Market report

[kato]

Hope this works. Haven't embedded one in a while.

[Happytrails]

Kato, you would have to bring that up. Those of us who have been wintering our own calves have a decision to make.

[grassfarmer]

It's a tough one to make HT isn't it? We were real happy with the yearlings we sold this fall but looking at the price of calves now it looks cheap.

Thinking about keeping calves through until spring using current prices for 5 and 8 weight steers there is @$144 price difference. Do I want to overwinter a calf and put 300lbs on him for $144? Easy answer.

Then again if these dearest 300lb steer calves are over $1300 now what might an 8 weight be worth come March? If high calf prices pull more of the supply in this fall it can only short the supply next spring. Might they be $2000 by spring and $2500 by fall? Sounds crazy but is it any crazier than $1300 3weight steers that carry a lot more health risk?

It's a head scratcher for sure but also a nicer decision to have to make than we've had for a while as neither is a "bad" option.

What is everyone else's opinion?

[kato]

We pencilled out buying our usual light calves, and it's pretty scary. The issues have changed. Where before the biggest worry was the markets, now it's become death loss and interest rates. If you were to buy only a hundred or so calves, and had anything close to a wreck, you could lose a lot of money in a short short time. We've got these little guys to the point where our losses are comparable to bigger calves, but that would still be a pretty good hit to take. We buy high risk calves, in the three weight range, and the thought of losing a thousand dollar calf is pretty painful.

I can see vaccinated backgrounded calves being the premium item to have, especially after a few feedlots have experienced some of the health issues that crop up all too often. They will start insisting on preconditioning once they've been burned. I know if we were offered a choice, that's what we would bring home.

Can't count how many times we have sat at the auction mart and heard "I don't vaccinate anything and I never have a problem" from someone who sells their calves right off the cow. Of course they don't have a problem. The feeder that brings those BVD PI calves into their yard will be the one who gets to watch them die, after racking up a big drug bill.

That's my rant for the day. My advise? If you're going to keep them over, vaccinate them and keep them alive. Zuprevo and Draxxin won't save them all.

[grassfarmer]

I agree on the health front kato. Our calves are always fully preconditioned and low-stress weaned because we always retain them past weaning. Thus far I am leaning towards marketing them looking for that premium early in the New Year.

On the market front I still find it hard to figure out. If I were to retain calves and sell 800lb steers in March you can buy price insurance for $230 (highest level) for week of March 2nd for a $4.35 premium. When I said in my previous post that current market price of 800lb steers was $144 above the 500lb price I was using $228 as the the current average market price of 8's.
Given that the price insurance program is based on 900lb steers and the current price differential between 8's and 9's is around $12/cwt that would give an 8 weight a predicted price of $237 in March (230 plus 12 minus the 4.35 premium)
So by my calculation, if it's correct, that would add $77 to the $144 price differential for taking a 500lb to 800lb. $221 to add 300lbs to a calf over winter factoring in death loss, labor yardage etc. Better but worth the risk?
Any feedlot guys care to weigh in with their take on this - BFW?

[BFW]

I am happy that these prices are generating some optimism in the business again, its long overdue. As others have mentioned though these price increases eventually elevate the risk for all involved so I tell myself as i often say to my kids, "suck it up buttercup!" Even so I will admit to suffering some buyers remorse as I watch $2200/hd yearling steers come off the truck. As for your question Grassfarmer, I think people will be rewarded by retaining ownership into the new year. There is significant opportunity in adding weight and thus value to calves at home (not to mention the positive market effect of spreading out marketing can have) if you have the resources available to do it. But don't bet the farm maybe sell the heavy end now and use the tools such as livestock insurance to mitigate some of the risk.

[BFW]

And I forgot to mention, while you're at it breed a few more heifers