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Million-dollar question: What are buyers looking for in calves?

Progressive Cattleman Editor Cassidy Woolsey Published on 22 September 2017
Non-uniform lots

“If it takes more than two sentences to describe your cattle to a buyer, plan on getting discounted,” said Tom Brink, CEO of Red Angus Association and a past president of J&F Oklahoma Holdings, the cattle procurement and ownership arm of Five Rivers Cattle Feeding.

Ouch.

He then added, “What does that say about your calves? You just told the buyer you don’t have a breeding program, your genetics are all mixed up, and you’ve been on this path to nowhere for a while. These calves have already been discounted in the buyer’s mind.”

Double ouch.

But on the flip side, if you can describe your calf crop in one sentence, that says a lot about your program. The buyer knows you’ve got an established plan and will value those calves higher because of it. If you want someone to buy and be satisfied with your calves, you have to understand what the key value attributes are.

Diamonds in the rough

In the cow-calf sector there are many traits sought after, but in the feedlot sector there are really only a few major things that must be done to have truly valuable feeder calves, Brink said. So what are they?

Referring to Table 1, Brink pointed out the striking difference in the top 10 animals and the bottom 10 – $457 a head difference in value.

Profiling real value creation for feeders and packers

Yes, the market was higher in this dataset, but if you look at it in today’s value, there would easily be $250 to $300 per head difference in the best and worst animals, he said.

All fed to the same endpoint, one group of cattle created $457 more in this real-world example. First of all, the top group was healthier, but Brink believes it also has to do with genetics. He said, “Those top 10 head were just better genetically, and it turned into dollars.

Health, growth and grade; if your calves do those things right as they go through the feedlot, you have extra-valuable cattle.”

One way producers can easily improve the genetics in their herd is to purchase quality bulls, said Ken Jordan, owner of Jordan Cattle Auction in San Saba, Texas. While a cow in five years will only influence five calves, a bull turned out on 25 cows for five years will influence 125. Bulls alone can have a huge impact, he said.

“I see people spending a lot of money on females and then hardly spending anything on bulls. I would do it the other way if I had to choose between the two. But if you can buy both good cows and good bulls, you’ll have tremendous calves,” he said.

Pointing out it costs about the same amount of money to produce quality cattle as it does to raise poor-quality cattle, Jordan predicted producers will receive at least $10 to $20 more per hundredweight if they would buy a better bull.

And that doesn’t mean the bull has to be black, he said. Regardless of what people might think, quality doesn’t necessarily stem from black hides. There is more variability within breeds than there is amongst breeds. He said just because the calves are black doesn’t mean the quality of those animals will be exactly the same.

Health: A pricey penny

According to Brink, industry statistics show one out of five pens of calves sent to the feedlot will experience “catastrophic” death loss of 5 percent or more. Does that tell you why buyers are very careful about paying a premium for anything? Health will always be the number one value determinant, he said.

“Your health program on the ranch could be a marketing tool to help you capture additional value. All it has to be is a one-pager with a veterinarian signature at the bottom that says the calves were given specific vaccinations and other health treatments and the dates they were given.

If you, as a seller, present that info and say ‘Here’s what these calves had since day one,’ what did you just do? Your reputation goes up in the buyer’s mind,” Brink said.

For most feedlot operators, September and October aren’t what you would call their favorite months. Not only are they processing a huge shipment of grass cattle out of New Mexico and the Flint Hills, but they are also dealing with seasonal sickness.

As the temperature starts to cool at night, and the days remain warm, the doctoring rate for feedlot cattle goes from about 15 percent to as much as 80 percent. So if you aren’t going to wean your calves, Jordan said September and October are the worst time to sell.

And if you didn’t see this coming, Jordan said simply not castrating your bull calves is a lot like neglecting to put sunscreen on at the pool; you’re going to get burned. The same goes for dehorning, especially in the replacement market.

“For bull calves, we see a $15 to $25 per hundredweight difference in those calves because once you go past 550 pounds, just the stress on the calf alone will dock you on that particular bull calf,” Jordan said. “So you look at $20 per hundredweight, you’re looking at $110 to $150 a head less than you would a steer calf, especially in the fall.”

Jordan said one of the big reasons producers aren’t castrating their calves is due to lack of help. It can be hard to find good help, or to pay for the good help, but instead of losing money on bull calves, he suggests calling your veterinarian – guaranteeing you can pay the amount the vet will charge to work those calves with the money you would have lost in selling intact calves.

Overfed and underbred

According to Surcy Peoples of Cactus Feeders, with locations in Texas and Kansas, condition makes a lot of difference to a feedlot operator.

Peoples said, “If the calves are fat when I get them, I’m not going to expect much out of their performance. Most of that performance is gone. But on the other hand, if they come in fairly thin, I can expect some compensatory gain out of those cattle as they try to catch up to their frame size.”

In many instances, producers will let their calves fill up on water and feed before hauling them to the sale barn. Although it may seem like a good idea, this practice ends up costing them money, as the buyer has to determine how much shrink will occur on that extra-full calf.

Peoples also mentioned single-trait selection and the harm that can be done in this type of management. Let’s say you focus all your energy on performance – producing an animal that gains over 4 pounds a day. Peoples said, “That’s great, but you just devalued that animal in other ways.

We need a well-rounded, balanced animal. One that can grade, hot yield, low yield and has a weight in certain parameters.”

Be at the top

Cattle feeders are constantly juggling. They get asked all the time: “What is the optimal breed? What is the optimal weight?” but “What I want at 9 this morning I might not want at 9:30; the market changes that fast,” Peoples said.

In a day and age where most people are doing things right, it has become important to reverse your thinking. Peoples said he often gets asked, “I’m doing everything right, and I get the same price for them as my neighbor who doesn’t; why aren’t I getting the premium?” A valid question – Peoples said, “High tides raise all boats.”

When cattle buyers are fighting for head count, they still have to have calves, no matter their quality. But when there are more cattle to pick from, those poorer-quality cattle will be at the bottom of the list. As Peoples said, “When you’re in the soup, be at the top of the bowl. To remain competitive in the beef business, it’s not about solely chasing the premiums but also avoiding the discounts.”  end mark

This article was compiled from presentations at the Texas and Southwestern Cattle Raisers Convention earlier this year.

Cassidy Woolsey
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Extra Tips

A few more tips when selling feeder calves:

  • If you’re not a large producer, commingle your calves with those produced by other cattlemen to get truckload pricing.

  • Don’t sell bred heifers as feeders if their udders are beginning to fill. Instead, palpate them and sell them as bred heifers.

  • Work toward a uniform herd by shortening the calving period.

  • Avoid placing the brand in the rib area, since that is the most valuable portion of the hide.

  • Precondition your calves to avoid a discount.

A few more tips when selling replacement calves:

  • Dehorn

  • Don’t ear notch or brand if possible. Buyers want markings unique to their operation, not multiple outfits.

  • Build a reputation for your genetics.

  • Unlike the feeder market, buyers want replacement females to have some flesh.

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