We often hear that finished weight brings home the green in cattle feeding, and it is true that heavier carcasses earn a bigger check. But what it takes to get cattle to those weights can make an even bigger difference in profitability, says Decatur County Feed Yard owner and manager Warren Weibert.
For years, Decatur County Feed Yard (DCFY) has managed and tracked cattle individually, analyzed data and shared results with ranchers. They recently conducted an economic analysis of 185,000 cattle finished at the facility to evaluate the drivers of profitability, using a corn price of $6 per bushel to equalize feed costs over several years. In their analysis, they found feed efficiency is the top profit driver, accounting for 43 percent of the differences in profitability between cattle. Grid value follows closely at 39 percent and carcass weight accounts for 18 percent.
Speaking to ranchers during a seminar preceding the Leachman Cattle of Colorado bull sale, Weibert noted that 80 percent of finished cattle in Texas and Kansas now sell on carcass-based grids. Ranchers who finish their calves need to know what type of grid they market to, and select genetics accordingly.
Seasonality plays a significant role in feeding profits, Weibert points out, and ranchers who retain ownership should work with their feedyard to target the best seasonal markets and manage the cattle accordingly. DCFY data show steer and heifer profitability reaching an annual peak during March, April and May, usually around April 15. Returns decline into the summer as prices weaken, typically reaching a low point in August. Prices and profits typically reach a second, smaller peak in October and November.
The Choice-Select spread also follows seasonal patterns, typically reaching its narrowest level during the early spring. Over the past few weeks, for example, there has been little difference between Choice and Select boxed-beef prices and at times, Select prices have averaged slightly higher than Choice. The spread usually is widest around November and December. Ranchers who have selected for high Quality Grade might target their slaughter dates during a time when the Choice-Select spread widens, while those with cattle big on muscle but producing lower percentage of Choice carcasses could market into a window when Select carcasses sell close to choice. USDA’s National Daily Cattle and Beef Summary includes a chart showing annual trends in the Choice-Select spread.
Weibert is a proponent of retained ownership as a means for producers to pursue improvements and get paid for the value they build into their cattle. Many ranchers, he says, have very little reliable information on how their calves perform after leaving the ranch. He recommends finishing at least a portion of your calf crop and working with a feedyard that will share useful data. Those data should help you set a baseline for genetic improvements.