When corn prices jumped from around $2 per bushel in the fall of 2007 to $3, then $5, then to more than $6, it became clear livestock production would change. Conventional wisdom says one fairly obvious change would be to keep more cattle on forage for longer times, reducing the time they spend in feedlots eating expensive corn.

Reality has turned out somewhat different. While there has been some shift toward extended grazing, factors such as drought, expensive hay, excess feedlot capacity and the inherent efficiency of calf-fed programs have kept calves moving into feedlots after weaning.

But for some producers, depending on their environment, resources, management and marketing flexibility, shifting at least some calves into a yearling program could improve returns.

Pay attention to details

“The devil’s in the details,” says Terry DeGroff, a consulting veterinarian based in Burwell, Nebraska. He works with several cow-calf producers who market their calves as yearlings., and explains that while marketing yearlings instead of calves might sound good, producers need to engage in careful planning to make it work.

University of Nebraska Animal Scientist Terry Klopfenstein agrees, saying backgrounding calves through the winter offers opportunities for ranchers, but they need to be better than average in their management to keep input costs low enough for it to work economically. Another big question, he adds, is the state of the overall economy and its effects on cattle prices. Markets might be on the rebound by this fall, offering stronger prices for weaned calves. But if the recovery lags, the outlook might be more favorable for selling yearlings in the summer or fall of 2010.

In an uncertain market, flexibility could be the greatest benefit for ranchers who are prepared to retain ownership of their calves, as they open up several marketing options:

  • Sort in the fall, sell the heavier steers or place them on feed. Background lighter steers and heifers through the winter.
  • Sort again in the spring, sell heavier cattle or place them on feed. Graze the lighter animals.
  • If the market is favorable, or forage conditions are not, sell remaining calves, or place them on feed, in the spring or summer.
  • Potentially breed entire heifer crop, and select replacements based on fertility.
  • Sell remaining steers and open heifers as long yearlings in the fall.

Whether you sell feeders or finished cattle, Klopfenstein says, you market at two or three different times during the year, improving your chance of hitting a good market.

Manage for the market

DeGroff stresses the importance of beginning with the end goal in mind. For his clients in northern Nebraska, that goal is to market a 900-pound yearling in July or August. The seasonal trend in the region’s markets usually offers strong prices for grass yearlings at that time, with demand from cattle feeders placing cattle against the late-fall fed market.

Achieving that goal requires considerable planning and targeted management. DeGroff explains that if you wean 500-pound calves in October, and want to sell 900-pound yearlings in July, limiting gains to 400 pounds over 260 days or more means average daily gains need to be low.

Most of DeGroff’s clients wean calves at lighter weights, and program their feeding to target their end weights and dates. After weaning, DeGroff says, they count the days to when the calves will go to grass around May 1, determine the rate of gain they need during the winter, and program the feeding accordingly.

Homer Buell is one of those clients who operates a cow-calf and yearling operation with his brother near Burwell, Nebraska. He says they have maintained the same general program since the 1970s, wintering their calves, grazing them through the summer and selling them as long yearlings.

Calving season for heifers begins about April 1, and for cows in late April, Buell says, adding that later calving fits the program well since lighter weaning weights are preferred. They wean the calves in late September or early October, and move them to sub-irrigated meadows for grazing through late fall. They keep the calves on grass as long as forage conditions allow, but typically move them in November, sorting by sex and weight and placing them in pastures of around 100 acres. There the calves have access to feedbunks, with rations including hay, corn syrup, wet distillers’ grains and supplements.

Cost of gain versus sale price

You need to keep production costs down, De Groff says, but also determine which costs to measure. Cost of gain, while important, can be misleading in this type of program. With calves gaining just 1.5 pounds per day, cost per pound of gain typically is much higher than that for the same calves on full feed gaining 3.5 pounds. DeGroff says his clients are more interested in cost per day, which they keep low. The added weight, marketed at the right time, makes up for the higher cost per pound of gain.

Buell says he initially bred British-Continental cross cattle, which gained weight faster through the winter and were ready for market in January. The cost of gain was lower, but the market timing meant lower prices. He has since switched to Angus-Hereford-cross cattle, slower gains and later marketing, which turns out to be more profitable. DeGroff adds that prices for 900-pound steers in August typically run $10 to $15 per hundredweight higher than those for seven weights in the winter or eight weights in the spring.

Sorting

Sorting is a critical component of the system, and DeGroff says his clients sort the calves several times between weaning and shipping. At the first sort in October or November, there typically is a wide distribution of weights, anywhere from 325 pounds up to 575 pounds. Producers sort heifers and steers into separate groups, and sort off the heaviest or lightest animals. For the lightest groups, DeGroff says they design a feeding program targeting daily gains around 2.0 to 2.75 pounds, while programming most of the steers and heifers to gain 1.5 to 1.7 pounds per day.

