Backgrounding Feeder Cattle
Some cattle producers in this region background their feeder cattle – but not many.
Eldon Cole, University of Missouri Extension regional cattle specialist at Mount Vernon, Mo., ticked off the reasons. “A lot of it depends on feed, and in southwest Missouri the feed supply that we have is usually fescue pasture, which isn’t a very good backgrounding environment later in the year,” Cole told Ozarks Farm & Neigthbor. “Because of our wetness this year, we’ve got pretty good pasture, but cattle still aren’t going to gain on it like they might on a higher-quality roughage and some supplementation. And with the price of feeder cattle being as good as it is, I think most of them aren’t going to want to give a second thought to backgrounding.”
If you do background, it would be good to have a warm season grass like Bermudagrass. “I would probably utilize that before our cool season fescue or Orchardgrass,” Cole said. “Whether it’s a warm season or cool season, though, these freshly weaned calves who are without their mamas for the first time will benefit from some high-quality concentrate feeds. That’s something we just can’t ignore, not so much for the protein benefits as the energy. Something in the neighborhood of 0.75 to 1 percent of the calf’s body weight should be given to them as a concentrate feed.”
Dan Childs, economist and senior agricultural consultant with the Samuel R. Noble Foundation, Ardmore, Okla, said the producer should calculate the potential return from backgrounding, and that starts with the futures market.
“It adjusts daily, but today it is offering you a price for November, for instance, and you have to decide whether it’s something you want to take or not,” he said. “That’s the best reference for what future prices will be, and it’s the only one that we can lock in.”
From the anticipated future price, deduct the additional costs. Childs said, “We’re going to vaccinate and deworm them; we may have to put fly control on them if it’s not late in the wintertime. You may have to hire some labor; you may haul them to a vet and have the vet do it. Then, it’s going to take some feed; do we have pasture available that will put gain on the calves, or are we going to need some hay or supplemental feed to do that? Are we going to have to put in a dry lot so they can be fed everything?”
A cow/calf producer will not consider retained ownership of his calves unless it would be for at least 45 days, which is the minimum time period from weaning — the industry is trending toward 60 days — that defines preconditioning. So the producer has to project those costs for 45 days. If you did haul them to the sale, Childs noted, you could gain from marketing preconditioned calves “that know how to eat from a trough and drink from a water source, and would not present much risk to the buyer of getting sick.”
The preconditioning expense is then compared to what the futures market indicates the animal will be worth in 45 to 60 days. If the potential value is higher than the potential cost, it’s worth the expense. After 45 to 60 days, the producer can decide whether the availability and price of feed and grass make it worth holding the animal and putting another 200 to 300 pounds on it. “We would again look to the futures market to give us a prediction of what the price is going to be,” Childs said. “We have to estimate what the calves are going to gain per head per day, so if in 150 days that calf’s going to weigh 700 pounds instead of 500 pounds at weaning, what will be the value of that 700 pound calf, and what will it cost us to get that calf to that weight?”
Again, there will be marketing options at that weight, and Childs said producers who can market cattle by the truckload can develop a relationship with a buyer for a feedyard. You can get a quote on how much the order buyer would pay in the fall for the calves when they reach 500 pounds, and again at 700 pounds; those quotes are based on the futures market, minus a margin for the buyer to compensate for risk. The producer could also sell through a video auction, which is more flexible in that they’ll accept mixed gender lots; however, the video sale would also want truckload lots. With fewer animals to sell, the local auction is more viable.