Beyond the Barn: Changing Bull Calf Markets – Chad Howlett, Vita Plus
The Holstein steer feed and marketing world has experienced quite a bit of angst in the past couple months. Basis on cash Holstein steers at the auction houses has widened to as much as -$45 per hundredweight (cwt) under colored cattle. Typically, basis runs -$5 to -$7 under beef breed animals. When you factor in the difference, you could be taking a hit of about $550 per head.
The reason for this is that the Tyson Foods facility in Joslin, Illinois is no longer writing contracts for Holstein steers. Contracts already in place are still being honored. This leaves JBS in Green Bay, Wisconsin and Plainwell, Michigan, and Green Bay Dressed Beef, also in Green Bay, as the only entities procuring Holstein steers in the Midwest. I’ve heard that Cargill in Schuyler, Nebraska has expressed interest in entering the market place, but I have not had any producers market to them.
Limited hook space is available to contract cattle to JBS later in the year. I’ve had producers lock in a -$10 basis with JBS for October and have heard other reports of a -$13 basis for other months. Even so, the difference between a -$5 and a -$13 basis on the finished end is a reduction in value of about $110 per head.
So what does this mean to the dairy producer? I think it’s safe to say the market for bull calves, as most know by now, has become softer and will stay that way for the foreseeable future. This fall, we saw bull calf prices at $200 to $300 per head. Depending on where you’re located, the price has been somewhat variable, but the downward trend is evident. Chance Meteer, Vita Plus beef specialist, reports that prices in the Ohio market area are $80 for heavier calves (greater than 90 pounds) and $70 for 80- to 85-pound calves. I’ve heard similar reports in the Indiana area with some strength in price due to increased interest in filling veal barns. In the thumb area of eastern Michigan, Steve Good, Vita Plus Gagetown dairy specialist, reports $50 for 80- to 95-pound bull calves and $75 for calves above 95 pounds. In Wisconsin, northern Illinois and eastern Iowa, we currently see prices ranging from $50 to $80 per head. In northwest Iowa, John Brantsen, Vita Plus dairy specialist, reports calves at $60 to $80 with some farms reporting $100 per head.
Unfortunately, risk management tools for bull calf pricing are basically nonexistent, but a reputation for doing the best you can to raise quality calves will make your buyers repeat customers. To add value, make sure bull calves receive ample colostrum in a timely manner. This is one area of concern for beef producers looking to buy bull calves. I always tell dairy producers who feed their own cattle to treat them like you would a heifer. A little added effort on the front end can certainly pay dividends on the back.
If you have further questions, contact your Vita Plus consultant to help you navigate through these challenging times.
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