Tool helps with cull cow decisions
As cattle producers are in the midst of a situation where cull cows are bringing much more money than usual, does it make sense to cull more cows in an attempt to capitalize on the high market?
That’s the question UW Extension Livestock Marketing Specialist Bridger Feuz answers in a discussion about changes to culling practices in high-priced markets.
“Cull cows account for about 15 to 30 percent of the gross receipts on our operations, though they’re not something on which we focus,” says Feuz. “We don’t spend near as much time thinking about how to maximize cull cow prices as we do with our calves, but they do represent a pretty big chunk of our income, and they can affect profitability.”
Feuz notes that the nice thing about cull cow markets is that they’re one of the more predictable markets in the cattle industry.
“In cull cow marketing, timing is key. It doesn’t matter if we’re in high or low markets, if we look at the utility cull cow seasonal index we hit the high around May, but generally February through March is a good time in the market, and early August is still ok, but September, October and November are the low.”
“Just to prove economists wrong, over the last couple years this chart hasn’t worked out,” says Feuz of the usual trends. “Cull cow prices have stayed strong through the fall, but that’s a short trend, and if you’re really planning you might consider longer term trends and what that price will look like over the season.”
Even though the market’s low is typically in the fall, Feuz says selling cull cows then still might be the right thing to do, depending on the economics and the risk, and he mentions a cull cow calculator that helps producers get an idea of market timing to maximize cull cow profit.
The cull cow tool is a joint partnership between UW and Utah State University, where Feuz’s brother Dillon Feuz developed the tool for the website cattlemarketanalysis.org.
Of the cull cow tool, Feuz says it’s good at predicting one to six months into the future, but going any farther than that stretches the abilities of the model.
“It’s a tool to use in the fall when you’re looking to make the decision on whether to sell your cows now or keep them until spring,” he explains.
The model begins with the date, the body condition score of the cows, their estimated weight and the present market price, and it calculates the current estimated value per head. To look into future possibilities, a producer must enter the number of days on feed, the amount and what type of feed, the expected final weight and the expected sale date.
“Once you get that information, you can see if you’ll break even on the expected price,” says Feuz. “The tool does give you a good idea of what will happen should you keep those cows through the winter.”
Of running a roughage scenario in the model, Feuz says it’s usually pretty close to break even.
“The last few years it’s made money, but usually, especially if you only have 20 head, the amount of money is probably not worth the risk in keeping those cows,” he states, adding that those with access to a cornstalk program will come out a little more profitable.
After deciding when to sell cull cows, Feuz says the next question is how much to cull.
“Should you cull more in higher prices, or cull bred cows?” he asks.
For this scenario he recommends the partial budgeting tool, which he developed for the cattlemarketanalysis.org website. The model looks at culling more bred cows and either retaining more heifer calves or buying more bred heifers, comparing the strategies to see if either makes a difference with higher cull cow prices.
“It’s a simple analysis, and something most of you do in your head, but this tool will help you get the answers you need. The reason it works well is because it systematically organizes the answers to four questions. We can think these things through, but a lot of the times we don’t think about each of these questions individually,” he explains.
Feuz said the partial budget answers what new or additional costs will be incurred through selling cull cows and retaining or purchasing bred heifers, as well as what current income will be lost or reduced, what new or additional income will be received and what current costs will be reduced or eliminated.
“When we do budgets in our head, we tend to take the net things out, and the more things we net out, the more likely we are to make a mistake,” he says.
If a producer culls 20 more cows than normal, and retains 20 more heifer calves, Feuz says the partial budget shows a loss of about $9,540 at today’s markets, and the scenario is similar for purchasing bred heifers.
“High markets don’t necessarily mean you come out ahead,” he says. “If you want to make genetic improvements, holding more heifers calves is the right thing to do, but if you’re looking at culling them now to make some money, that probably isn’t the right decision.”
Bridger Feuz presented his information at the Wyoming Stock Growers Association Winter Roundup in Casper in December. Christy Martinez is managing editor of the Wyoming Livestock Roundup and can be reached at email@example.com.