Ways to Limit Risks when Marketing Calves

February 9, 2010 06:00 PM
 
By Kim Watson Potts, Beef Today editor

Between 2002 and 2006, cow-calf producers were the one segment that was profitable in the beef industry, according to data from CattleFax. That trend, however, is taking a turn and cow-calf producer no longer have the automatic advantage, which creates a bigger gamble when it comes time to market calves.

There are, however, some ways to limit risks when it comes to selling the calf crop, says Brett Stuart, CattleFax analysts. He suggests producers:

  • Consider two marketing windows for calves. This allows you to market calves in two time periods to avoid taking a hit should prices fall at any given time.
  • Watch seasonality. Typically 550 lb. steer prices peak in March and April, then hit bottom in November. Knowing that alone, can help you adjust marketing windrow. And if you can't adjust production to accommodate, forward contract in the summer before seasonal calf price low in the fall.
  • Is there a plan B? He says the prior two years saw a collapse in calf and feeder prices in the fall. It's better to anticipate that and have a backup plan to possibly hold onto calves if necessary.
  • Backgrounding and preconditioning. This is a management that pays if you will continue to own or retain ownership on calves. That's because you get the benefit of additional health benefits and improved gains from preconditioning.
  • Consider running summer yearlings if you have available forage. This is a profitable option and works 8 out of 10 years, says Stuart. The key to running summer stockers is to know your breakevens and use seasonal futures to forward contract. Manage for return over investment, not necessarily profit.
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