Thursday, October 27, 2016

Sell the Calves or Retain Ownership? It’s a Question to Consider this Fall

In a blog post titled “CalfPrices and Retained Ownership”, posted by the Beef Cattle Research Council (BCRC) on October 7, Brian Perillat, Canfax Manager/Senior Analyst, discusses the prospect of retained ownership this fall with calf prices down from last year. It challenges the producer to think about both sides; it may seem like the perfect opportunity to keep back your calves but have you considered all the options.

Perillat states, “Marketing decisions were relatively straightforward the last couple years for producers when they were selling calves at record high profit levels. Given the major price correction, producers are taking a harder look at different marketing/feeding options for this year’s calf crop.”

As people consider retaining ownership of their calves because prices are lower than the record highs of 2015, they need to look at the bigger picture. “It is also important to put prices into perspective as they remain higher than past high points of 2001 and 2012. Also, the market remains in a down trend, and despite their major drop, markets are still pointing lower,” says Perillat. 

All aspects of raising cattle for an extended period of time need to be considered.   

Perillat reminds producers, “The important factor for each producer looking to retain ownership is to understand their own cost of production, and make sure to properly account for yardage, death loss, health costs and interest. Cost of gain also varies highly with the average daily gain of cattle. Based on current market conditions and feeding costs, the projected margins on backgrounding calves are generally negative.”

You can read the blog post here for economic breakdowns showcasing some specific examples. 

If you are considering selling your calves through the auction market or privately this fall, your Canadian Angus Association has a new program, the Commercial Angus Identification and Performance Program (CAIPP), that may be very useful to you. This program is based on our Angus tag program and is designed to attribute performance and pedigree information to your commercial cattle. The information collected can come from producers, feedlots and packing plants. One of the many tools that CAIPP offers is the Bull Battery Performance Endorsement. This record provides you with an average of your bull battery’s EPDs over the last four years. This record also showcases the breed average and percentile ranking (the percentage of animals that have this EPD value or a more desirable value) for each of the EPDs. You want to see percentile rankings that are lower numbers as this means the EPD is in the top %, for example the top 10%. By having these three aspects represented, producers are able to show their program’s strengths and that they have made an investment in quality Angus genetics. Here is an example of the Bull Battery Performance Endorsement: 


As you can see, the top row shows the percentile ranking for each EPD. 50 is the average so a number less than 50 represents that your bull battery EPD average is actually more desirable than the breed average. For example, in this performance endorsement, the weaning weight EPD has a percentile ranking of 9 meaning that it is in the top 9% of the breed. This is an excellent way to show potential customers that your calves should have good growth traits.

We have had many producers use these endorsements when selling their calves at market and have had strong success with them. Cattle buyers like to see some promise or potential in the calves that they are sourcing and this gives them just that. Especially in a downturn year, people want to have a strong confidence in the calves they buy because they have to see productivity in their programs. 

For more information on the Bull Battery Performance Endorsement or about the Commercial Angus Identification and Performance Program, please contact Taylor Holmes. 

Posted by Taylor Holmes