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Preconditioning adds value to fall calf sales

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Cow-calf producers with calves to market in the fall of 2014 are going to have some interesting decisions to make. With calf market prices at all-time highs and feed prices lower than the past three years, are the calves going to be sold at weaning or are they going to be kept until a later date to make additional income?

It is crucial 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. If the labor and facilities are available to wean and precondition calves, assuming the calves have good to superior genetics, additional profits are available in most cases by keeping the calves after weaning.

When selling calves at weaning, the shrink on weaned calves can be significant, often ranging from 4 to 12 percent, depending on the sale and weather conditions. These same calves are discounted from $10 to $12 per hundredweight because they have not been through the weaning process.

Compare this to a +2 percent to -2 percent sale shrink at the end of a 45- to 60-day preconditioning period with no price discount for being a calf. In addition to the lost weight and lower price at weaning, the calves have an opportunity to have a daily gain of 2 to 3 pounds and typically sell at a higher price at the end of a typical 45- to 60-day weaning period in the fall. Considering these factors, the market value of the preconditioned calf is significantly higher.

Table 1.

To optimize the margins through this preconditioning process, it is crucial to keep the cost of gain as low as possible, preferably in the 80- to 90-cents-per-pound range or lower. This level of cost of gain can be achieved by planning ahead for feed, veterinary supplies, and hay or grazing.

By marketing calves at the end of the 45-day preconditioning period, consistently positive margins are achievable, and the margin can be significant in some years. For example, Noble Research Institute producers in the Integrity Beef Alliance netted an additional $142 per calf during the 2013 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 per pound to $1.05 per pound, there are opportunities for increased profits the longer the calves are held. If you need help calculating the cost of gain and value of gain during this time, give the Noble Research Institute a call.

Steve Swigert
Agricultural Economics Consultant (Retired)