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Quality Carries The Profit

An Iowa State University study says that the profit in grade vs. yield selling comes down on the quality side.

Tired of wrestling with the grade versus yield question, only to hear the same old answer: It depends? Sorry, it does depend. The following can help make those breeding and/or buying decisions a little easier. In an Iowa State University (ISU) study, the profit tends to lean toward the critters that grade.

After looking at the numbers from almost 1,150 steers fed through Southwest Iowa's Tri-County Futurity from '96 to '99, John Lawrence, ISU ag economist, says, “As the Choice-Select spread widens, marbling becomes more and more important. It becomes even more important than feed efficiency and average daily gain.”

And if you think you've noticed the Choice-Select spread getting wider, it isn't your imagination. It's increased 55%, or over $3/cwt., from 1989-1991 to 1999-2001, he says.

There is also a seasonal pattern to the spread. “It can be as narrow as $2 to $4 in early spring, but is generally wider most of the year,” he adds.

For the study, the researchers, including undergraduate research assistant Cody Forristall, Extension program specialist Gary May, and Lawrence, used an $8 spread.

However, Lawrence comments, “In the late spring, early summer and fall, it's more likely to be $12, and as high as $20.”

They also used a generic grid. “There weren't huge premiums on quality grade but some premium on yield grade,” he reports. “If you went to a different grid, for example, one with more premium on yield grade rather than quality grade, yes, you might get a different result.”

Macedonia, IA, feeders Gary and Diane Forristall generally market their cattle through U.S. Premium Beef's grid, but tend to come up with similar results.

“The price is based on 52% Choice or better,” Gary Forristall says. “We usually make our money beating the plant average on Prime and Choice.”

Although the Forristalls purchase their feeder cattle, the best news of the study is for cow-calf producers who retain ownership. The ISU group traced steers in the study back to their dams.

“The most profitable steers in the feedlot in a grid marketing situation came from lower maintenance, moderate-sized, lower cost cows,” Lawrence says.

“It's not a conflict. The ones that are cheaper to feed at home produce more money on the other end. The opposite is also true. The higher cost cows tended to produce the less profitable steers in the feedlot,” he says.

Lawrence says they calculated cow-carrying costs from frame score, body condition score and weight.

These cows from five different herds had another common denominator besides size and maintenance costs. More than 90% were British-influenced and 80% were at least half Angus.

So, do these numbers mean you should select the smallest heifers in your herd for replacements? In a word, no.

“There is a very practical reason for selecting the larger, growthier heifers,” says University of Nebraska animal scientist Jim Gosey. “You get better developed heifers that reach puberty faster.”

He adds, “It is more a matter of managing breed composition. A producer could use a Continental or Continental-cross bull on British or British-cross cows and still maintain a reasonable amount of Choice.”

However, he says it's important that producers don't go overboard on size when they select their replacements.

“Not only should they weigh them at 14 to 15 months, but it's more important to temper frame size. Eliminate the very heaviest ones and the ones with the largest frame size,” Gosey says.

If you have a herd of cattle that tend more toward the faster growing, leaner Continental types, or that's the type you prefer to feed, timing is everything. Lawrence recommends juggling calving dates or buying times so cattle will finish out when the Choice-Select spread is narrower.

“Marbling becomes less important when there is less premium on Choice,” he explains. “That's when we want fast-growing efficient cattle. If you sell in February when the Choice-Select spread is narrow, and you have 80% Choice cattle, who cares?

“If you're selling in November or May when the Choice-Select spread is $12, you want something that grades. You can give up a little on feed efficiency or gain,” he adds.

“Not only do we need to find the right grid, but we need to sell at the right time of the year,” he emphasizes.

Becky Mills is a freelance writer based in Cuthbert, GA.

What Grid?

If you need help deciding on the right grid for your cattle, Iowa State University (ISU) has a grid calculator, or actually two, that can be downloaded from its Web site.

Go to and click on the Feedlot Management section (the list is on the left side of the screen). Next, click on Grid Marketing. There are two versions of the calculator — a full version and a simpler version.

“In the full version, you can use actual data from cattle you have sold. In the simpler version, you can use estimates to find out what your cattle will do in the different grids,” says John Lawrence, ISU ag economist and director of the Iowa Beef Center.

“The individual has to update some grids. For example, the IBP grid changes daily or weekly but some only change every six months. You might have to tweak it a little but the calculator will read the data and give you results under grid A, B or C,” Lawrence says.

Who's Your Daddy?

Council Bluffs, IA, producer Duane Warden says it's hard to figure which cow type is most profitable in his herd. He has 1,100-lb. cows that produce profitable steers and 1,500-lb. cows that do the same. However, when it comes to sires, he can zero in on the ones that make the money.

Over the last six years, Warden, an Angus breeder, has fed close to 280 steers through the Tri-County Futurity. He sorted the steers by sire and calculated which bulls sired the most profitable steers. To try to reduce such year-to-year variables as feed costs, he converted dollar figures into profitability ratios for the bulls. The exercise was enlightening.

“One sire had an average profit ratio of 73% (100 % is average) over four years,” Warden says. “His steers averaged 67% Choice. Another bull had a profit ratio of 169%. He had 19 steers in three years and they were 100% Choice.”

“The big thing is that if you increase the number of Choice, you're going to increase your profit,” he says.

Warden also says sire identification is critical in improving profit. “In 2000, we had 21% Select steers. Two-thirds of those were from one sire.”

Not that the sires get all the blame, or all credit. He adds, “There is a wide range in profit for individual steers. Therefore, identity is also important for selective culling of poor producing cows.”

In 1999, that lesson was particularly obvious. The profit for the 63 steers he fed through the Tri-County Futurity ranged from $23.46 to $199.12/head.