MARKETING CATTLE AT PROPER TIME IS KEY TO PROFITS

by: Heather Smith Thomas

Marketing cattle efficiently and at the proper time can make money for the producer. There are many costs involved in getting cattle to market and it is important to try to minimize those costs. Many cattle producers do a good job of getting the calves born, keeping them healthy, minimizing sickness and death loss, but only do an average or even a poor job of marketing those calves and thus reduce their potential profit.

C. Wilson Gray, Extension Economist, University of Idaho (retired) says that for maximum return, stockmen should start planning for market the year before, with a good breeding program and calving season to fit with how they want to market those calves—whether through an auction yard, order buyers, video sale or whatever kind of tool or combination of markets they plan to use. “The later delivery price may depend on the market situation at the time of delivery, which makes the final price less certain,” he says.

“Many producers like to sell their calves at weaning time or close to it. With the video auctions, they may make the sale contract ahead of weaning—such as in spring or summer for a fall delivery. This takes some of the guesswork out of it, but other factors enter in such as trucking to market. A person needs to know how far the cattle will be trucked and what that cost will be,” says Gray.

The rancher has to decide whether to maintain the calves for a while after weaning (to precondition, or even to background them) and then sell them. Many producers precondition calves for several weeks after weaning, to take advantage of premiums offered (or to avoid discount on calves sold right off the cows). “Some producers hold those calves anywhere from two or three months to clear into the next fall to sell as yearlings. If they can put additional weight on, in an economic manner, they have a more suitable product to sell,” he says.

If light calves are worth a lot, however, and feed resources on the ranch are in short supply or costly, it may pay to sell them at a younger age. It depends on each individual situation. “When feed prices are high, feedlots often look for heavier cattle that won't have to be on feed very long. When feed costs (especially for corn) come down, this changes a bit, but it is still expensive to feed cattle longer,” says Gray.

Another factor that may affect price is the kind of preconditioning program calves have been through. “Once a feedlot gets to know the cattle from a certain operation (and those calves perform well) their buyers look for those calves and are willing to pay more for them. Preconditioned cattle will get off to a better start, with fewer health problems.”

Many feedlots spell out the type of preconditioning program they'd like to see for the calves. “This can mean weaning the calves and holding them for three or four weeks, up to a couple months before they go to the feedlot,” he explains.

“Other marketing factors are administered by the Ag Marketing Service. They set up all the parameters, like source and age verification or selling into a grassfed or natural-produced market. The rancher needs to know what he/she has to do to be able to use that kind of label.” This can take extra planning and effort and possibly some more expense.

Typically you'll need records to show source, age, how the cattle have been managed health-wise, etc. There may be a fee to be part of one of these programs. The producer needs to weigh all the costs and benefits to see if the premiums involved in the program more than offset the costs and extra effort.

“There are some cooperative marketing systems in which you have to join and be a member in order to sell your cattle that way. One example is Oregon Country Beef that is now called Country Natural Beef. There are guidelines you follow to meet their standards and they have a dedicated market. There are several organizations like this around the country, like Laura's Lean Beef in the Midwest. These are some outlets that producers can utilize if they want to try for something more specialized,” he says.

If a person sends cattle to an auction market, trucking costs and commissions must be figured in. “If you have a pickup and gooseneck trailer you are looking at least $2 per loaded mile to haul cattle (one way). If a trucking company takes them to a feedyard in Colorado or Kansas you need to have at least 45,000 pounds on that truck because you can't afford to send a part load. Today it costs somewhere between $4 and $5 per loaded mile to haul cattle on a semi, especially if they don't have a back haul—and that's hard to do with a cattle truck,” says Gray. If a person doesn't have enough cattle to make a load, neighbors often pool their cattle to make up loads. Sometimes a video auction will work at putting together two or three small outfits to make a load.

There are commissions and fees any place you market the cattle, whether through a video auction or a sale yard. If you take cattle to a sale yard a day or so before the sale there will also be feed and yardage costs on top of the regular commission.

“Some ranchers try to raise certain types of cattle to fit a particular market like the certified Angus program. The American Angus Association has done a terrific job of marketing. If the animals meet the qualifications they can make those premiums. If an animal doesn't perform there will be discounts,” says Gray.

If cattle are cut back because of pinkeye, foot rot, or some other problem, this will cost the producer because those animals have to be held longer and sold later. If a group of cattle aren't quite what the buyer thought they would be, the buyer may still take them, but at a discounted price.

“Depending on the market, some stockmen may try to decide if it would be more profitable to sell the calves the way they normally do, or to retain ownership and hold them until they go to slaughter. Those things need to be penciled out carefully. There is also a definite seasonality to prices. These vary a little by the weight category the cattle fit into. If calves have come off desert range and are pretty light there is almost always a good spring market for lighter calves to put on pasture. If the rancher can make the right connections it may pay to try to fit into a situation like that. In Oklahoma and north Texas areas, if conditions are right, a lot of cattle are put out on wheat pastures over the winter. People are looking for the right kind of animals to go into those programs, so that can be a little bit different market,” says Gray.

“Often the traditional marketing may give you some kind of return, but there may be something a person can do differently and make more money, or there may be a program that at least part of the animals might fit into to give a higher return. It may pay to try to optimize some things instead of just doing it the way you've always done. Not all of your calves may fit the same market,” he says. It may pay to sort them and sell them more strategically in different groups.







Don't forget to BOOKMARK  
Cattle Today Online!