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A backgrounders perspective

B

Big Swede

Well-known member
Joined
Jan 21, 2008
Messages
1,179
Location
South Dakota
It never ceases to amaze me what happens in the feeder calf market most every year. For most of my life we started calving about March 1st and weaned in October and sold backgrounded calves weighing around 750-800 pounds in January. When corn was really cheap some years we would take those same calves to finish at 1200# in May. For years I would watch light green 500-600 pound calves sell in the spring for nearly as many dollars as my heavy calves and scratch my head and wonder what were those buyers thinking. They were getting 200 extra pounds for very little money. That told me that I just wasted a lot of money to put on 200 extra pounds.

Well, I start getting a little older and calving in blizzards and slop seems much less appealing to me so I start calving in May. No night checks, very little sickness, no frozen feet or ears, less death loss, cows go to grass and do their thing. Now I'm the guy selling 500-600 pounders and the market demands calves that can go to grass this spring and buyers are willing to pay nearly what 800# calves are worth. By the time you figure how much more corn it takes to get those calves to 800# the dollars taken home is basically the same for both groups of calves. That doesn't even take into consideration how much less feed it takes in the cow herd by calving later. That's where the biggest savings are. For those who background calves, you really need to run the numbers.

For years I would just shake my head at sale time at what those smaller calves would bring but I finally decided that I don't make the rules but I just as well follow them and take advantage of them.

Any thoughts?
 
Hey B. S. (pun intended!)

I don't question your numbers. You may be right on.

However I sold in January twice with mixed emotions. I kicked a fat hog in the butt once, then lost my shirt the next year. The money I left on the table that year is still a sensitive piece in my puzzle.

In my humble experience, I've come to the conclusion that each year is different. It is hard to explain why the past year happened as it did and conversely, it is impossible to predict how the next one will go.

Most of us ranchers know how to work. We can feed, calve, hay, fix fence, etc. but most of us do not have much education in finances or marketing. We tend to toss the dice and hope for the best. If over our lifetime we can end up somewhere above average we are probably fortunate.
 
We backgrounded our calves for the grass market (May) in 08/09 and 09/10. This year we were short of hay and there was a margin in our calves so we sold.
I did not think that the way feed costs were increasing that there could be enough added value to put $130.00 hay into a $600+ steer calf and come out on the deal. Apparently I was wrong. :roll:
I was told years back that there is no such thing as a bad deal that has made you money but as I grow older I sure hate to leave money on the table. I guess it could have played out as I had it figured and then I would have been the one crowing on the roof. :D

Good for you folks that held on, God knows we all can use a break now and then. :wink:

Final thought, it was taught to me by a good operator that weaning weight doesn't neccessarily leave money in your pocket but dollars per cow sure does.
 
I agree JF, every year is different but I've seen it from both sides now and with the price of grain and feed it makes more sense to me to let someone else feed them if they are willing. I've got tons of feed and grain but that doesn't mean it makes sense to feed it. The market cycle always demands light green calves that can go to grass in the spring. That is a fact and it holds true most every year. Prices for feeders peak in April and bottom in October most years. I had planned on keeping mine till at least March but I thought the time was right.
 
We switched from buying grassers and running them to yearlings and some times finishing them to a cow calf operation. I always have calved starting sometime in April and since we just have native grass my calves were always on the lighter side. I also started out keeping or selling the calves to my Dad as we switched over from him to me. So I have been wintering my calves for quite awhile. For a few years I sent them to a custom feeder for the winter at 1,1/4 to a 1,1/2 lb gain/ day. They stayed green and sold in March or early April. He also got in some calves with a touch of Continental blood that the owner always wanted them up on the cement getting fed right out of the Harveststore and gaining2 to 2.5 lb/day. They usually sold very close to the same time in the spring with his weighing 850 and mine 700 or less. Consistently I got very close to the same dollars for my calves as the heavy ones and I had alot less dollars into them. The feeder would just shake his head.
I still have my calves but our calf market is just getting going now after the new year. I have bought calves starting now for my Dad and son and watched them get higher every sale so I think it will pay to wait a few more weeks yet. The calves are settled nicely and growing good staying green on a few pellets, hay and Vigortone mineral. :D
 
Big Swede said:
I agree JF, every year is different but I've seen it from both sides now and with the price of grain and feed it makes more sense to me to let someone else feed them if they are willing. I've got tons of feed and grain but that doesn't mean it makes sense to feed it. The market cycle always demands light green calves that can go to grass in the spring. That is a fact and it holds true most every year. Prices for feeders peak in April and bottom in October most years. I had planned on keeping mine till at least March but I thought the time was right.
Click to expand...

