Lower weight higher price?

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mtnhunter
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Lower weight higher price?

Postby mtnhunter » Tue Dec 13, 2016 8:59 am

Newbie here and there is something I don't understand. Why is the price higher for calves that weigh less at the market. If a finished for slaughter steer weighs 1000 lbs, would a steer weighing 550 lbs not be cheaper to feed out than one that weighed 300? Seems a heavier calf would take less input and would thus bring a higher price to the seller at least up to a point. I know there is probably a reason but t looks like (at least to an amateur) that its just a way to profit more on the producer.
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Re: Lower weight higher price?

Postby M-5 » Tue Dec 13, 2016 9:10 am

the price of the animal is pretty much the same , what you see is what i call the benchmark where a calf's value is based on futures with each individual either influencing a higher or lower price.

lets say a calf is worth 500.00 if he weighs 500.00 # that's 1.00 a # if a calf weighs 400# he is still valued at about 500.00 so his price per pound would be 1.25 a # , It is more complicated than that when you get to heavier calves in the 700 to 1000 pound range but for light weights its pretty close
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Re: Lower weight higher price?

Postby Ebenezer » Tue Dec 13, 2016 10:06 am

Feeders make money putting on pounds.
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Re: Lower weight higher price?

Postby RanchMan90 » Tue Dec 13, 2016 11:58 am

M-5 wrote:the price of the animal is pretty much the same , what you see is what i call the benchmark where a calf's value is based on futures with each individual either influencing a higher or lower price.

lets say a calf is worth 500.00 if he weighs 500.00 # that's 1.00 a # if a calf weighs 400# he is still valued at about 500.00 so his price per pound would be 1.25 a # , It is more complicated than that when you get to heavier calves in the 700 to 1000 pound range but for light weights its pretty close

Do the buyers not calculate the time and costs it takes to get a 400 lb calf to 500 lb? It always seems there is a hole in the price of 5 wts
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Re: Lower weight higher price?

Postby M-5 » Tue Dec 13, 2016 12:58 pm

RanchMan90 wrote:
M-5 wrote:the price of the animal is pretty much the same , what you see is what i call the benchmark where a calf's value is based on futures with each individual either influencing a higher or lower price.

lets say a calf is worth 500.00 if he weighs 500.00 # that's 1.00 a # if a calf weighs 400# he is still valued at about 500.00 so his price per pound would be 1.25 a # , It is more complicated than that when you get to heavier calves in the 700 to 1000 pound range but for light weights its pretty close

Do the buyers not calculate the time and costs it takes to get a 400 lb calf to 500 lb? It always seems there is a hole in the price of 5 wts


from my experience the buyers are buying what they have orders for. The people making the orders have done the math I presume and if the futures in 6mth predict a price that's conducive to a 400# calf today that's what they buy. most of the 400 to 500# you see selling are going on wheat pasture right now and they will be 600 to 750 when they come off with a profit of 100 to 200 per head roughly .
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Re: Lower weight higher price?

Postby RanchMan90 » Tue Dec 13, 2016 1:29 pm

M-5 wrote:
RanchMan90 wrote:
M-5 wrote:the price of the animal is pretty much the same , what you see is what i call the benchmark where a calf's value is based on futures with each individual either influencing a higher or lower price.

lets say a calf is worth 500.00 if he weighs 500.00 # that's 1.00 a # if a calf weighs 400# he is still valued at about 500.00 so his price per pound would be 1.25 a # , It is more complicated than that when you get to heavier calves in the 700 to 1000 pound range but for light weights its pretty close

Do the buyers not calculate the time and costs it takes to get a 400 lb calf to 500 lb? It always seems there is a hole in the price of 5 wts


from my experience the buyers are buying what they have orders for. The people making the orders have done the math I presume and if the futures in 6mth predict a price that's conducive to a 400# calf today that's what they buy. most of the 400 to 500# you see selling are going on wheat pasture right now and they will be 600 to 750 when they come off with a profit of 100 to 200 per head roughly .
Thanks
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Re: Lower weight higher price?

Postby Dave » Tue Dec 13, 2016 1:32 pm

RanchMan90 wrote:
M-5 wrote:the price of the animal is pretty much the same , what you see is what i call the benchmark where a calf's value is based on futures with each individual either influencing a higher or lower price.

lets say a calf is worth 500.00 if he weighs 500.00 # that's 1.00 a # if a calf weighs 400# he is still valued at about 500.00 so his price per pound would be 1.25 a # , It is more complicated than that when you get to heavier calves in the 700 to 1000 pound range but for light weights its pretty close

Do the buyers not calculate the time and costs it takes to get a 400 lb calf to 500 lb? It always seems there is a hole in the price of 5 wts


It is the 6 wts that take a beating here right now. The 4's and 5's will go to grass. The 7's and 8's go to the feedlots. The 6's are in between. Too big for grass and smaller than the feeders want.
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Re: Lower weight higher price?

Postby Bigfoot » Tue Dec 13, 2016 1:35 pm

The price of concentrates should enter in to the equation somewhere. When grain is high, who wants to take a 500 pound calf to 1225? The incentive would be to buy a larger calf. Haven't really seen that mentality unfold in a while.
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Re: Lower weight higher price?

Postby js1234 » Wed Dec 14, 2016 12:52 am

Bigfoot wrote:The price of concentrates should enter in to the equation somewhere. When grain is high, who wants to take a 500 pound calf to 1225? The incentive would be to buy a larger calf. Haven't really seen that mentality unfold in a while.

