Cull Cow Marketing And Feeding Alternatives. Dillon M. Feuz - Utah State University and John P. Hewlett University of Wyoming

Transcription

1 Cull Cow Marketing And Feeding Alternatives Dillon M. Feuz - Utah State University and John P. Hewlett University of Wyoming

2 OBJECTIVES Analyze Seasonal Cull Cow Prices Use to make short term price forecasts Understand Cull Cow Slaughter Grades Cow Body Condition Score (BCS) Evaluate Alternative Marketing and Feeding Programs

3 UTILITY CULL COW PRICES Cattle Fax Feb Apr Jun Aug Oct Dec

4 MONTHLY SEASONAL INDEX Monthly Index = Monthly Price * 100 Annual Avg. Price

5 UTILITY CULL COW SEASONAL INDEX Seasonal Index Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

6 CULL COW SEASONAL INDEX Over Time Seasonal Index Overall 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

7 CULL COW SEASONAL INDEX Across Markets Sioux Falls Torrington Billings Washington Colorado Cattle-Fax Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

8 CULL COW SEASONAL INDEX Different Grades Commericial Breaker Bonner Lean 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

9 SEASONAL PRICE SUMMARY Cull Cow Seasonal Price Patterns are Fairly Consistent Over Time Across Markets Between Grades Prices are Lowest in Oct, Nov, and Dec Prices are Highest from Mar through Aug

10 FORECASTING PRICES Using Seasonal Index Values Get current cull cow price Divide price by that months index value Then multiply by the index value for the month you want to forecast Example: August price is $50/cwt August Monthly Index value is 104 November Monthly Index value is 88 November Price Forecast $42.31/cwt ($50 / 104 * 88 = $42.31)

11 FORECASTING PRICES Cautions A strong uptrend/downtrend in the market will result in prices that are higher/lower than forecast by the seasonal index method Forecasts longer than 2-4 months are much less reliable

12 CULL COW SLAUGHTER GRADES and Cow Body Condition Score (BCS) USDA Grades.Market Class %lean BCS Canner Cutter Lean 85-90% 3-4 Boning Utility Boners 80-85% 5 Breaking Utility Breakers 75-80% 6-7 Commercial Premium White 70-75% 7-8

13 PERCENTAGE PRICE INCREASE BETWEEN CULL COW GRADES ( Average) Torrington Boner Breaker Commercial Lean 7.5% 11.0% Boner 3.5% Breaker Sioux Fall Boner Breaker Commercial Lean 8.0% 12.9% 23.3% Boner 4.9% 15.3% Breaker 10.4%

14 PRICE NOTE Many other auctions follow similar pattern to Torrington, WY and Sioux Falls, SD Areas where few cows are fattened with grain may not have many cows sell in the Commercial, or White Fat Market Class Individual Packer Prices May Differ from Auction Prices and this Does Impact Grade Price Differentials

15 Weight Gain Required to Change BCS and Cow Grade Depending upon the weight and frame of the cow it requires about lbs. of weight gain to increase one BCS A cow with a BCS of 3 in the Lean Market Class would require about 140 lbs. of gain to get to a BCS of 5 and into the Boner Market Class A cow with a BCS of 4 in the Lean Market Class would only require about 70 lbs. of gain to get to a BCS of 5 and into the Boner Market Class

16 Weight Gain Required to Change BCS and Cow Grade A cow with a BCS of 3 in the Lean Market Class would require almost 300 lbs. of gain to get to a BCS of 7 and into the Commercial Market Class A note on weight change, cow grade and price. Weight is measured by the scale. A grader at the auction assigns the grade based on subjective visual appraisal. Buyers bidding against one another determine the price and they may see the cattle differently than the grader.

17 SUMMARY OF GRADE CHANGES There are significant Price Changes Between Grades Grades are based on an estimate of the percent lean meat Body Condition Scores are related to the percent fat Adding weight to mature cows will change the percent fat and therefore the BCS and the Market Class or Grade

18 PARTIAL BUDGET ANALYSIS To Compare Alternatives to Feeding/Marketing Programs Additional Revenue $$$ Less: Lost Revenue ($$$) Feeding Margin $$$ Less: Additional Costs ($$$) Net Return $$

19 EXAMPLE FEEDING PROGRAMS Grain Feeding Program Silage Feeding Program Roughage Feeding Program

20 GRAIN FEEDING PROGRAM Ration Corn lbs/day Alfalfa 6.60 lbs/day Supplement 0.33 lbs/day Performance 3 Lb. ADG for 90 days Increase BCS by 3.5 scores Majority sell as Breakers or Premium White Market Class

21 SILAGE FEEDING PROGRAM Ration Corn Silage lbs/day Alfalfa lbs/day Performance 2.0 lb ADG for 90 days Increase BCS 2.5 scores Majority sell as Breakers

22 ROUGHAGE FEEDING PROGRAM Ration Grass Hay lbs/day Alfalfa lbs/day Performance 1.25 lb ADG for 90 days Increase BCS 1.5 scores Majority sell as Boners

23 GRAIN FEEDING Example Additional Revenue From Selling Cull Cow in Feb 3 lb / day gain * 90 days = 270 lbs Nov Price / Nov Index * Feb Index $40/87*101 = $ % gain in Grade Change Price $46.44 * 1.18 = $ lb cow * $54.80 = $751 / cow

24 GRAIN FEEDING Example Lost Revenue From Not Selling Cull Cow in Nov 1100 lb cow * $40.00 / lb = $440 / cow

25 GRAIN FEEDING Example Additional Costs Feed $200 Yardage $ 27 Trucking $ 15 Other $ 5 Interest (440 *.08 * 90/365) $ 9 Total $256

26 GRAIN FEEDING Example Partial Budget Budget Additional Revenue $751 Less: Lost Revenue ($440) Feeding Margin $311 Less: Additional Costs ($256) Net Return $ 55

27 On-Line Decision Support Tool Forecast Cull Cow Prices Based on historical seasonal pattern Based on historical price differences between grades Evaluate Alternative Feeding Programs Calculates Expected Return and Determines Break-Even Price

28 SUMMARY Cull Cow Prices are Seasonal There are Price Differentials Between Grades Feeding Cows can Improve Their Grade Revenue can be Increased

29 SUMMARY There are Costs to a Feeding Program Use a Partial Budget to Analyze Cow Feeding Program

30 Questions