You've posed an interesting question and again, you have no argument from me. You've undoubtedly studied it more than I have and I congratulate you on a great sale.

I think that we each tend to do what we are comfortable with by using the feed available to us. However, if using your feed works one year, it probably won't the next. Anytime I've tried to out think the market, I've been disappointed. It's easy to miss it by a week.

I guess what I'm saying is that there is not much wrong with doing the same thing each year. Some will say it's old-fashioned to keep doing what Grand Dad used to do. If we are comfortable with that, fine. As the years add up, it will probably average out.

I don't see anything wrong with making long term changes either. You have thought this out carefully, it makes perfect sense and it worked great this year.

My guess is, next year will be different and we'll be wondering why.
 
Market quotes from Kamloops BC this past Tuesday. I think a suggestion to our buyers to attend a Nebraska or South Dakota bidding school is needed.
The butcher cattle sold well.

KAMLOOPS SALE - TUESDAY JANUARY 11, 2011
January 11th 2011


KAMLOOPS SALE - TUESDAY, JANUARY 11TH

A great sale to start off the New Year in Kamloops on Tuesday, January 11th. Butcher cows opened the trade with lots of action and higher pricing. Ryan & Erin Culligan's 1250 lb butcher cows topped 62.75. Dave Cunningham's butcher cows reached 66.25. Wendall Stoltzfus saw his top kill cows sell to 69.75. Bill Robinson had 1200 lb cows trade to 65.00 and Quesnel Ranch's 1295 lb cows brought 63.75. Frolek Cattle Co came to town with two liner loads of feeder and butcher cows. Their load of butcher cows reached 66.75, and the heiferettes topped 74.75, while the 874 lb heifers sold to 108.25. Seven 0 Ranches 2290 lb butcher bulls brought 77.75. Ian and Brenda Jones 1200 lb cows brought 67.75. Feeder cattle and calves sold on a strong trade as well. Don and Marion James' 800 lb Angus steers brought 114.25, the 900 lb steers traded to 104.75. Quesnel Ranch's 546 lb

Angus steer calves topped 139.00, and John Philip's 790 lb steers sold to 115.25, and the 634 lb heifers reached 114.75. Gardens Creek Ranch had 520 lb steer calves sell to 139.00, the 630 lb steer calves traded to 122.50. Willow Ranch's 887 lb steers topped 112.00. Dan Speller's 523 lb heifer calves sold to 125.50.
 
Out guessing the market is tough. :D

I kept my calves for three years putting them out on rented grass with supervision. I maybe broke even but had the stress of keeping them. Last year I sold in the spring and did OK but with the market trending upward it would have been the year to keep them. This year I know I will be wrong but this spring market looks to good to pass and I just hope who ever buys my grassers makes money and wants more next year. :D
 
I have an old friend from Yankton, SD, now retired, who has been an order buyer and horse trader all his life. He calls up about once a month to see how things are going. Last March (of 2010), he went to Ft. Pierre and bought some 636 pound Angus steer calves for his brother who feeds out cattle. These steers cost $102 per cwt. The brother and his sons fed out these steers, but didn't get them marketed until December. One draft of these steers weighed 1600 pounds and brought $101.50 per cwt, and the rest weighed 1646# and brought $100.00 per cwt. Making almost a thousand dollars per head for nine months of room and board turned out to be a pretty good deal. :-)
 
I'm happy for anyone that cashes in on this market.

As for us, the cowman that helped us get started on our own
many moons ago, gave us this advice (among others). Sell
your calves the same time every year. Don't try to outguess
the market. Doing this you will probably not hit the high of
the market too many times, but you won't hit the low, either.

We remembered that advice all these years. We always tried
(didn't always get it done) to have the calves contracted to
an order buyer by the middle of August and off the cows
and gone by Oct. 10th. We managed to make it work for
37 years. I realize that others have the feed to wean the calves
and keep them over and I think that is great. We never had
the feed or the place to keep them. We did work for a fellow
who kept his calves til about March first every year and that
worked amazingly well for him.

