First it was just drought, and now we have war in eastern Europe. On Feb. 24, feeder cattle futures markets were down over $4 for most months, and live cattle were down over $2. Corn and wheat were up over $0.50/bushel. The futures market jitters have given a lot of us more to worry about.
Producers have asked about keeping calves through these low markets until prices improve. Whether this is possible or advisable depends on the ability to lock in prices to control the risk of further price erosion. There are several ways that cattle can be retained to delay marketing, and the recommendation of which production system to use depends on several factors related to the size and type of cattle, available resources and producer risk tolerance.
By the end of February, growing cattle should have some graze-out wheat available since we have gotten moisture from winter storms and temperatures are warming up. With wheat futures over $9/bushel, will the wheat intended for graze-out earlier in the year still be grazed? To harvest a grain crop, the calves will need to be coming off pasture within a few weeks. If markets haven’t recovered and producers want to keep them longer, we have a few options for retaining ownership and adding further value.
Larger cattle kept on graze-out wheat weighing over 650 pounds should not be held over on warm-season grass. On graze-out wheat pasture, these calves often gain over 2.5 lbs. per day. Over the years, cattle on graze-out wheat pasture studies conducted in Oklahoma and Arkansas show gains from 2.2-3.3 lbs. per day from late February to early May (65 to 80 days). These cattle can gain 150-250 lbs. and should go to the feedyard weighing 800-900 lbs.
Calves from research in Arkansas were placed on feed at 880 lbs. following an extended wheat grazing program. These cattle gained 3.4 lbs./day during finishing and weighed 1,283 lbs. at slaughter. In another Arkansas trial, yearlings fed after wheat pasture gained 4.9 lbs./day and were slaughtered at 1,323 lbs. These two sets of cattle provide a range of performance expectations from about average to much better than average.
A summary of yard closeouts from Hitch Enterprises shows that steers weighing 900 lbs. when entering the feedlot were slaughtered at 1,466 lbs., were on feed for an average of 142 days and gained 3.78 lbs./day, with 6.38 lbs. of feed required per pound of gain.
Lighter steers weighing 700 lbs. were on feed for 183 days, gained 3.48 lbs. per day, required 6.13 lbs. of feed per pound of gain and were slaughtered at 1,402 lbs.
The “Focus on Feedlots: Kansas Feedlot Performance and Feed Cost Summary” report of feedlot closeouts from December shows steers gained 3.83 lbs./day, and cost of gain was $108.37/cwt with expected cost of gain to be $115/cwt for cattle placed on feed that month.
Corn getting more expensive and high fertilizer prices may reduce the corn acres planted this spring. Research indicates that the cost of corn explains 58-67 percent of variability of cost of gain, but the price of fed cattle and feeder cattle explains 70-80 percent of feeding profit risk. This will have a big impact on the price of feeder cattle and the willingness of feeders to purchase cattle.
Live cattle futures are right at $138-142 for when feeders going on feed today will be marketed in August through October. Cattle placed on feed in June will be coming off feed at a higher market of $147. There is considerable risk in this, but there is potential for positive movement in the market. Even so, don’t bet the farm without some form of risk protection in place.
Figuring out a way to keep calves until markets improve can be tricky with high feed prices. — Paul Beck, Oklahoma State University Extension beef cattle nutrition specialist
