Winter rates of gain and market timing affect profitability

             Dr. Mary Drewnoski, an Extension beef systems specialist and Dr. Jay Parsons, an Extension Educator at the University of Nebraska-Lincoln (UNL) focused on research regarding winter rates of gain during the UNL Beefwatch podcast on Feb. 9. The pair tracked cattle performance through summer months and looked at how market timing affects profitability.

            “Our research came from questions asked by producers with stocker and yearling cattle,” says Drewnoski. “We kept getting questions such as when producers should be marketing cattle and what the optimum rate of gain is in the winter.”

Rates of gain

            “We targeted a higher rate of gain at two pounds per day during winter compared to slower rates of gain at 0.8 pounds per day,” she explained. “We compared weights from previous research done at UNL and wanted to see the differences in weight and cattle performance when put on grass in the subsequent summer.”

She explains the cattle used to model the data for research were fed corn residue for about 127 days. Following this period, the cattle were fed distillers’ grain and hay during the spring for approximately 91 days before going to grass. 

“We assumed on corn residue we would charge about 56 cents per head per day while cattle were grazing, and then we added the cost of distillers and mineral on top of those costs,” says Drewnoski. “The fast growth cattle cost around $200 per head for wintering costs, while cattle on the slow rate of gain had $150 in cost.”

“One mistake producers often make is assuming smaller cattle will eat less in the summer and this is not actually true,” she notes. “The smaller cattle eat about the same as others.” 

In fact, cattle undergoing compensatory gain consume about the same amount of forage as cattle not undergoing compensatory gain. 

Market Timing

Understanding the difference between faster and slower rates of gain is key. Producers should also consider costs above feed and supplements. 

Often, slow growth rates and faster growth rates will even out depending upon how producers manage their cattle production systems.

 “If a producer’s cattle have a slow rate of gain during winter, they will compensate growth during the summer months,” Drewnoski explains. “Cattle with slower gains during winter will gain faster in the summer. The cattle with faster rates of gain during winter will have a slower rate of gain during the summer months.”

If a producer markets their cattle in July, the forage quality is much greater than later on in the summer. Thus, the rate of gain is going to be faster over the shorter summer period. 

            With the fast-growth diet, a producer would pass a lot of the potential sell points, specifically the 1,000-pound point. It would make sense to turn cattle out on grass, especially since the cost of production is low enough producers can keep them later and still make money. 

Profitability

Parsons shares he gathered cattle price data, the price of grass and what it costs to rent pasture for 18 years. He specifically looked at the costs of winter feeding. 

“We compared what we saw over time in terms of profitability at potential sell points,” Parsons notes. “Producers take the risk of holding cattle longer, but they can generally increase their profits. At least this is the case with the fast growth winter diet.” 

“One downside to compensatory gain is if producers don’t push their cattle as hard in winter, those producers have to commit to keeping the cattle on grass to gain the benefits of compensatory gain,” he explains. “Based off price data, less than half the time with a slow-growth diet, cattlemen would make money if their cattle were sold in February.” 

Producers using the slow-growth diet could however recapture, catch up and actually pass the profitability of the fast-growth diet if they sold their cattle in July. This is because those calves weigh 100-pounds lighter and producers are capturing some of the price slide benefits.

            If producers aren’t looking for flexibility of sale dates, which comes with faster growth rates, and don’t mind selling cattle at the mid-summer sale point, the slow growth diet can be a competitive option. 

                  Madi Slaymaker is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.