From Merck Animal Health's From the Fence Post.

As cow-calf producers approach fall weaning, it’s a good time to rethink calf economics and sale strategies. Calf values have never been higher, and projections suggest that trend will continue throughout 2015 and early 2016 prior to the expansion of the national cow herd. In past years, retaining ownership of weaned calves for 45 to 60 days before sending them to the feedlot may have seemed too expensive or risky. But with today’s economics, the cost/benefit has changed dramatically and it deserves renewed consideration.

According to 19 years of data on more than 7 million calf sales, Superior Livestock Auction shows that buyers consistently pay 4 percent more for preconditioned and weaned calves (45 days) compared to calves removed from the cow and shipped without preconditioning. In today’s market that calculates to about $60 for a 550-pound calf. In 2014, a calf vaccinated twice and weaned for 45 days commanded about $33 per head more than calves vaccinated once and weaned on the truck. Calves held for 60 to 90 days can reward the cow-calf producer even more through added weight gain if that gain is efficient.

There’s no question that calves weaned for 45 to 60 days are better adjusted and have fewer health problems throughout the feeding period and are, therefore, more profitable for the feedlot owner. The benefits from these high-quality calves enhance the cow-calf producer’s reputation and help to ensure satisfied repeat buyers.

The downside of retained ownership is that the cow-calf producer must accept some market and production risk. If the producer doesn’t have the facilities, labor, expertise or cost-effective, quality feed to manage weaned calves, the result can be losses instead of profits. It is imperative to know exactly what feed costs, labor costs and gains will be to correctly forecast the economic outcome.

One way to simplify the process is to use a calf backgrounder to manage calves through the weaning period. The backgrounding contract can specify feed and labor costs and should accurately estimate gains. This arrangement pays the backgrounder a set fee for his feed and labor, and the cow-calf producer will still take advantage of the benefits of increased health, weight and value when the calves are sold.

If a cow-calf producer plans to retain weaned calves, he/she needs to also consider the use of growth implants. According to Superior data, fewer than 30 percent of calves were implanted in 2014. Yet, 90 percent of cattle will be implanted going into the feedlot. For the cow-calf producer, a $1.50-per-head investment of an implant at weaning can return as much as $40 per head.

Strong economic signals from buyers are telling producers what management practices they value most. Now is a great time to take a fresh look at weaned-calf strategies and take full advantage of current market conditions. For a spreadsheet to review the profit potential of retaining ownership and implanting weaned calves, email me at Kevin.hill@merck.com.