– Kevin Laurent, Extension Specialist, Department of Animal and Food Sciences, University of KY
What the value of adding pay weight?
Seems like every time I log on to social media there is another post about a record selling lot of cattle. We are definitely experiencing a most interesting time in the cattle market that I don’t think anyone could have honestly predicted. These high prices coupled with dry conditions throughout most of the state have got some producers rethinking their weaning and marketing strategies this fall. As a result, I’m starting to get several phone calls from producers asking if it’s worth weaning and preconditioning these calves prior to marketing.
First things first, if your pastures are deteriorating and you are starting to feed hay it may be best to consider weaning the calves. Dry cows eat less, require less nutrient dense feed and quite frankly can maintain or even gain weight on average quality hay. Generally, hay testing higher than 7% protein and 50% TDN will maintain a dry cow, whereas a lactating cow will require hay testing 10-11% crude protein and nearly 60% TDN to maintain condition, not to mention the 5-7 month old calf at her side will need more than just mothers’ milk to continue to gain efficiently. It’s simply more efficient when feed or pasture is limited to wean the calf and feed it separately from the cow.
So, if we decide to pull the calves what do we do with them? Do we sell off the cow and take advantage of these high prices or do we precondition? From a short-term economic standpoint, I can’t argue with anyone who chooses to cash them in. But there may be an opportunity to add additional value through a precondition program. There are several things to consider in making this decision. For sake of brevity, I will assume that there are adequate facilities and feed resources to background 90-100 days, and that the decision is based primarily on current market conditions. Following is a chart of selected calf prices from the KY Weekly Livestock Auction Summary for the week of August 24 -August 30. I chose the starting weights of 375 and 475 pounds in these examples due to the assumption that earlier weaning may result in lighter weight calves. Non-value added prices were used to establish initial value of the 375- and 475-pound calves assuming these calves would be bawling calves straight off the cow. The value of these lighter calves was compared to the value of both non-value added 575- or 675-pound calves and value-added calves. It should be noted that the premium reported for value added calves that week for 575- and 675-pound steers and heifers ranged from $25 to $42 per cwt. I chose a more conservative premium of $20 for steers and $15 for heifers.
You can see from the chart that the value of an additional 200 lbs. ranged from $328 to $596 per head depending on the class of cattle. That calculates a breakeven of cost of gain in the range of $1.64 to $2.98 per pound ($328/200=$1.64), again depending on class of cattle and if the heavier calves sell at a value-added price. To put this in perspective, a producer would have to put the additional gain on for less than the breakeven prices for the preconditioning to be profitable. I ran these numbers through Dr. Kenny Burdine’s backgrounding decision aid spreadsheet, with feed at $250/ton, hay at $125/ton, 6% interest, and a $15/head health cost. I used a feeding program of 2% bodyweight of concentrate and 1% body weight of hay, and an average daily gain of 2.2 for steers (90 days) and 1.9 for heifers (105 days). The breakevens calculated in the $0.87 to $0.95 range resulting in estimated net added values of ü Feed hay and allow cool season pastures to stockpile for winter grazing. ü Rest native warm season pastures until after frost to enhance winter survival and subsequent productivity. approximately $180 to $350 per head over selling off the cow. Additionally, actual on farm data from the Advanced PVAP Program from 53 closeouts using similar feed prices but feeding heavier calves indicate a cost of gain of $0.96.
So will it pay to feed these lightweight calves post weaning? Current market conditions suggest that there is an excellent opportunity to add real value. Obviously, market conditions can change and there is always inherent risk in any feeding program, but I always like to remind cow calf producers that the best place for a calf to be castrated and weaned is on the farm it was born. Here’s to fall rain and continued strong markets.
