Tonsor Weighs Producer Options For Marketing CalvesThu, 19 Jun 2014 16:20:45 CDT
With a strong cattle market, what should producers do with their weanling? Hang on to them, market them quickly, K-State Livestock Market Economist Glynn Tonsor says producers will have several decisions to make. In the current situation, he believes there is more than one good alternative available.
"These historically high feeder cattle prices are setting up the typical cow-calf producer around the country and especially those that have decent pasture conditions, so their cost situation is improving to have a historically high year in 2014," Tonsor said. "And a lot of producers who typically just sell at weaning, a fall weaning crop, will be tempted to do so since they have historically high calf prices and they will have a better than they have in the past."
Before making that decision, Tonsor encourages producers to also consider their other options by comparing that option to background that steer and keeping it all the way through the feedyard. There are some resources available through OSU, to determine what backgrounding is worth by going to the agmanager.info and beefbasis.com. He says this resource will allow producers to project what the market is expecting the value of gain to be for putting additional pounds on.
In running his latest projection he found the a value of a 550 pound steer on September 19th is $218 dollars, which is consistant with the futures market. By coupling that with a expectation around Christmas for a 750 pounder is $195 bucks. That projection makes the assumption of over two pounds gain per day. He says the value of gain the market is suggesting is $130 dollars.
"So if you can put those two hundred pounds of gain on for about $100 per 100-weight, there is roughly $60 per head," Tonsor said. "There is a lot of risk around this we can talk about, but that is the expected return."
He says not every is going to make that trade off, but I think you need to think about it given your situation.
This year producers can sell their calves right off the cow and have a very good year with none of the risk and forgo the potential for additional returns. Or cattle producers delay that revenue and put on additional value by putting additional weight on their calves. Tonsor recommends producers check out those available resources, compare cost of gain and contact him if you have additional questions.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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