Fall is the time to wean and market calves born last spring. Producers use different methods to wean calves, but according to Andrew Griffith, University of Tennessee Extension livestock marketing specialist, some methods are better than others when it comes to the health of the animal. “The methods that result in fewer health problems are largely desired by many cattle buyers and result in higher prices but not necessarily larger profits,” Griffith says.
One of the most common methods is to market calves at weaning. “This may not be the most profitable method,” says Griffith. “And it is definitely the hardest method on the calf as it creates significant stress.” Stress makes the calf more susceptible to health problems which place the calves in the high risk category for producers purchasing the animal and thus a lower price.
Griffith says the less common method of weaning calves for a short period before marketing reduces marketing stress, but many calves fail to gain much weight during the weaning period. Additionally, they remain high risk cattle if they have not participated in a complete vaccination program.
Another common weaning method is referred to as a VAC 45 program. A VAC 45 program generally provides vaccinations for respiratory and clostridial diseases while also introducing calves to a feed bunk and water trough during a 45-day weaning and preconditioning program. “Calves participating in VAC 45 programs generally have a lower risk of sickness and mortality than calves not participating in such programs. Thus, calves produced utilizing a VAC 45 program generally receive a higher price than calves that are considered high risk,” Griffith explains. He adds that some producers take a VAC 45 program a step further and background calves for as much as 120 days. The backgrounding period provides a producer the opportunity to grow the calves to heavier weight prior to marketing.
The question is which method of weaning and marketing is the most profitable and most suited for an operation? Griffith says several aspects must be evaluated. “The first is whether a marketing method is available that will allow the producer to capture the added value of weaning and vaccinating calves. Such marketing methods may include a marketing alliance, weaned sale, or special feeder calf sale. Second is whether resources are available to wean calves such as a lot or pasture, feed availability and capital to purchase feed if needed. The third aspect is to determine if the value of weaning, vaccinating and growing calves is greater than the cost to do so.” The livestock specialist adds that this third aspect includes how long calves should be retained and to what weight they should be grown.
Griffith further explains that a producer’s decision to wean and grow calves to heavier weights hinges largely on the value of gain (VOG) and cost of gain (COG). COG will vary widely from producer to producer, while VOG will be similar across producers with similar average daily gains.
“VOG is related to market fundamentals and is evaluated using the current price and weight of an animal as well as the expected price and weight of an animal at a future marketing date. It is fairly easy to determine the current price and weight while the future price and weight are more difficult to determine,” he says.
To help with an expected price determination producers can use the futures market price and Tennessee basis estimate tables found online in a publication on the UT Agricultural and Resource Economics website economics.ag.utk.edu/publications/livestock/2015/Basis2015.pdf. To determine expected sale weight, the producer needs to have a good idea of how calves perform on the feed being used to grow the animal.
Based on current conditions, Griffith notes that as of the middle of August, a Tennessee producer can expect to wean calves weighing 550 pounds on October 1 at $215/cwt. “Additionally, the producer could carry these calves for 60 days until December 1 to either 650 (sale price: $195.5/cwt) or 700 (sale price: $192.8/cwt) pounds. The value of gain using Tennessee basis values and futures market prices ranges from $88/cwt to $111/cwt depending on the average daily gain experienced. It is important to remember that COG is an important component of this evaluation. If the COG is expected to exceed the VOG then producers may want to evaluate other alternatives.” A similar valuation can be utilized by stocker producers to determine the prospects of buying calves this fall.
The University of Tennessee Institute of Agriculture provides instruction, research and public service through the UT College of Agricultural Sciences and Natural Resources; the UT College of Veterinary Medicine; UT AgResearch, including its system of 10 research and education centers; and UT Extension with offices in all 95 Tennessee counties.
W. Alan Bruhin