How Much Time and Money Should You Spend on That Calf?

From June of 2017 - It's a good time of year to think about this so you can make decisions about management and taking calves to market. We added an Excel-based "calculator" to make it easier. :-)

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5 thoughts on “How Much Time and Money Should You Spend on That Calf?

  1. Excellent comments and discussion.

    My main purpose is to get producers thinking about marginal gain instead of gross value.

    The math is correct as given when looking at marginal gain on a lbs. or cwt. basis. If we had use 100 lbs. break it may have been less confusing. Let’s not get too hung up on it since it is only part of what brings home net income.

    When selling cattle there are other important factors.

    1. What are the weighing conditions? If I’m selling directly off the farm I want to know what are the weighing conditions, before I talk price. Will the cattle be shrunk overnight (penned up without feed), will they be weighed by taking them down the road, off loading at a stock yard and weighing them in groups?

    2. Is the set of cattle uniform in weight, breed and sex and enough of them to fill a tractor trailer. This “50,000 lbs.” load is the real marketing unit of beef cattle. In our WV quality beef cattle sales you see this real quick when cattle are being sold. Smaller lots are strongly discounted since they, by themselves, will not fit the big trailer.

    3. Are the cattle from a reputation farm. If the producer has a good track record there will be multiple buyers wanting the cattle and the price will go up. It also works the other way if the operation has less than a stellar reputation.

    4. Knowing the slide is important. But remember you are using historical data, even if it is only a week old. Has anything happened in the market since last week that makes things different? I have seen the market change overnight when big economic/political events have hit the market. The sale this week is a new event based on the buyers present at the ring or on the phone.

    Thank you for your comments. I’ve accomplished my purpose of getting you-all to think about what is the net value in the next 50 to 100 lbs. gain you put on your animals. And yes I do want you to do the math. Putting pencil to paper enables the producers to improve their decision making.

    Ed

  2. This is the sentence with the error: “The $107.50/cwt. is the value of putting another 100 lbs. gain on the lower weight cattle.”

    As Doug said, that sentence should read: “The $107.50/cwt. is the value of putting another 50 lbs. gain on the lower weight cattle.” because that’s the weight difference between your two groups.

    You can’t extrapolate that out to 100 lbs without some adjustment. As Doug said, IF (and it’s a big IF!) the slide continues on the same level of 5 cents per 50 pounds, then the value of gain would be around $1.02/lb. However, we don’t know, without seeing the actual prices, whether the slide continues in this same relationship. These relationships continually change.

    Bud Williams Marketing teaches you how to understand and profit from what’s happening with the market today. Because, today’s prices are all we know for a fact.

  3. I am going to split some hairs here. The first sentence after the example is wrong

    “The $107.50/cwt. is the value of putting another 100 lbs”

    If we continue to use a 10 cent slide the VOG on 100# would be 102ish. The VOG of 107.50 is on 50#. I know it was just a wording error, thing is if this mistake were made in real life on a load you’d be off a few grand.

    1. Hi!
      Sorry for the delay in posting this. I’ve been out of town. Can you clarify your math so that we all get your point? Some folks (Like me, for example) are not great at math and it helps if we see it laid out in equations. 🙂
      Thanks!
      Kathy

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