The last time we did see that enter the equation, it led to commodity cattle be killed at 1,250lbs. opposed to being taken to 1,400lbs.
I also agree with Dave about the 6 weights too. Toughest commodity to trade out there at the moment is a 6wt. heifer. Heifers in general have a steep discount right now. I bought some heifers in the 4's last week over $40/cwt. cheaper than their brothers.
To my logic, the middle 6wt. is the most volatile class out there right now because it's the one with the narrowest opportunity for seeing a profit. Doesn't mean they won't, it just means the prudent operator needs to price said risk into what they'll give.
We are also seeing that on grass leases right now too for stocker cattle. Lots of good ranches have had to be a bit more reasonable or at least not raise their prices on what they want for a gain deal or outright lease on steer ground. Corn being so cheap, you can feed good cattle in MidWest yards in the 60's pretty handy. With such economical COG, it's hard to get excited for a grass gain deal much over 50 cents once freight and other costs are added in, it's hitting the tipping point where for any more you might as well just send them straight to the yard.
We run our stockers in Wyoming and California (only mother cows in Nevada) on a combination of ground we own, private ground we lease and in Wyoming, 1 grazing allotment and a membership in a grazing association.
California we have 3 separate ranches leased for stockers above the ranches we own and of them, 2 stayed the same rate wise and 1 lowered the guarantee component of the gain and lowered the rate on a heifer by 2 cents.
In Wyoming we only have one private lease above our deeded ground and allotments but it is a large one. We run 6,500 steers on the one ranch and it's directly across the highway from our Wyoming HQ, so its pretty valuable to us. We didn't ask to make any adjustments to the rate paid there either but the owners are a great ranch family and have always priced very reasonable as they appreciate the job we do treating their ranch as if it were our own, putting good ranch families in the employee housing on site etc. We've leased the ranch since 1990 and based on their family trust having it setup to not sell this generation at least, we plan on continuing to lease it another 25-30 years at least. Ranches like that are always going to get top dollar but a lesser ranch, less capacity, less water, lesser facilities, further from deeded ground etc,. etc., etc. is going to feel some resistance if they price stocker ground in a fashion that works out to over about 50-52 cents COG this coming season.
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Re: Lower weight higher price?

Postby Stocker Steve » Wed Dec 14, 2016 3:00 am

RanchMan90 wrote: Do the buyers not calculate the time and costs it takes to get a 400 lb calf to 500 lb?


Some do, some just buy what they bought last time, some just focus on $/head. If you run the numbers here you usually find:

Limited interest in calves < 375#. This kind need more TLC.
Limited interest in 6 wts. unless they are bulls. Some guys specialize in stinky bulls.
Limited interest in heifers. Not totally sure how folks justify the huge discount currently, but I think if you resell them as heavier feeders - - than the VOG is lower than steers.
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Re: Lower weight higher price?

Postby Stocker Steve » Wed Dec 14, 2016 3:09 am

js1234 wrote:it just means the prudent operator needs to price said risk into what they'll give.
We are also seeing that on grass leases right now too for stocker cattle. Lots of good ranches have had to be a bit more reasonable or at least not raise their prices on what they want for a gain deal or outright lease on steer ground. Corn being so cheap, you can feed good cattle in MidWest yards in the 60's pretty handy. With such economical COG, it's hard to get excited for a grass gain deal much over 50 cents once freight and other costs are added in, it's hitting the tipping point where for any more you might as well just send them straight to the yard.


The grain guys keep hoping for drought in SA, but odds are we will see low grain prices and thus low grass VOG for a while.

What options does a leased ranch have with cheap corn? Even at a 50 cent grass VOG - - I assure these ranches are much better off financially than running pairs?
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Re: Lower weight higher price?

Postby js1234 » Wed Dec 14, 2016 11:24 pm

Stocker Steve wrote:
js1234 wrote:What options does a leased ranch have with cheap corn? Even at a 50 cent grass VOG - - I assure these ranches are much better off financially than running pairs?

I think I agree with you but what exactly are you saying?
The rancher leasing a ranch is better off stocking it with steers than pairs or that the ranch owner is better off leasing out to a flat rate cow deal than a stocker deal on the gain?
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Re: Lower weight higher price?

Postby Stocker Steve » Thu Dec 15, 2016 1:58 am

js1234 wrote:what exactly are you saying?
The rancher leasing a ranch is better off stocking it with steers than pairs


If the forage is good enough - - are the steers would be more efficient and more profitable for the land owner?
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Re: Lower weight higher price?

Postby js1234 » Thu Dec 15, 2016 11:37 pm

Stocker Steve wrote:
js1234 wrote:what exactly are you saying?
The rancher leasing a ranch is better off stocking it with steers than pairs


If the forage is good enough - - are the steers would be more efficient and more profitable for the land owner?

Agreed. Any time a ranch is capable of putting competitive gains on steers (250lbs. for Winter grass and 225lbs. for Summer grass where we operate), the ranch owner is going to be money ahead going the route of leasing to the steer operator.
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Re: Lower weight higher price?

Postby Supa Dexta » Tue Dec 20, 2016 9:01 am

Also have to take into account how long the animal will be on feed, to hit seasonal markets. They will pay different prices for different sizes, at different times of yr based on the size they need, to be able to finish at a predetermined point in the future.
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