– Kevin Laurent, Extension Specialist, University of Kentucky
Do you “sell” your calves, or do you “market” your calves? With cattle prices at record levels, the difference between the two doesn’t seem to really matter that much, or does it? We are in unprecedented times in the cattle industry. Beef cow inventory is as low as it’s been since many of us were born. Carcass weights are at record highs and input costs continue to rise. With light weight calves hitting $4.00 cwt it’s hard to argue against the mindset of load them up and haul them off, but I think we need be careful to not let these good times change our mindset.
We are fortunate in Kentucky to have an excellent Market News division at Kentucky Department of Agriculture and lately I have poured over numerous KDA market reports working on PVAP closeouts. I thought I would share some of what I found. Table 1 shows the number of steers and bulls by weight (300-699 lbs.) and grade, large and medium frame, muscle score 1-2 (LM 1-2) vs large and medium frame, muscle score 2-3 (LM 2-3) as reported by the KDA Market News reporters for the week of December 8-14. I chose to summarize this particular report since it represents one of the largest marketing weeks in 2024 (24,085 feeder cattle). Note that 34% of the calves weighing 300-699 lbs. were bulls. This ranged from 60% for 3 wt. calves to 20% in the 6 wt. category. If you calculate the number of LM 2-3 calves, both steers and bull, you will see that 892 calves out of 7,413 (12%) failed to have the muscling and quality to make the LM 1-2 grade. So how does this affect price?
Table 2 gives the corresponding weighted average prices ($/cwt.) reported in that same week. Discounts for bulls vs. steers of similar quality (LM1-2) ranged from -$14.41 for 3 wt. calves to -$30.18 for 6 wt. calves. More severe discounts were reported for LM 2-3 steers and bulls with a range of -$30.34 for 6 wt. LM 2-3 steers to a high of -$75.15 for 3 wt. LM 2-3 bulls. This means that 40% of calves weighing between 300 and 699 lbs. experienced discounts ranging from $14 to upwards of $50 plus per cwt. Per head discounts on a 500 lb. calf ranged from $125 per head for selling a LM 1-2 bull up to $283 per head for selling a lower quality light muscled LM 2-3 bull. For the average 25-30 cow Kentucky cow herd, this could easily total $2000 or more of lost revenue. The good news is these discounts can be avoided by simply castrating calves and using quality bulls with adequate muscling. The common argument against castration is added weight at weaning and the risk involved. Both of these concerns can be alleviated by castrating early (less than 3 months of age) and implanting. Early castration is easier on the calf and the person doing the castrating. Also, research has shown that early castration coupled with one growth promoting implant will result in similar weight at weaning as if the calf had been left intact.
So, what is the difference between “selling” and “marketing”? If the first step of marketing is avoiding discounts, maybe the second step is adding value. Weaned preconditioned calves continue to be in demand and the best place for a calf to be castrated and weaned is on the farm where it was born, and buyers recognize that. The Advanced Post Weaning Value-Added Program (PVAP) helps producers determine the profitability of weaning and preconditioning their calves prior to marketing. Calves must be weighed at weaning to determine the beginning value of the calves and expenses are recorded throughout the preconditioning period. When calves are sold, a one-page closeout detailing costs and returns and performance of the calves is provided to the participant. Table 3 is a summary of closeouts from the PVAP program during the marketing year April 2024 to January 2025. This summary contains the 25 closeouts that have been completed. Note that 2024 was a historically profitable year for preconditioning calves. Net added value per head averaged $216 vs selling the calf at weaning. Returns this fall were even higher, averaging $278 per head with several closeouts in the $300 plus range. Think about the “sellers” who sold their intact bawling bull calves straight off the cow in October vs the “marketers” who weaned their steer calves in October and preconditioned and marketed them in December. Market data and PVAP results from this fall indicate a potential $403 ($125 + $278) per head revenue advantage to the “marketer”. Which for a typical 25 cow herd could have totaled an additional $4000 and this does not include added revenue for preconditioned heifers.
There are several other strategies that can enhance value and help you “market” your calves. Managing a tighter calving window will result in larger lot sizes. Upgrading genetics with breeders who offer buyback programs or special sales. Participating in stockyard precondition sales. Group selling with other producers with similar cattle and program. Whatever strategies you use, remember these prices won’t last forever so use your profits wisely to position yourself to be a “marketer” and not just a “seller”.