Cash In On Culls

Two New Mexico researchers put their own money on the line and showed that intensive cow feeding programs can yield $50 more per head.

Telling ranchers how they can make more money is one thing. But, for Extension beef specialists, practicing what they preach is a whole other story.

Clay Mathis and Jason Sawyer know when it comes to marketing cull cows, timing is everything. The New Mexico State University (NMSU) Clayton Research Center specialists also know cull cow income generally accounts for 10-20% of the gross revenue on a cow-calf operation.

Through their “applied” research on cull cow feeding and marketing, the two specialists are more convinced than ever that ranchers can add significant value to cull cows — $50 or more net return/head.

Using their own money, Sawyer and Mathis sold their last load of cull cows in early March out of a commercial feed yard.

“Last winter, we put together middle-aged culls purchased at a local sale barn,” Mathis says. “We marketed them 42 days later with an 11% return on investment in 43 days.”

They also worked at the research center with Bruce Davis, CS Ranch, Maxwell, NM, on a cow-feeding project last year. CS Ranch owned the cattle and let them do the research. Again, they concluded money could be made by feeding culls.

There are two keys to their success:

  • Seasonal cow prices. Nationally, cull cow prices are typically lowest in October and November and highest in February-May.

  • Cost of compensatory gain. Cows that are thin — body condition score (BCS) 2-4 — but aren't sick or injured have the potential for very rapid weight gain. Average daily gain of 4-5 lbs./day aren't uncommon during a 30- to 50-day feeding period.

“Intensive cull beef cow feeding programs that take advantage of seasonal market patterns can benefit producers who typically market cull females in late fall,” Sawyer says. “You have to wonder why very few producers do it; maybe that's why it works, though.”

But, Prices Are Already High

With the current high cutout value of beef, and cutter/canner cows selling for $38-$45/cwt. across the country, some may question that seasonal cow values this season are proportional to historical levels.

“We're not in the business of projecting prices, especially under such unusual market conditions,” says Mathis. “But, we have no reason to expect the magnitude of the seasonal price increase will be drastically different this year than the historical trend.”

Plus, Sawyer adds, the cost of gain isn't expected to be much higher than last year. Subsequently, there's less dependence on a seasonal price increase to ensure profitability.

But, Mathis cautions that producers who wean in August-September may be better off selling cull females at weaning before fall prices bottom out in October and November. The alternative, he says, is to hold those females on pasture or in dry lot until the more favorable late-winter/spring market.

Multiple Management Strategies

Mathis and Sawyer recommend ranchers begin by charting local prices to determine their best marketing window. In New Mexico over the last 25 years, the March-April cull cow market has averaged 14% above the fall market low in November.

“Historically, the greatest month-to-month price increase here is from January to February,” explains Mathis.

Cull cows are graded based on live weight and percent lean meat yield into four broad categories: Canner, Cutter, Utility (boning or breaking), and Commercial.

As thin cows gain weight, their grade changes, Sawyer says. For example, a cow that is a BCS 2 will generally be graded Canner. When that cow reaches a BCS 4 to 5, she may be graded Cutter. The grade difference is worth $5-8/cwt.

If the same cow gains more weight and reaches Utility grade (BCS 5+), she may be worth $3-5/cwt. more. The value of upgrading the BCS 2 Canner cow to Utility grade may be $8-12/cwt.

“It's not too surprising that we found as age increased, cows ate less feed, gained less weight and were less efficient at converting feed to gain,” Mathis says. “Older cows simply don't perform as well as younger cows.”

Three feeding strategies were evaluated:

  • Conservative — 70% concentrate diet throughout a 54-day feeding period.

  • Standard — begin with a 70% concentrate diet and step up to a 90% concentrate diet over 21 days by increasing the concentrate by 5% every five days.

  • Aggressive — begin with a 70% concentrate diet and step up to 90% over 11 days by increasing the concentrate 10% every five days.

“Feeding strategy had no significant influence on breakeven,” says Mathis. “We think the program should be 30-50 days — anything more is probably too long.”

“It all goes back to seasonal price changes and cost of compensatory gain,” says Sawyer. “We hope this information will help as many cow-calf producers as possible.”

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