ANGUS BEEF BULLETIN EXTRA

November 22, 2022 | Vol. 15 : No. 11

Preparing for Financial Opportunity — Heifer Retention

The opportunity to market bred replacement heifers at premium values will be available.

It’s time to look ahead at some of the financial opportunities on the horizon. Cattle producers need to act as business managers and assess inventories of all resources and commodities on hand to determine the best course of action to maximize profit potential through the next several years. Regardless of what you have done in the past, now is the time to prepare for financial opportunities that lie ahead in the cattle business. Let’s address the upside of heifer retention.


Consider the following:

  • Drought has resulted in cyclically low cattle inventories. The laws of supply and demand dictate that when cattle inventories are low, the future value of cows, calves, yearlings and feds will increase. Feedlot placement data shows more heifers going on feed as opposed to being retained as replacements. What opportunity does this create? The opportunity to market bred replacement heifers at premium values in the future.
  • In mid-October, the USDA Oklahoma Weekly Cattle Auction Summary tells us that 477-pound (lb.), Medium- and Large-frame, Muscle Score 1 heifer calves traded at an average of $162.79 per hundredweight (cwt.). This translates to a total value per head of $777.
  • If we collect weights on our 4- to 7-year-old cows at weaning, we can determine the average mature weight of our cow herd.
  • Let’s assume: 1) these heifers will be 14-15 months old by May 1, 2023, when we are ready to begin our breeding season; 2) they need to be at 65% of their mature weight at that time to be cycling and ready to breed; and, 3) our average mature cow weighs 1,300 lb.
  • This permits us to calculate the following:
  • o 1,300 x 0.65 = 845-lb. target weight by May 1, 2023

    o 845 – 477 = 368 lb. of gain needed during the next 200 days

    o 368 ÷ 200 = 1.84-lb. average daily gain (ADG) needed from now until breeding season

  • As we take inventory of our hay, silage, feed grains and potential for winter grazing, we need to arrive at a ballpark figure for the cost of gain (COG) on the 368 lb. needed to reach the target weight. This could be achieved in multiple ways, depending on available feed resources. For this example I will assume a cost of gain at $0.80, $1.05 and $1.30 to make the following calculations:

    o At $0.80 COG: 368 x 0.80 = $295. This added to the current value of the heifer at $777 equals $1,072. To account for opportunity cost, financing, additional grazing past breeding season, potential death loss and the cost of breeding naturally or by artificial insemination (AI), I am raising this value by 10%, resulting in a breakeven value of $1,180. Do you believe bred heifers will be worth at least $1,180 per head a year from now?

    o At $1.05 COG: 368 x 1.05 = $387. This added to the current value of the heifer at $777 equals $1,164. Again, raising that value by 10% to account for previously stated expenses results in a breakeven of $1,281.

    o At $1.30 COG: 368 x 1.30 = $479. This added to the current value of the heifer at $777 equals $1,256. Again, raising that value by 10% results in a breakeven of $1,382.

Manage your business, do the math, take inventory of your resources and consult with a nutritionist. Each of the breakevens calculated above are below the fall values of good-quality, spring-calving, bred heifers during the past couple of years.

Editor’s note: Mark Johnson is a beef cattle breeding specialist with Oklahoma State University Extension. He talks about management of replacement heifers on SunUP TV’s Cow-Calf Corner from April 2, 2022. https://youtu.be/cbAdfmVTyYQ. Photo by Shauna Hermel.