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Packaging calves to top the market

Soapweed

Well-known member
This article is in the current edition of the Tri-State Livestock News out of Spearfish, South Dakota.

Packaging calves to top the market

Dillon Feuz
Livestock Marketing Specialist, Utah State University

February 4, 2008

I am sure you have all been told in the past by some brilliant economist that you are in a competitive industry and therefore you are price takers. The message is that whatever you do with regards to your production will not impact the market price. This statement remains true for the general level of market price but not for the actual price you receive.

Put another way, the general price level for calves is determined by overall supply and demand conditions in the market place and your level of production will not alter this. However, individual prices are discovered in the market place (auctions, order buyers, internet, etc.) and your actions can have a major impact on this price discovery process.

Look at the market price quotes from any auction this week; you will find that prices for the same weight calves are similar from one auction to the next. If the ranges of prices are listed in addition to the average price, why does the range often vary by more than $10 per cwt. for the same weight and frame calf?

I have been analyzing data from Superior Livestock Auction this winter. I have data for three years on over 31 thousand lots sold. The average lot size was 98 head, a pot load, and the average weight was just over 600 pounds. Lot size varied from a few head to 900 head. Calf weights varied from less than 400 pounds to over 800 pounds. I was able to obtain all of the sale catalogue data on these cattle as well as all the information recorded at the time of sale. Breed, frame, flesh, weigh conditions, location, number of head, weight, the presence or absence of horns and several other variables were recorded for each sale lot.

Let me first tell you a few things you probably already know and then I will share some things that you may not have known. Heifers sold at a discount to steers of about $8 per cwt. There was a fairly consistent price slide that decreased with weight. The slide was about $12 per cwt for 4-weight calves, $10 per cwt for 5-weight calves and $8 per cwt for 6-weight calves.

Small frame calves were discounted about $4.50 per cwt compared to medium and large frame calves. Calves with heavy flesh received a discount of $2.50 per cwt and those with light flesh received a $1.50 per cwt premium compared to medium fleshed calves.

There were also breed differences that were significant in market price. Angus calves sold at a premium and more exotic breeds sold at a discount. These premiums and discounts are a little harder to quantify, because it matters what breed or combination of breeds you set as the standard.

Uniform lots of calves sold at a $2.75 per cwt premium to uneven lots. If the lot was at least a full pot load, there was a $3 per cwt premium compared to smaller lots. Lots from 300-500 head sold at about a $5 per cwt premium. Lots of calves with horns sold at a $3.40 discount to calves without horns.

Most of these premiums and discounts are things which you as a producer have control. Therefore, you can influence the market price you receive. The message I would like to drive home with this article is the general price level for calves, the price you can’t control, will likely be lower the next few years. That price level may be near break-even for many of you. Therefore, you should begin now to think about what you can do to sell a uniformed package of calves this fall that will generate you a higher price within that general price level.

Marketing doesn’t just mean weaning the calves and sending them to market. Marketing is merchandising. It is putting together a package of calves that meets some buyers specific needs. If you can do this, you will be successful and you will be one of those producers who always “get lucky” and top the market.
 

leanin' H

Well-known member
Interesting reading and sure makes you think! I am a firm believer that all producers under 300 head have to specialize in some way. We keep most of our steer calves and feed them out to sell as fat beef. We sell open heifers and bred heifers too. And each spring we sell some 2nd and 3rd calf heifers as pairs. We try to pre-sale our old cull cows as hamburger beef and usually can sell most of them that way. It gets us about 200 to 300 more than sale barn prices for cutters. And we but some holseins and feed them out throughout the year as well. Anything to bring in a check. My Grandpa raised his family with his cattle and ranch. Now, two generations later, we have full time jobs and more, plus the cattle to make ends meet. But as long as I'm able i will try to carry on the great ranching tradition. I was vaccinated against it but i guess it didn't take. I'm sure glad! Can't imagine livin' in town!
 

John SD

Well-known member
I guess it ain't no secret that the buyers like load lots of black calves, not too fleshy, no implants, all-natural, that are like peas in a pod.

I'm kinda an oddball swimming against the tide by getting more Hereford blood in my herd, at least while I'm still in the herd rebuilding phase. This upcoming breeding season I have an all-Hereford herd bull battery. I've been keeping all the Hereford heifers as calves and culling them as open yearlings or later if they wash out at calving time or later down the road. Heifers and heiferrettes sell pretty well if you send them down the road before they become cows or cowettes! :wink:

Also been keeping my steers and making yearlings out of them to sell as 9-10 weights in July/Aug. The buyers discriminate against Hereford steers as calves but if I can keep them over and make yearlings I believe they sell as well as the blacks. I wouldn't have enough to make load lots regardless.

And even if it's only a figment of my imagination I believe it takes less feed to background a Hereford steer than any other breed over winter. :wink:
 

CattleArmy

Well-known member
As different producers market their cattle I often wonder what the people who sell a split load on the video markets are thinking. Most of the time it seems like they take it in the shorts for selling in this manner.

I realize it's due to the fact they don't have a load of either steers or heifers but why not just take them to the sale barn?
 

Nicky

Well-known member
CattleArmy said:
As different producers market their cattle I often wonder what the people who sell a split load on the video markets are thinking. Most of the time it seems like they take it in the shorts for selling in this manner.

I realize it's due to the fact they don't have a load of either steers or heifers but why not just take them to the sale barn?

Most of the time they are still doing better selling a split load on the video that taking them to a sale barn. I know you guys have some really good sale barns in your neck of the woods but not all of us do.
 

Soapweed

Well-known member
John SD said:
I guess it ain't no secret that the buyers like load lots of black calves, not too fleshy, no implants, all-natural, that are like peas in a pod.

I'm kinda an oddball swimming against the tide by getting more Hereford blood in my herd, at least while I'm still in the herd rebuilding phase. This upcoming breeding season I have an all-Hereford herd bull battery. I've been keeping all the Hereford heifers as calves and culling them as open yearlings or later if they wash out at calving time or later down the road. Heifers and heiferrettes sell pretty well if you send them down the road before they become cows or cowettes! :wink:

Also been keeping my steers and making yearlings out of them to sell as 9-10 weights in July/Aug. The buyers discriminate against Hereford steers as calves but if I can keep them over and make yearlings I believe they sell as well as the blacks. I wouldn't have enough to make load lots regardless.

And even if it's only a figment of my imagination I believe it takes less feed to background a Hereford steer than any other breed over winter. :wink:

Maybe that would be considered "pigment of your imagination" instead. :wink: :)

I think you are right about Hereford yearlings bringing just as much as Angus, but as calves it doesn't seem like they do.

At the Bull Bash yesterday, one gentleman had a couple fine looking Hereford bulls on display. There was also a photograph hanging on the panel. It depicted a good looking black cow with a big heavy red baldy steer calf by her side. The calf was as tall as the mother and probably weighed two-thirds as much as the cow did. It presented a good case for using Hereford bulls on black cows. Come to find out, the black cow was actually 5/8 Angus and 3/8 Hereford herself. That would make the calf 13/16 Hereford and 3/16 Angus. He was a good one.
 
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