To this point, the beef cattle market has certainly outperformed the expectations of most industry prognosticators from the beginning of the year. Prices for feeder calves and fat cattle have been strong for much of the first half of 2017. Where the market goes from here is anyone’s guess. Based on what we have seen since 2014, it would be reasonable for the producer to expect a fair amount of volatility in the market as we move forward.
I believe it is safe to say that we will see a different market moving forward over the next few years. The current beef cow herd expansion that started in 2014 has increased the supply of animals and has turned things more towards a “buyer’s market.” Market signals in 2014 and 2015 told the producer to provide the buyer with anything they could produce. Current and immediate future market signals will tell the producer to provide the buyer what they want!
What are some things that the cow-calf producer can do to add value to their calf crop? Maybe the more appropriate consideration is to how to avoid discounts in the market. A starting point would be to recognize some of the factors that help to establish the basic value of feeder cattle. Some of the primary factors in no particular order include the following:
1. Time of the year/weather (Supply and demand)
2. Weight – heavier calves generally bring less per pound than lighter calves
3. Shrink – buyers do not like to purchase extra condition or fill
4. Information/Past History – source, age, health, and genetics
5. Location – where are the calves located in relation to the market or potential buyer.
Once we have established the basic value of a feeder calf, how can the producer add value (or avoid discounts) with the feeder calf? Consider this list as a means to add value:
a. Health – Most feeder calf buyers prefer preconditioning a minimum of 45-days after weaning. This allows for a specified animal health program with initial and booster vaccinations, a proper nutrition program, and training to a feed bunk and water source.
b. Sorting – Consider sorting your calves by sex, size, muscle score, color, etc.
c. Quality – Basic but important practices such as castration, dehorning, control of internal and external pests, etc.
d. Programs – Evaluate opportunities to participate specific markets for all-natural or “never ever” calves, BVD PI tested, branded programs such Certified Angus or Hereford Beef, etc.
Many producers will question the merits of implementing value added practices as they simply believe that they do not get sufficiently rewarded financially to justify these extra practices. The reality is that you probably will not get properly compensated if you are selling a small number of calves at any type of traditional sale. Consider working with other producers to put together larger groups of calves of similar breed composition, weight, and sex. Discuss all marketing options with someone you are comfortable with. Traditional weekly or special feeder sales are always options but there are also a growing number of video or internet sales available. A little extra time spent on your marketing plans now may just put a few extra dollars in the bank account.