By Burt Rutherford Contributing Editor
It’s a decision as old as cattle feeding itself – “If I hold ‘em, will the market get better?” Even in today’s era of longer days on feed, that decision still has a place in feedyard management.
That’s what an economic model developed by a team of researchers at Kansas State University and Merck Animal Health discovered. The model looks at the risks associated with longer days on feed, according to Lucas Horton, Ph.D., who presented the data during a Merck Animal Health seminar prior to the spring meeting of the Plains Nutrition Council.
Feeding cattle longer has its roots in the cattle cycle. As cattle numbers decline, more days on feed utilizes feedyard capacity more efficiently and packers have more beef to sell from every carcass. Beyond that, cheaper ration costs, growth technology and high feeder cattle prices also make longer days on feed and heavier carcass weights feasible.
While it’s likely the trend of more days and heavier weights will continue for the foreseeable future, market variability should be considered, said Horton, a researcher with the K-State College of Veterinary Medicine who lead the research team.
The collaborators developed an economic model that looked at net returns for different endpoints for steers on feed using data from 2021 to mid-2024. The model considers a wide range of variables that are simulated to reflect variable steer populations and economic conditions.
Endpoint 1 reflected the baseline industry average during those years. Endpoints 2-4 each represented feeding an additional 14 days past Endpoint 1, where the final outcome was the marginal difference in net return. “We didn’t evaluate whether cattle were profitable at each endpoint,” Horton said. “Rather, we evaluated how much profitability changed if feeding to each of the later-fed endpoints instead of the average in Endpoint 1.”
Bottom line, the model showed that, on average, it was not economically advantageous to feed cattle longer than average during those years. On a grid, net returns compared with Endpoint 1 were positive for Endpoint 2 about 44 percent of the time, about 38 percent of the time for Endpoint 3 and about 29 percent of the time for Endpoint 4.
“Obviously, as weight goes up, we have a shift up in premiums for quality grade,” Horton told the nutritionists. “But there are also shifts downward toward increased discounts for yield grade and heavyweight carcasses, those more than 1,050 pounds,” he added. Over that time, heavier carcass weights and better quality grades did not outweigh the discounts the majority of the time.
Indeed, of the factors at work in the model, four of the top five most important were economic, as opposed to animal characteristics.
“Being in conditions where corn prices are lower and cattle prices are a bit higher, adding days probably makes sense.”
– Lucas Horton
“What we saw is that how much price changed was by far the most important variable,” he said. Other important variables were the dressed base price, corn price, the quality grade grid and the number of mortalities.
He points out, however, that the model looked at net returns on a pen basis, not a feedyard basis. From an overall feedyard perspective, adding days on feed may be a valid decision.
For comparison, Horton ran the data for the nine months prior to his presentation in April. Carcass prices were higher and corn prices were lower than the timeframe used in the original model.
As might be expected, changes in those variables made the net returns for Endpoints 2, 3 and 4 look better. But variability in net returns still existed. Which means there are times when increasing days on feed beyond the industry average makes economic sense, and times when it doesn’t.
“Certainly, being in conditions where corn prices are lower and cattle prices are a bit higher, adding days probably makes sense,” he said. Grids are negotiable and cattle feeders may be able to get a better deal on heavyweight carcasses, some of which is happening already, he added. “But in the summer, when corn prices generally go up a bit and cattle prices start to trend down, that might be a time to pull back.”
Beyond that, he said the model isn’t necessarily a decision-making tool. “There’s not going to be a straightforward, this-is-what-you-should-do answer every time of the year. It’s going to vary depending on economic conditions.”
To that end, the model isn’t saying that cattle aren’t going to be profitable if fed longer than average, and variability around how much more or less profitable they are should be expected, he said. “It’s something to add more information to hopefully make more informed, evidence-based decisions.”
A summary of the data can be found at
https://www.agmanager.info/livestock-meat/production-economics/extending-days-feed-feedlot-steers-economic-considerations
