risk, post-weaning time?
- Does your operation have the potential for planting and establishing a cool season forage base to be used for grazing calves and turning them into yearlings to be marketed next spring? Is daily feeding of a growing ration an option?
- Does your inventory permit you to put together semi-load lots (approximately 50,000 pounds) to economize the transportation cost to feedlots?
- Are you comfortable turning over management responsibility of your calves or yearlings to someone else? Cattle finishing is a highly specialized business. Even if you are capable of turning your weaned calf crop into yearlings, it is not practical for most cow/calf operations to run a finishing operation.
- What do you know about the post-weaning genetic potential of your calves? Have you collected the cost of gain, health, carcass weight, carcass quality or yield grade data from past calf crops needed to assess the profit potential of retained ownership? Are you willing to make the commitment to collecting this type of information to base your decisions on in the future?
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $181.39 per cwt to $188.00, compared with last week’s range of $179.34 to $190.97 per cwt. FOB dressed steers, and heifers went for $285.56 per cwt to $292.49, compared with $282.49 to $295.81
The USDA choice cutout Tuesday was up $1.76 per cwt at $307.26 while select was up $2.58 at $283.03. The choice/select spread narrowed to $24.23 from $25.05 with 101 loads of fabricated product and 46 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.90 to $2.10 a bushel over the Sep corn contract, which settled at $4.64 a bushel, down $0.11 3/4.
No contracts were tendered for delivery against the Aug cattle contract Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $244.64 per cwt, down $0.17. This compares with Tuesday’s Aug contract settlement of $245.87 per cwt, down $0.35.