Value of Preconditioning Apparent in Oklahoma Quality Beef Network Sales and Stocker DemandMon, 11 Nov 2013 10:20:48 CST
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist writes in the latest Cow-Calf Newsletter:
The first few of several Oklahoma Quality Beef Network (OQBN) sales have been held in the past two weeks. OQBN is a vac-45 type preconditioning programming with a specific protocol for health and weaning of calves. Several more sales are upcoming in McAlester (November 19); Blackwell (November 23); Tulsa (December 2); El Reno (December 4); and Pawnee (December 7). Last week, at the OKC West sale at El Reno, Oklahoma, OQBN steers and heifers sold for premiums ranging from $11 to $24/cwt. compared to non-preconditioned feeders. The value of preconditioning is apparent even when feeder cattle prices are near record levels. For stocker or feedlot buyers, the improved health and reduced death loss risk of preconditioned feeder cattle is even more important at high prices.
Wheat pasture is continuing to develop and calf markets in the Southern Plains reflect strong wheat pasture demand for stockers. The strong demand for lightweight stockers is maintaining a sharp price rollback on initial stocker gains. In last week's seven-market Oklahoma auction averages, the steer price rollback for the 425-525 pound weight range was $21.61/cwt; for 525-625 pounds, $16.75/cwt.; for 625-725 pounds, $3.07/cwt.; and for 725-825 pounds, $5.87/cwt. This means that the value of gain is heavily loaded towards the later stocker gains, i.e., in animals above 600 pounds. Stocker producers should determine a target end weight that captures this higher value of gain and works backwards, considering production conditions and time available for weight gain, to determine the best purchase weight for stockers. For example, at current prices, a 550 pound beginning stocker weight has a 46 percent higher value of gain on 200 pounds of gain, compared to a 450 pound beginning weight.
Steers versus heifers may be another important consideration for stocker producers. In the last three weeks, an increasing number of feeder auction reports from several states have included heifers sold as replacements at significantly higher prices than feeder heifers. In many cases, the replacement heifers are selling $8-$12/cwt above comparable feeder heifers. This implies heifers selling at 5 to 6 percent discount to comparable steers, compared to the more typical 11 to 12 percent heifer discount. In several instances, replacement heifers are selling at prices at or above comparable steer prices. For the most part, replacement heifer demand this fall is centered in the central and northern Plains and the western Corn Belt. However, replacement heifer demand is likely to spread into the Southern Plains, where much herd rebuilding is ahead, if drought conditions continue to moderate.
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