KSU Cattle Value Optimization Seminar

What Feedyards Are Looking For in Cattle They Buy By Tom Brink

Five Rivers Ranch Cattle Feeding, LLC

• Formerly 50-50 owned by ContiGroup & Smithfield• Now owned entirely by JBS USA• Thirteen feedyards in Eight States• 890,000 head of feeding capacity• Have sold cattle to 4 of the 5 major packers• Majority sold on grids (formulas)

(1) Economics of Cattle Size and Finish Weight

Economics of Size & Weight

Is BIGGER better? Or is SMALLER better in a high feed cost environment?

“The industry wants a steer that can produce a 700- to 800-lb. Choice carcass with a Yield Grade less than 3.”

True statement?

“The industry wants a steer that can produce a 700- to 800-lb. Choice carcass with a Yield Grade less than 3.”

ChoiceYG 3 or less700-800 lbs. ?

Compare feeyard performance in steers that produce 700 to 800 pound carcasses with those with carcass weights of 850 pounds or more.

Need cattle with the same placement weight and same health status and death loss. Also need to de-trend the performance data for out month.

Steer Performance Comparison

• 700-800 lb. carcasses• 784 lb. carcass wt.• 782 lb. placement wt.• 1.05% death loss• DMI = 19.29 lbs.• ADG = 2.93 lbs.• