Is retained ownership right for your operation?
The August 1 Oklahoma Market Report indicates 525-lb. steer calves are worth $1,475/ head, 861-lb. yearling steers are worth $2,040/head and fed cattle are worth $185/cwt, a 1,400lb. finished steer has a live value of $2,600.
The August 1 Oklahoma Market Report indicates 525-lb. steer calves are worth $1,475/ head, 861-lb. yearling steers are worth $2,040/head and fed cattle are worth $185/cwt, a 1,400lb. finished steer has a live value of $2,600.
I have seen headlines this week of “Historically strong profit opportunities” and “Strong cattle prices.” Recently, Dr. Derrell Peel predicted $4/ lb. weaned calves, $3/lb. yearlings and $2/lb. fed cattle in the future.
Overall, 2023 looks to be a very profitable year for all segments of the beef industry (cow-calf producers, stockers operations and cattle feeders). Low cattle inventories indicate high value of cattle of all classes for the next several years. Wow! This is great news, and it leads to the question: Is retained ownership right for your operation?
To a commercial cow-calf operation, retained ownership simply means holding onto your weaned calves and turning them into yearlings and/or fed cattle that will be marketed later. When all industry segments are profitable (which is rare), it makes economic sense to capture more value and profit potential from your calf crop through retained ownership. As is so often the case, your answer to this question should be based on answering several other questions and financial analysis of what’s going on in your operation.
Consider the following:
• Can you afford to move a portion of your income into the next calendar year? Does your financial situation permit you to withstand the change in cash flow?
• Are you comfortable managing stocker calves? Does your schedule permit you the time to check on and treat calves during the high-risk time postweaning?
• Do you operation have the potential for planting and establishing a cool season forage base to be used for grazing calves and turning them into yearlings to be marketed next spring? Is daily feeding of a growing ration an option?
• Does your inventory permit you to put together semi-load lots (approximately 50,000 lbs.) to economize the transportation cost to feedlots?
• Are you comfortable turning over management responsibility of your calves or yearlings to someone else? Cattle finishing is a highly specialized business. Even if you can turn your weaned calf crop into yearlings, it is not practical for most cowcalf operations to run a finishing operation.
• What do you know about the post-weaning genetic potential of your calves? Have you collected the cost of gain, health, carcass weight, carcass quality or yield grade data from past calf crops needed to assess the profit potential of retained ownership? Are you willing to make the commitment to collecting this type of information to base your decisions on in the future?
