Cull Cow Marketing And Feeding Alternatives Dillon M. Feuz - Utah State University and John P. Hewlett University of Wyoming
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
UTILITY CULL COW PRICES Cattle Fax 70 65 60 55 50 45 40 35 2006 2007 2008 2009 2010 30 Feb Apr Jun Aug Oct Dec
MONTHLY SEASONAL INDEX Monthly Index = Monthly Price * 100 Annual Avg. Price
UTILITY CULL COW SEASONAL INDEX 120 115 110 105 Seasonal Index 100 95 90 85 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CULL COW SEASONAL INDEX Over Time 120 115 110 105 Seasonal Index 100 95 90 85 1995-99 2000-04 2005-09 Overall 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CULL COW SEASONAL INDEX Across Markets 120 115 110 105 100 95 90 85 80 Sioux Falls Torrington Billings Washington Colorado Cattle-Fax Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CULL COW SEASONAL INDEX Different Grades 120 115 110 105 100 95 90 85 Commericial Breaker Bonner Lean 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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
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)
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
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
PERCENTAGE PRICE INCREASE BETWEEN CULL COW GRADES (2005-09 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%
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
Weight Gain Required to Change BCS and Cow Grade Depending upon the weight and frame of the cow it requires about 60-80 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
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.
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
PARTIAL BUDGET ANALYSIS To Compare Alternatives to Feeding/Marketing Programs Additional Revenue $$$ Less: Lost Revenue ($$$) Feeding Margin $$$ Less: Additional Costs ($$$) Net Return $$
EXAMPLE FEEDING PROGRAMS Grain Feeding Program Silage Feeding Program Roughage Feeding Program
GRAIN FEEDING PROGRAM Ration Corn 26.00 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
SILAGE FEEDING PROGRAM Ration Corn Silage 37.00 lbs/day Alfalfa 12.00 lbs/day Performance 2.0 lb ADG for 90 days Increase BCS 2.5 scores Majority sell as Breakers
ROUGHAGE FEEDING PROGRAM Ration Grass Hay 12.50 lbs/day Alfalfa 12.00 lbs/day Performance 1.25 lb ADG for 90 days Increase BCS 1.5 scores Majority sell as Boners
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 = $46.44 18% gain in Grade Change Price $46.44 * 1.18 = $54.80 1370 lb cow * $54.80 = $751 / cow
GRAIN FEEDING Example Lost Revenue From Not Selling Cull Cow in Nov 1100 lb cow * $40.00 / lb = $440 / cow
GRAIN FEEDING Example Additional Costs Feed $200 Yardage $ 27 Trucking $ 15 Other $ 5 Interest (440 *.08 * 90/365) $ 9 Total $256
GRAIN FEEDING Example Partial Budget Budget Additional Revenue $751 Less: Lost Revenue ($440) Feeding Margin $311 Less: Additional Costs ($256) Net Return $ 55
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 http://www.something
SUMMARY Cull Cow Prices are Seasonal There are Price Differentials Between Grades Feeding Cows can Improve Their Grade Revenue can be Increased
SUMMARY There are Costs to a Feeding Program Use a Partial Budget to Analyze Cow Feeding Program
Questions