Carefully Consider Backgrounding
Weigh the pros and cons before deciding
to background calves this year.
Declines in calf prices may interest some producers in feeding calves and marketing them at heavier weights later rather than sending them to market now, according to a North Dakota State University (NDSU) livestock specialist.
But before producers make that decision, they need to consider a number of variables, says John Dhuyvetter, area Extension Service livestock specialist at NDSU's North Central Research Extension Center near Minot.
Two of those variables are feed costs and when the producer wants to sell the calves.
Feed costs are much lower than the high prices of 1½ years ago. Corn prices still are unknown because an early frost may decrease supply and drive up prices. On the other hand, an early frost might create wet, immature corn that is lower-priced and more suitable for cattle feed.
Determining when to sell cattle depends on the type of cattle, available feed resources, prices, feeding performance and projected future market price that leads to projected cost of gain.
Using a simple breakeven calculator, such as the NDSU-developed "Calf Web" (available at www.chaps2000.com), can help evaluate feeding risks and potential.
As an example, a 550-pound (lb.) steer weaned in late October would be marketed in late January at 750 lb. with an average gain of 2 lb. per day. Assuming this will be achieved on a $70-per-ton ration at a 9-to-1 conversion; charging 30¢ per head per day yardage; and assuming $10 veterinary costs per head, 1.5% death loss and 7% interest on both the calf and feed, a sale price of $92.50 per hundredweight (cwt.) would be needed to break even. The resulting feed and yardage cost per pound of gain would be 46.5¢ and total cost of gain would be 63¢.
For earlier-born and growthy calves, a shorter 45- to 60-day preconditioning period may get the calves ready to sell during higher seasonal markets for finished cattle. For example, a 600-lb. steer weaned in mid-October would reach 800 lb. in mid-December at an average gain of 3 lb. per day for 65 days. This would result in a projected breakeven cost of 88.5¢ and a total cost of gain of 57¢ per lb.
Sometimes later-born, smaller calves are weaned late in the fall and grown slowly through the winter to target summer grazing. These calves utilize forage in the winter and grass in the summer, then are finished for fall markets. Thus, 525 calves weaned in mid-November and wintered at 1.5 lb. per day of gain on a $60-per-ton ration results in 725-lb. feeders at the end of March with an associated 91.5¢ breakeven cost and a 68¢-per-pound overall cost of gain.
"If calf prices rally over the next few months, backgrounding will prove to be a very good choice," says Karl Hoppe, area Extension livestock specialist at NDSU's Carrington Research Extension Center. "But with the sluggish economy, calf prices may only maintain or could decrease."
For more information on weaning calves, backgrounding and related issues, visit www.ag.ndsu.edu/livestock/beef.html.