What Influences Prices of Backgrounded Feeder Cattle?
How hide color, vaccination and implant status determine premiums or discounts on sale day.
Fall means weaning time for many cow-calf producers across the country. Some are weaning early to protect forage resources and relieve some of the foot traffic on droughty pastures; others will be weaning calves and taking them straight to town to capitalize on near-record-high prices. But one of the staples of the Northern Plains, especially east of the Missouri River, is the farmer/feeder who raises or purchases calves, backgrounds them to add additional pounds, and then typically markets them after the first of the year. Researchers within South Dakota State University (SDSU) Extension have been monitoring sale barn prices and categorizing lots of cattle to inform producers about the variables affecting their sale checks at the local auction market.
Where and what you market
After analyzing backgrounded calf data from 2022, it was determined that regional differences influence the price received at the market, which may be affected by cattle volume. “High-volume” sale barns received higher prices. Barns considered “low-volume” sold animals at discounts, ranging from $5.43 per hundredweight (cwt.) to $19.31 per cwt.
The basis realized at barns considered “high” vs. “low” volume may be a management component for producers. While a higher price may be received at a different market venue, there are other expense factors to consider before making a change. An evaluation of the mileage differences, marketing expenses and other fees needs to be reviewed to determine if a change in location can make a change in profit.
The steer vs. heifer vs. bull evaluation shows yearling steers brought more than similar heifer calves and intact bulls. Heifers and bulls were discounted $13.34 per cwt. and $7.26 per cwt., respectively, compared to their steer mates.
These results were consistent with earlier studies done across the nation. This observation and price difference could encourage producers to evaluate the use of sexed semen to change their steer-to-heifer ratio and to evaluate the cost and effort of different castration methods to reduce the number of bulls brought to the sale.
Hide color
We investigated hide color as a variable of interest. This facet of cattle production is largely dependent on owner preference in the Northern Plains, and many idealistic schools of thought collide in the public marketplace. Our observations indicated that, like fall calves, backgrounded cattle of any single color, brought premiums over mixed lots of cattle. This should encourage producers to market cattle in consolidated lots of a single color to avoid discount. Lots of solely black-hided (and black-faced) cattle received the highest price per pound. All subsequent observations will be reported as discounts on average relative to the price of these black-hided lots, regardless of sex. Red (and red-faced) cattle were discounted $8.37 per cwt. White cattle received a $13.95-per-cwt. discount, compared to black-hided counterparts. Mixing hide colors of cattle resulted in discounts of $8.83 per cwt. to $20.74 per cwt. compared to single-color lots. Animals with spots, roan, white feet or tails, tiger-stripes, and other non-solid color patterns were heavily discounted. Producers in this space should carefully evaluate marketing options. Within our data set, these were classified as ‘other’ in color and were discounted as much as $36.85 per cwt. compared to black cattle.
A producer’s breed preference is a key indicator of animal color at the sale barn. This often collides with perceived market-end-point preference. The result of this study is not to influence breed selection. However, given the price discounts observed, producers are encouraged to evaluate breeding decisions that provide them with the most profitable outcome for their operations.
How many and lot uniformity
The concept of a premium for larger groups of uniform cattle was investigated. Lots were divided into four groups: 1 to 20, 21 to 50, 51 to 100, and 101+. This was a more realistic method of capturing uniformity, as sale barn staff separated and sorted cattle into their sale lots based on variables such as frame, muscling and body condition, which in feeder cattle is largely dependent on age. Cattle sold in lots of less than 20 were discounted $7.82 per cwt. compared to lots of 21 to 50. However, this was the only significant difference. Larger lots of cattle received no additional premiums.
Lot uniformity (such as muscle, flesh and height) was very consistent across all barns. As the animals are sorted by sale barn staff prior to entering the ring, the outliers in the herd were sorted prior to the sale. The sort provides buyers with the ability to fill orders and needs.
Horns and vaccines
Cattle with horns were discounted $24.63 per cwt. compared to cattle without horns. Creep-fed animals were compared to those raised without. Purchasers were willing to spend an additional $12.93 per cwt. on cattle not offered creep. Implant use was also noted. Non-implanted calves brought $7.38 per cwt. more than implanted contemporaries.
These management aspects indicate that buyers are unwilling to take on the inherent risk to other animals, carcass damage or loss of gain when purchasing animals with horns. One of the more surprising results from this information was the value change in creep-fed compared to non-creep-fed animals. These results should be considered when evaluating the value of the feed used compared to the total weight gain and reduced price per cwt. received. The same decision-making effort needs to be utilized when implanting. The cost of the implants and increased weaning weights must be considered against the price difference received for non-implanted cattle.
The final variable investigated was to determine what effect herd health protocols had on the price received. Five-way and seven-way vaccines were used to evaluate the herd health consideration. Cattle who received a five-way vaccine brought $14.59 per cwt. more than unvaccinated cattle. Cattle with an unknown vaccination status were discounted $22.52 per cwt. Similarly, cattle that received a seven-way vaccine were paid a $12.19-per-cwt. premium compared to those that had not. Cattle with an unknown seven-way status were penalized $12.42 per cwt.
Producers can execute herd health protocols in a variety of ways. The data above indicate producers who follow a vaccination protocol and provide a list of dates and vaccinations on sale day are compensated for their efforts. Sellers marketing in a specific program limiting vaccines should ensure appropriate buyers are present and informed of offerings to minimize the potential downside.
The bottom line
A thorough understanding of production costs and market trends is incredibly important. Understanding the variables at play in the public market will increase the competitiveness and flexibility for those marketing cattle in 2023 and in years to come.
Editor’s note: Kiernan Brandt is an Extension cow-calf field specialist, and Heather Gessner is an Extension livestock business management specialist at South Dakota State University. [Lead photo by Lindsey Sawin.]
