– James Mitchell, Livestock Marketing Specialist, University of Arkansas
As fall approaches, producers should already be thinking about preconditioning programs as part of their broader marketing plan. A few months ago, Kenny discussed always doing the “little things”, even when times are good, and prices are high. Preconditioning is a “big thing” that producers should continue to do to add value to their calves. That preconditioning process includes castrating bull calves, removing horns, vaccinating calves for respiratory disease and blackleg, treating calves for internal parasites, and keeping calves at least 45 days after weaning. I’d argue 45 days isn’t long enough and should be considered the minimum number of days to keep calves after weaning.
This year in Arkansas, preconditioned steer calves are bringing a $14/cwt premium. Preconditioned heifer calves are averaging a $17/cwt premium at auction. For a 500-pound calf, that’s an additional $72/head and $83/head for steers and heifers. That price premium does vary by weight category, with lighter-wight calves receiving the highest premium for preconditioning. That premium is also consistent across years. There is a premium in years when cattle prices are high and in years when prices are low.
Producers get paid by the pound, so there is some disagreement about whether it pays to castrate bull calves. Kenny has discussed this topic at length in a previous article. The general finding is that selling bull calves instead of steers is never a price advantage, even after considering that bull calves will weigh more. Kenny calculated—depending on the specific price adjustment for weight—a bull calf would need to weigh 70-100 pounds more than a steer to have comparable value. Separate from preconditioning programs, steers are selling for $20/cwt more in Arkansas than bulls.
Another consideration is the additional weight from keeping calves after weaning. Assuming calves are in a program that gains 1.5/lbs/day for 45 days, producers sell an additional 68 pounds at marketing. Based on current Arkansas price forecasts for early November and a $10/cwt price slide, the value of gain for an additional 68 pounds is $1.70/lb or $116/head.
The final estimate for preconditioning calves considers value of gain, premiums for castrating bull calves, and the premium for weaning and vaccinating. That estimate can be compared against the cost of gain and preconditioning. These costs include feed (supplement, hay, and mineral) ear tags, dewormers, vaccines and boosters, chute charge, and labor. Other considerations should be given to timing (seasonality), location (venue and distance), lot size (there are no premiums for selling singles), and risk management (previously bought LRP contracts), among other factors.