I guess the best advice is, when you are ready to sell them,
send them down the road. :D
 
JF there is certainly nothing wrong with consistency. Doing things the way your Dad and Grandad did is great, as long as it is truly working. A person can not argue with success. My arguement would be that lots of people never see that the way Grandad did it isn't working until it's too late, and pride stops them from taking the steps to try to make it work because they do not want to change. Tradition is something that can never be taken away and it is a great thing to pass on. In the same sense change is wonderful because it allows a person to leave there own legacy. There are a lot of outfits around that have neither, they tried to hold on to the ways of old and couldn't make it work, once they saw the writing on the wall they hurried to make change without a lot of planning. The biggest change they made is selling the ranch. I wish I had a dollar for every time I have heard someone say there is no money to be made in ranching. There must be some to be made somewhere or several of the people on this board and in our area would not still be in the business. My two cents for what it is worth. It seems to me that the most successful ranchers I have met plan things out and have the ability to roll with the punches, the ones that do not make a plan and just fly by the seat of there pants tend to struggle greatly.
 
flyingS said:
JF there is certainly nothing wrong with consistency. Doing things the way your Dad and Grandad did is great, as long as it is truly working. A person can not argue with success. My arguement would be that lots of people never see that the way Grandad did it isn't working until it's too late, and pride stops them from taking the steps to try to make it work because they do not want to change. Tradition is something that can never be taken away and it is a great thing to pass on. In the same sense change is wonderful because it allows a person to leave there own legacy. There are a lot of outfits around that have neither, they tried to hold on to the ways of old and couldn't make it work, once they saw the writing on the wall they hurried to make change without a lot of planning. The biggest change they made is selling the ranch. I wish I had a dollar for every time I have heard someone say there is no money to be made in ranching. There must be some to be made somewhere or several of the people on this board and in our area would not still be in the business. My two cents for what it is worth. It seems to me that the most successful ranchers I have met plan things out and have the ability to roll with the punches, the ones that do not make a plan and just fly by the seat of there pants tend to struggle greatly.
Click to expand...

:agree:
 
Someone I really respect tells me all the time "It's not what you have it's when you sell them, timing is everything." We all just need to get our timing down. :wink:
 
Interesting comment about weaning weights. Ours were also light by about 50lbs this year. We sold a pot load in the summer for December delivery. We were pretty happy with the price we got, at the time ($1.41 for 500). Unfortunately, we weaned about 50 lbs light so that made the calves really cheap for the buyer. He will do pretty good on that load of calves. Usually though we see feeders pay considerably more in the summer for winter delivery than they will in late fall or winter for the same weight of calves. That obviously isn't the case this year.
 
First of all It's what's works for all of you... And I jump for joy when farmers and ranchers see a profit. I don't know of a single occupation that deserves it more.............

Now here is our scenerio...... We calve in April and May and background our calves to 700-800 pounds.. Why... We know that our calves will go right on feed and be ready for harvest by late june and july..... We've done it..... We have the grain and hay..... We sell as much of the grain... Wheat, corn and sunflowers saving enough corn for the calves who get less than 5 pounds.. Sure we could just keep em green, but that's not what we WANT to do and so far has made a good living for us.... Bottom line it's what works and what ya want to do........

p.s.
Not responsible for loss of any money or spouses do to my advice... :D
 
We do everything. Spread it around. It's been what's kept us in business.

Feed efficiency is what we live by. A four hundred pound calf will gain the same weight per day as a 700 pound calf, but will eat less to do it. That's the key. That's where the money is made. We've found that over a certain weight, which is somewhere in the 700 pound + range, the feed consumption starts to rise. This is when they start to leave the yard.

Our own calves do not leave all at once. We spread it out starting in November, until they're gone. Usually steers first, so we have some time to assess heifers and make up our minds on who gets to stay. Some sell higher, some lower, but the risk is spread out too. There's a lot to be said for spreading the risk. We just don't have the nerve to put a whole year's work at the mercy of one day's market.

We buy calves to background, but they never see grass. They come in a little under 400 pounds and leave at 750. We feed them to gain 2 to 2.4 lb per day, and they're not here long. When they're in the 700's, the big feedlots are happy to have them. They're started on feed, vaccinated, and ready to go.

Time is money. The younger generation will learn that fast if the days of high interest ever come back. The key is to listen to that little voice in your head that tells you when it's time to cut them loose. You've got to be flexible because no two years are alike.

That's the way we do it.
 
I wouldn't think of telling anyone how to market their calves. I agree with you Katrina, whatever works for you works for me. I was just giving my perspective since I've now done it both ways. That's what happens when you have long winter nights to think about things. :wink:
 

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