Marketing alternatives with limited forage

Markets
Jul 18, 2014
by WLJ

Most all of Oklahoma received considerable rain from late May into early July. This resulted in much needed forage growth in all regions, including some of the worst drought areas. However, the heat of summer has arrived in July and forage growth has slowed abruptly.

Rain now may do little to relieve continuing long-term drought conditions and additional forage growth could be limited through the heat of summer. As a result, producers may face decisions about how to manage pastures and cattle to get through the summer. Many pastures, stressed from years of drought, require careful management to promote recovery and that may include limiting grazing this summer. Pastures need time to rebuild root systems and reproduce to reestablish pasture stands. Cow/calf producers have several management alternatives to reduce forage demand this summer.

Early weaning spring-born calves is an effective way to reduce the nutritional requirements of cows and thus forage demand. Earlyweaned calves can either be sold now or retained in a backgrounding program.

At this time, calves may be 150-200 pounds lighter than normal weaning weights. One alternative is to sell the calves now at significantly lighter weights than usual. This will result in lost revenue but, depending on the cost of feed for both calves and cows, may be the best option in some instances. Because of the steep premium for lightweight calves at the current time, the lost revenue is not as much as the weight might suggest. For example, using prices from last week in Oklahoma auctions, a 350-pound steer would bring about $195/head less than a 500-pound steer or a reduction of about 15 percent of the animal value even though the weight is down 30 percent.

Alternatively, the value of added weight gain by retaining the calf in a backgrounding program is about $1.40/ lb. (at current prices) for the additional pounds up to normal weaning weight. Confined, limit feeding of calves may be a viable alternative when stocker grazing is not available. Depending on the backgrounding cost of gain and the additional requirements, i.e., labor, etc., this may provide a potential return for retaining the calves and still provide the needed flexibility for pasture management.

These two alternatives can be combined for more flexibility such as selling the heavy end of the calves and retaining the lighter weights in a backgrounding program or selling the steers and retaining the heifers for additional weight gain. It is possible that calf prices have peaked seasonally and prices could drop a bit this fall, especially if drought conditions redevelop. While the downside risk is low, having the calves weaned and in a backgrounding program makes it easy for producers to monitor market conditions and market the calves at any time if any market weakness should develop.

Early weaning of calves should be followed immediately with early cow culling to further reduce forage demands. Pregnancy examinations and examinations of feet and teeth will help to identify cows that can be culled sooner rather than later. Average dressing Boning cow prices were record high at $117-$118/cwt. last week in Oklahoma, meaning that a slaughter cow is worth roughly $1,500/head at the current time. With a bit of labor and extra management, there are several possibilities to take advantage of current calf and cow prices and simultaneously manage pastures for long-term productivity. — Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

{rating_box}