Cow-calf producers with calves to market in the fall should use the summer months to develop a plan. Specifically, are the calves going to be sold at weaning or are they going to be kept until a later date to make additional income?
With input prices and values of gain at new highs, it is crucial that a plan of action be made to determine what is best for the calves and what is best for the operation financially. There are several decisions to be made when working through this process.
The first decision is whether to market at weaning or keep the calves longer. If the calves are sold at weaning, income is available immediately and no more labor is needed to take care of the calves. Most of the time, however, calves with good to superior genetics can generate additional profits when kept after weaning.
When selling calves at weaning, the shrink on the weaned calves can be significant, often ranging from 4 to 12 percent depending on the sale and weather conditions. Additionally, these same calves are being discounted from $6 to$8/cwt because they have not been through the weaning process. When compared to +2 percent to -2 percent sale shrink at the end of a 45-day preconditioning period with no price discount for calves, the value is significantly higher. In addition to the lost weight and lower price at weaning, the calves have an opportunity to have a daily gain of 1.5 to 2.25 pounds. In addition, calves usually sell in a better market, price-wise, at the end of a typical 45-day weaning period in the fall.
To optimize margins through this preconditioning process, it is crucial to keep the cost of gain as low as possible - preferably in the 60 cents to 70 cents per pound range or lower. This cost of gain level can be achieved by forward planning for feed, veterinary supplies, and hay or grazing.
By marketing calves at the end of the 45-day preconditioning period, consistent positive margins are achievable and, in some years, the margin can be significant. For example, Noble Research Institute producers in the Integrity Beef program netted an additional $122 per calf during the 2010 preconditioning period.
In addition to the marketing opportunities at the end of a preconditioning period, these same calves will continue to perform through a wheat pasture or post-preconditioning feeding program. With value of gain ranging from 85 cents to $1.05 per pound, there are potential opportunities for increased profits the longer the calves are held. If you need assistance calculating cost of gain and value of gain, give the Noble Research Institute a call.