Tuesday, December 6, 2022
HomeMoney MattersSelling Cattle in September Increases Profit Potential

Selling Cattle in September Increases Profit Potential

Though this research speaks directly to producers in semi-arid environments, it has some great food for thought for graziers everywhere to consider when working towards profitability.

The bottom line:

“[Graziers] should…invest adequate time in understanding principles of agricultural economics, livestock marketing, and options for reducing market risk. These efforts would not only enhance the economic sustainability of individual ranching operations, but also the vitality of their rural economies.”

Irisarri et al 2019.

The Central Plains Experimental Range is a Long-Term Agroecosystem Research site (LTAR) established in 1939. ARS scientists use
this long-term data to evaluate relationships among climate, livestock performance, grassland species diversity, and more.

For graziers on the semi-arid shortgrass steppe, grazing management has less impact on profitability than market variability. That’s one of the findings from a 15-year study of yearlings grazing at light, moderate, and heavy intensities at the USDA-Agricultural Research Service Central Plains Experimental Range in north-central Colorado. That’s not surprising really. Our response to our inability to control market ups and downs has been to manage inputs and try to sell at the right time.

The right time is another finding of this study. Most ranchers in this area have traditionally moved their cattle from the rangeland to feedlots in October in order to maximize their profits. But this study found that taking them off and selling them in September achieves the same production weights, and the animals bring a higher price.

Let’s take a closer look.

A Little Background

Click to download a copy of this paper for more details on methods and conclusions.

ARS scientists in Cheyenne, WY, and Fort Collins, CO, in collaboration with research partners from Argentina and the University of Wyoming, used 15 years of data (2003-2017) on livestock weight gain, forage production and three levels of grazing intensities, cattle market data, and climate to quantify differences in net revenue based on the date cattle were delivered to feedlots for finishing (attaining their final weight gain before harvest). The data included average daily gains based on monthly weigh-ins of  livestock for the normal grazing season of May through October.

The data draws on a grazing experiment that began in 1939 and has been going on ever since. The study includes four levels of grazing intensity for a grazing season from May to October: (1) none; (2) light (targeted for 20% utilization of peak growing-season biomass); (3) moderate (40% utilization); and (4) heavy (60% utilization).

Plant communities on the shortgrass steppe have a long history of being grazed (think large herds of bison), and they’ve developed an inherent resistance, or resilience, to grazing. Still, different grazing management can cause changes. Based on 80 years of data, we know that as grazing intensity increases, so does harvest efficiency. There’s also a decrease in cool season grasses, but an increase in warm season grasses and in the amount of bare ground. Animal weight gain also decreases under heavy intensity grazing.

Precipitation is variable in the region The more rain, the more forage, and the less rain the fewer cattle can be grazed. To deal with this variability, ranchers have either added yearlings to their cow calf operations, or switched to yearlings entirely. This allows them greater flexibility in stocking rates, but exposes them to more market risks. Thus, figuring out the best time to sell, is critical.

Sell in Early September

Figure 3 from Irisarri et al 2019.

Thanks to 15 years of monthly weigh-ins, researchers discovered that livestock weight gains were negligible from early September until the end of the rangeland grazing season. This is particularly true under heavy grazing management.

Meanwhile, looking at market data for September and October, they found that prices for yearlings were higher in September. Thus, sending cattle to feedlots earlier than the traditional timing of October provides a two-fold benefit – ranchers receive more profits for their animals, and they have more grass left over. The remaining forage could be used to extend the grazing season for cows, the rancher’s own or a neighbor’s, or to improve soil health by leaving more cover.

As the graph to the right shows, net returns over the 15 years were lowest if yearlings were sold in early August, regardless of grazing intensity. September was always best for all grazing treatments, with October, or “business as usual” falling in the middle.

Why This Matters

For graziers in highly variable environments, the biological and ecological variability in vegetation production and beef production is challenging.  Yet, in this study, variability across years was much lower for forage production and beef production compared to net revenue. The variability in net revenue across the study years was three to five times greater than for the forage production or beef production, showcasing the clear importance of market dynamics for economic sustainability of graziers.  This reinforces the bottom line with which this article started:

“[Graziers] should…invest adequate time in understanding principles of agricultural economics, livestock marketing, and options for reducing market risk. These efforts would not only enhance the economic sustainability of individual ranching operations, but also the vitality of their rural economies.”

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Kathy Voth
Kathy Vothhttps://onpasture.com
I am the founder, editor and publisher of On Pasture, now retired. My career spanned 40 years of finding creative solutions to problems, and sharing ideas with people that encouraged them to work together and try new things. From figuring out how to teach livestock to eat weeds, to teaching range management to high schoolers, outdoor ed graduation camping trips with fifty 6th graders at a time, building firebreaks with a 130-goat herd, developing the signs and interpretation for the Storm King Fourteen Memorial trail, receiving the Conservation Service Award for my work building the 150-mile mountain bike trail from Grand Junction, Colorado to Moab, Utah...well, the list is long so I'll stop with, I've had a great time and I'm very grateful.

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