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Agricultural News

Retained Ownership- Does it Make Sense in 2010?

Mon, 12 Jul 2010 14:14:27 CDT

Retained Ownership- Does it Make Sense in 2010? As producers are weaning their fall-born calves, it's a good time to look at retained ownership options. Utilizing OSU's Retained Ownership Decision Tool, we looked at retaining fall-born, long-weaned steers through preconditioning, grass stocker and feedlot. Calves are assumed to be weaned on July 15 and weigh 641 lb. Last week's Oklahoma City price was $115.36 for unweaned calves weighing 622 lb. after shrink. Subtracting expenses for sales, weaned steers are expected to return $711/head to the cow-herd. If instead those steers are preconditioned for 45 days, the producer can expect to sell a 698 lb calf, after shrink, at $120.94 (August) plus a $3 premium for preconditioning. So, the calf earns an $856 check after a 1% death loss. The producer will have another $87/head in expenses, so preconditioning nets about $59/hd. There is an important lesson to be learned from the price difference between a bawling calf and a weaned calf. The market is currently discounting bawling calves by over $6/cwt. compared to weaned calves of the same weight. Even waiting a week post-weaning can make you money.

Instead of selling after preconditioning, the producer could put the steers on grass pasture for 60 days. On October 28, 783 lb calves, net of shrink, are sold for a projected $104.18/cwt. The calves are projected to average $810/head after a 0.6% death loss. Additional expenses are incurred including $18/head for pasture rent. Since the calves earn an additional $38/head versus the added expense of $41/head, grass stocking phase does not appear to be advisable this year unless the producer has excess pasture with no alternative use.

Retained ownership in the feedlot looks to be loss generating for last fall's calves. Current March Live Cattle futures prices suggest a sale price of $97.43. A 1,255 steer (again net of shrink) earns about $1,221/head (March) after a 0.15% death loss. In the feedlot, steers cost the owner another $450/hd. Given that added revenue is only $327/head, retained ownership through the feedlot appears to be ill-advised this fall.

Values presented here are based on many production, cost and value assumptions that may be different for individual producers and may change over time. Producers can analyze their own retained ownership strategies using the Retained Ownership tool.

Click here for a chance to download this spreadsheet authored by Dr. DeVuyst.

These comments are from the weekly editorial service "Cow Calf Corner" written by Dr. Derrell Peel and Dr. Eric DeVoyst of Oklahoma State University.



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