Unconventional Thinking with Health Track
By Daniel Schafer
Keep those high-priced weaners and capture the value of incremental gain.
Cattle prices for spring-born calves being weaned this fall as a whole are as high or higher than we have ever seen before. And with such high prices, the argument often made by producers is that you should sell calves right off the cow. The sentiment is to cash in on a high dollar per hundredweight and not take the risk of participating in MFA Health Track, which requires cattle to be held for 45 days, a period in which producers face the risk of cattle prices dropping. While this option of weaning on the truck may be tempting, history shows it is not the most profitable option.
How is that possible, you might ask? To answer that, consider a phrase commonly used in the feedlot industry: incremental value of gain. In other words, the future value you will receive for the heavier calf is greater than the value of the light-weight calf today plus the cost of feed to put gain on the animal. For incremental value of gain to work though, cattle have to stay healthy, and they have to gain.
As I am writing this article, the Missouri Weekly Weighted Average (MOWWA) price report from last week (Oct. 4) shows 550-pound steers at $119.79 per hundredweight and 650-pound steers at $119.75.
Based off a projected gain of 2 pounds per head per day, the current price of Cattle Charge, and using the 5-year average to see how cattle prices change over this particular time of year, you can adjust the current price of cattle to estimate the prices over the next couple of months. In doing so, you can calculate what the incremental value of gain (or net return over selling at weaning) should be in the future whenever you would choose to sell.
The graph above uses these figures to show the net incremental value of gain (on a per head basis) for 550-pound (green line) or 650-pound (blue line) steers that would have been weaned or sold on Oct 1.
While the net monetary gain is greater for 650-pound steers, there is still $25 to $50 per head in incremental value of gain that can be reaped from a 550-pound steer. It should also be noted that the MOWWA price reports do not segregate value-added cattle from non-value-added cattle, so the graph only represents the merit of incremental value of gain and does not include any premiums that may be offered for wean-VAC-45, source and age verification or critical mass of cattle of the same type, condition, etc.
I once had a boss who said, “Don’t complain or point out all of the negatives unless you have a solution.” When looking at the graph across the page, there are two things that should jump out:
1) When selling a bawling calf to cash in on a big selling price, there are a lot of dollars being left on the table.
Solution: Properly pre-condition your calves through Health Track. Health Track has consistently proven to yield healthy cattle, gains of at least 2 pounds per head per day, and reduce shrink, all of which are necessary to put that additional cash in your pocket. Plus, Health Track has industry-wide brand recognition and respect.
2) If 550-pound cattle on Oct. 1 are the norm, make it a goal over the next few years to increase that benchmark to 650 pounds.
Solution: Calving earlier in the year, creep feeding calves, weaning earlier than Oct. 1, and pushing cattle for an average daily gain above 2 pounds per head per day are all pieces of the puzzle to get you to this goal. But, keep in mind, it is probably going to take some combination of more than one of these to get you there in a reasonable time frame.
For more information go to www.healthtrack.com.
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