Decisions on whether to background calves depend on many factors including feed costs, grass conditions and calf prices, but the real test is whether keeping calves longer will bring higher profits per head.
The Beef Cattle Research Council has recently updated the price seasonality data in its calculation tool to give cow-calf producers information needed to make decisions on backgrounding.
Brenna Grant, manager of Canfax Research Services, said the online calculator allows producers to enter their own data, such as weaning date, typical sell date and daily rate of gain targets, and see how keeping calves for 30, 45 or 60 days after weaning could pencil out.
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Calculations are made based on average price changes for the given time periods, as recorded by Canfax.
“We recently updated the database so that we have the most current five years of data for the price changes in terms of seasonality that we have in there because one of the biggest things about retained ownership for producers is recognizing that they’re taking a price risk if marketing into a different time period,” said Grant.
“Producers have the ability and flexibility to put in their own actual costs within the calculator so that it’s as accurate as possible.”
If producers are able to lock in a price for calves, they can plug that number into the calculator, plus any premium available for pre-conditioned calves, and see potential per calf returns.
Preconditioned calves can bring higher gross revenues because they sell at heavier weights, have lower cost of gain, require fewer treatments and have lower death loss, according to Beef Cattle Research Council information.
However, retaining ownership costs more through added feed and labour.
Grant said cow-calf producers might wonder this year whether feedlots, many of which are dealing with a backlog of cattle because of COVID-19 slaughter reductions earlier this year, will be able or eager to accept their fall calves.
The online calculator might remove some of the guesswork.
“The calculator provides a summary of estimated net returns and projected break-even price premiums based on your costs for up to three different preconditioning programs,” says BCRC information about the calculator.
“While the length of preconditioning programs can be adjusted in the calculator, typical time periods are 30, 45 or 60 days. The tool has a built-in database going back 10 years for price projection comparisons.”
Brian Perillat, senior analyst with Canfax, told a recent Canadian Cattlemen’s Association town hall webinar that cattle slaughter volumes are now back to pre-COVID levels at Alberta plants but there are still more than 80,000 head backed up in the system.
“We can sort of see the light at the end of the tunnel for cattle on feed numbers,” he said.
Perillat added that the fall calf run is off to a slow start and as of last week, marketings were too light to establish any trends.
In any given year, 20 to 40 percent of the calf crop is backgrounded, said Grant.
“It varies depending on grain costs. When you have cheap grain prices, you tend to see more going directly into the feedlots because that’s where the cheapest gain is.
“But when grain prices are higher, you actually do tend to see more backgrounding on a roughage ration, where that’s the cheaper way to actually have that gain.”
Hay is more plentiful this year, which has lowered the cost, but that has to be taken in context, Grant added.
“We’ve had several years of disappointing hay production and although hay prices are down, we’re coming off of some record high hay prices in Western Canada. So even if we talk about prices being lower, they’re not necessarily historically low. They’re simply lower than the highs that we’ve seen.”
The calculator can be found at www.beefresearch.ca/research/preconditioning.cfm.
A free Canfax price projection app can be found at cfxproapp.canfax.ca/price/projections/calculator.
