RECORD-high beef prices have many producers and commercial stockers debating the best time to buy and sell calves, and those who have the feed resources available should consider putting extra weight on the calves prior to selling them, according to Kansas State University livestock economist Glynn Tonsor.
"Today, someone who might have weaned a fall steer and have a 700-pounder around today will entertain selling him, but if you are in a situation where you still have something to feed the steer and you could put an additional 50 lb. on him, the market is strongly encouraging you to do that," Tonsor said.
In this example, Tonsor pointed out that the feeder cattle market in June looks to be higher than it was in May. If the steer sells at a higher price in June when he is 50 lb. heavier, the value of gain (VOG) is projected to be around $2.11, which could well exceed the cost of gain (COG) for producers who have access to feed resources.
For producers who will be weaning calves this fall or commercial stockers looking to purchase weaned calves, Tonsor explained that putting an additional 200 lb. on calves could have a VOG of around $1.20. That's comparing selling calves at 550 lb. in late September to selling them at 750 lb. in late December.
"Most people will have a COG close to a buck or a little bit lower, so there are positive margins being projected there as well," Tonsor said.
Tonsor used Beef Basis as a resource for figuring VOG projections. He recommended that producers visit Kansas State's Ag Manager website, where they will find links to the Beef Basis website and the Livestock Marketing Information Center website. These resources allow cattle buyers and sellers to view market reports and compare costs.
While many cow/calf producers are taking advantage of selling at the current high feeder cattle prices, many are also looking to expand the herd following a few years of extensive drought. Tonsor explained that despite high prices, there is evidence that the industry is trying to expand by retaining heifers and not culling as many cows.
In the first quarter of 2014, on a nationwide basis, he said there has been a notable reduction in the portion of feedlot placements represented by heifers, which indicates that they remain on a farm or ranch somewhere.
"The magnitude is in line with 2006, the last time we tried to expand the herd," Tonsor noted.
Herd expansion is also reinforced when examining slaughter data, he said. Cow slaughter is down compared to last year, but this could be partly due to there being fewer cows available to send to market. Steer slaughter is slightly down — depending on the week — compared to last year. Heifer slaughter is way down from a year ago.
"I think there are a lot of signals that the industry, as a whole, has pulled the trigger on expansion," Tonsor said. "Time will tell how much, but we are trying to expand in aggregate nationwide. Maybe Texas, the Oklahoma Panhandle and California are not participating (due to continued drought), but expansion is occurring in other spots."
Nationally, there is less pasture and range acreage in poor and very poor condition compared to last May, according to the U.S. Department of Agriculture's "Crop Progress" report. However, Tonsor said U.S. pasture and range conditions are still worse today than the five-year average prior to 2013.
He added that there are fewer cows located in areas in poor and very poor condition currently. Only 7% of cows in the U.S. are in areas reported to be in poor or very poor condition today, compared with 52% in 2013.
"I don't want to dismiss the fact that there are pockets in a lot worse condition, but many areas are in better condition compared to 2013," Tonsor said. "This facilitates the national story of some heifers staying at home and producers trying to expand."
Pregnant cow diets
Dry conditions in Kansas and other areas of the Midwest have caused many cow/calf producers to look at more cost-effective ways to adequately feed their herds.
One of the hot topics in the beef sector today, especially in dealing with drought, is that more producers are considering confined feeding for cows using low-quality forages with protein byproducts.
The process of using anhydrous ammonia to treat and enhance low-quality forages, such as wheat straw and corn stalks, is not a new concept to help producers save on feed costs, said Justin Waggoner, beef systems specialist for Kansas State University Research & Extension. Ammoniation increases the digestibility and dry matter intake of low-quality forages.
Waggoner, who works at Kansas State's Southwest Area Extension Office in Garden City, Kan., recently looked at using two different rates of anhydrous ammonia application on wheat straw that is fed along with wet distillers grains to pregnant beef cows.
He said the traditional rate of anhydrous ammonia application recommended for producers has been 3% (60 lb. per ton) on a dry matter basis. His latest research compares the 3% application to a 1.5% application (30 lb. per ton).
"Our primary interest in doing so is due to the current cost of anhydrous ammonia," Waggoner said. "When the research was done to establish that rate of 3%, anhydrous ammonia cost about $200 a ton. Today, we're looking at anhydrous ammonia prices at $700-800 a ton, so there's an opportunity for some cost savings by reducing the application rate."
Although Waggoner and his colleague John Jaeger, a Kansas State beef cattle scientist at the Western Kansas Agricultural Research Center in Hays, Kan., have studied forage quality in the past, they hadn't had the opportunity to do an actual cow feeding study until now.
A total of 132 second-trimester, spring-calving, Angus-cross cows were examined. A majority of the cows were four to five years old.
Previous research evaluating ammoniated wheat straw as a component of a beef cow diet didn't include wet distillers grains, Waggoner said. This provided an opportunity to study ammoniated forage in a more modern diet that does include wet distillers grains. The cows were limit fed at 1.9% of their initial bodyweight.
"On a dry matter basis, the diets were about 65% wheat straw, 20% wet distillers grains and rolled sorghum at 15%," he said.
Results of the 84-day study showed that the 1.5% anhydrous ammonia application rate increased the ration costs 21%, and overall cow performance increased 23% in terms of average daily gain (ADG). The 3% rate increased the ration costs by 35%, and overall cow ADG increased by 25%.
"We have this classic argument between maximum response and more of an optimum response when we figure in the cost," Waggoner said. "The important take-home message is that the response appears to diminish as we increase the rate of anhydrous application. So, the maximum response was at 3%, but from an optimum response in terms of cost, it looks like that 1.5% rate might have some benefits."
In addition to examining ADG, the researchers also assigned body condition scores to the cows, as well as took measurements by ultrasound of back fat thickness at the 13th rib and rump fat thickness at the beginning and end of the study.
They concluded that the body condition scores of the cows fed the 3% and 1.5% ammoniated wheat straw had greater body condition scores overall at the end of the study compared to those cows eating diets containing untreated forage. Back fat and rump fat thickness were not influenced by anhydrous ammonia application.
The Ohio Beef Council began collecting an additional $1 per head of beef cattle for the state beef checkoff as of June 2, following a referendum in which Ohio beef producers voted in favor to increase the total Ohio beef checkoff from $1 to $2 per head.
One dollar will be collected as part of the existing federal checkoff. The additional dollar will be refundable by written request. Additional checkoff funds will be utilized in Ohio to support programs designed to increase the demand for beef.
On March 31, the Ohio Department of Agriculture certified the results of the Ohio Beef Marketing Program Referendum. A total of 2,118 votes were certified: 72% of the total votes were cast in favor of the referendum, and 28% were opposed to the increase.