Thursday, October 27, 2011

Supplementing on Stalks and Winter Grass

No matter whether you are in the east or the west, supplementing protein to cows on corn stalks, winter range, or any other type of low-quality forage is getting very expensive. I'll pass on the discussion of when supplements are needed or not for the cow herd as I will assume everyone has a good handle on that.

Let's move on to more important things like cost. The table below shows the approximate crude protein content, bulk cost, cost per pound of CP, the approximate amount that needs to be fed per head per day to maintain a minimum 7% CP diet for dry cows, and the cost per head per day for a variety of common protein supplements. Note of course that all bulk prices and associated price calculations are FOB orgin, freight obviously will play a big role in final destination costs.

I rounded all fed amounts to 1/2 pound increments, figuring that few folks will actually calculate out 1.3748 pounds per head per day. So if you calculate and don't get the same thing, that is why.

One other thing to note is how I priced alfalfa and alfalfa/grass. With the small amount of Supreme, Premium, and Good alfalfa left in the country as a result of demand from dairies and Texans; any alfalfa that is left for beef cows is probably home raised and is priced as such.

I did include a few oddball products that you might not normally see in a list of supplements because this year they happen to be in abundant supply and reasonably priced. Many of these products are available in North Dakota, so proximate distance will determine freight cost and ultimately feasibility.

The last thing to note is that I kept the intake and cost per head per day for licktubs at about 1.0 pounds per head per day. The reason I did that is because on average, a cow will eat 0.75 - 1.0 pounds per day on tubs and that doesn't seem to change much. Of course it depends on the brand of tub and so on, but we are just using averages here.

Thursday, October 20, 2011

Cash Report

Hub City Livestock Auction - Aberdeen, S.D.
Feeder Cattle Weighted Average Report for 10/19/2011
Receipts:  5102    Last Week:  3855    Year Ago:  3221

Compared to last week:  Feeder steers and heifers sold mostly 1.00 to 3.00 higher.  Active market with good demand.  Steers 60 percent, heifers 40 percent, 70 percent over 600 lbs.

500-600 - $163.00
600-700 - $144.00
700-800 - $141.00
800-900 - $137.50

500-600 - $147.00
600-700 - $137.00
700-800 - $131.00
800-900 - $130.00

Tuesday, October 18, 2011

To Background or Not to Background?

Another incredible week in the cattle market this week for both the cash and futures. Hard to believe that 500 lb steers calves are going for $850 - $940/head.

In any event, the question I've heard a lot is whether a guy should be backgrounding calves this year? In my mind, that is a pretty easy question answer and it's not very complicated. I'll show a couple of calculations to demonstrate the ultimate point:

Let's assume a set of 5.5 wt. steer calves with an adjusted cost per calf of $550.00/head.

If you figure that unless there is a futures crash prior to the week or to in NOV, these calves will be bringing around $155.00, we would be looking at a gross return of $852.50/head. Which in turn yields an unbelievable net return of $302.50/head.

So, selling those calves right off the cow results in a net return of $302.50/head.

Now, if you elect to hang on to those calves, backgrouding them on a high roughage diet and supposing the market stays pretty stable (i.e., no major movements in basis), you would be looking at something close to the following:

Adjusted calf cost $550.00
ADG 2.0
DOF 90
COG $0.65
Operating costs $20.00
Market position $70.00
Weight out 730#
Total cost (including calf cost) $770.00

Assuming you price protect these calves with a short hedge, option put, or LRP, you will be looking at a cash price in the neighborhood of $140.00

Gross return $1,022.00
Net return $252.00 Less basis and commissions

So, even if backgrounding returned the same as selling calves right off the cow, why assume the risk? Most guys can make a very nice return by selling these calves right off the cow, many should probably leave it at that.

Of course we are a couple weeks out, so a lot of things can change, but on the whole, I don't think it makes a lot of sense for guys to be feeding calves after weaning.

On the other hand, if you need to roll income, at least right now, I don't think feeding calves will hurt you all that much either. You going to assume some risk you don't necessarily have to and you might give up $20-$50/head, but even some savvy marketing on your part should be able to avoid that.

Thank you and have a great day!!