“We’ll monitor them through the winter,” he says, and move calves as needed. Some of the smaller ones, for example, might catch up and move to the slower-gaining group. We’ll sort again before the calves go to grass, and possibly again at marketing time.

Klopfenstein says that in Nebraska trials, 35 percent of fall yearlings from unsorted groups produced carcasses weighing more than 950 pounds, compared with just 6.4 percent in groups from which researchers had sorted the heavier animals into the calf-fed program. Just 1 percent of the sorted cattle produced carcasses weighing more than 1,000 pounds, compared with 17.7 percent in the unsorted groups. “We routinely see a 300-pound weight spread among calves we purchase in the fall, whether from a ranch or a sale barn,” he says. Those weighing 600 pounds or more go into a calf-fed program, while the lighter calves are better suited for backgrounding and marketing as yearlings.

Over eight years of trials, UNL researchers have managed and kept data on calves sorted in the fall into either calf-fed or yearling programs. Calves that went to the feedlot in the fall weighed an average of 642 pounds, while those retained for backgrounding averaged 526 pounds in the fall and entered the feedlot at an average of 957 pounds.

Calf-feds were more efficient in the feedlot, with lower daily intake and less feed per gain, but with 168 days on feed versus 90 for the yearlings, they consumed more total feed. Cost of gain in the feedlot was higher for the less-efficient yearlings. Finished to similar fat endpoints, the yearlings went to slaughter about 80 pounds heavier than the calf feds. Yearlings graded 65 percent choice versus 58 percent for calf feds, and just 3.3 percent of yearlings had yield grades of 4 or higher, compared with almost 12 percent for calf-feds. More than 11 percent of yearlings however, were subject to overweight discounts at the packer.

As for profitability through the feeding phase, over 10 years of trials, the calf-fed and yearling programs, on average, came out almost exactly equal at between $21 and $21.50 per head. The yearling program was, however, more variable with a maximum profit of $356 per head compared with $206 for calf fed, and a maximum loss of $171 per head compared with $152 for the calf fed program.

That variability, Klopfenstein says, means more risk, and producers engaging in any retained ownership program need to understand their production costs and have some idea of the performance potential of their cattle.

Nutrition

Letting the cattle harvest as much of their nutrition as possible is the best way to keep input costs down, Klopfenstein says. In Nebraska and surrounding states, availability of crop residue for grazing and by-product feeds for supplements open up backgrounding possibilities for ranchers. Ranchers who are close enough to the source to use the wet products – wet distillers’ grains or wet corn gluten feed – are at a particular advantage in terms of cost on a dry-matter basis.

In areas without abundant corn stalks, availability of stockpiled forage can determine the feasibility of running calves through the winter. Again, by-product feeds such as distillers’ grains and corn gluten feed fit well as supplements, providing protein and energy. Lacking a starch component, these feeds do not interfere with forage digestibility, making them a good complement to natural forage. DeGroff also says most of his clients feed a grain mix or distillers grains with hay or standing forage.

Heifers

The program also serves as a low-cost strategy for heifer development. DeGroff notes that research has demonstrated the feasibility of developing productive heifers in range conditions with fairly limited inputs. So some of his clients are wintering their heifer calves, at a 1.5 pound daily gain, and selecting replacements at 12 months of age. They’ll sort off the lightest and heaviest, any poor doers and any born late in the calving season, wanting them to be at least 13 months old at the beginning of the breeding season.

Buell uses a variation of this system, wintering heifers on limited rations and weighing them in early spring. The lightest – under 600 pounds – are spayed and placed in the yearling program, The middle group, weighing 600 to 700 pounds, go into the breeding herd unless they fall out for other reasons. The Buells are working to maintain a moderate cow size in the herd, so they sell the heavier heifers as replacements to producers who want bigger females.

DeGroff says Clients are seeing around a 75 percent heifer pregnancy rate after a 21 to 25 day breeding season, and sorting open heifers into the yearling pool. This program allows selection for fertility, reproduction and stayability, as the heifers are managed on range conditions

Run the numbers

Several of DeGroff’s cow-calf clients have had yearling programs in place for years, well before corn prices escalated. Over the past year or so he says, growing numbers of producers are asking him and his clients questions about retaining calves through the winter. DeGroff notes that the same specific strategies might not apply everywhere, due to differences in climate, forage and feed availability and local market trends.

Buell agrees, stressing that switching to a yearling program requires planning and evaluation of resources. The program requires a different infrastructure, with equipment for feeding and storing ingredients and facilities for sorting calves and managing them in smaller groups. Like DeGroff said earlier, the devil’s in the details.

For more information, refer to the following research reports.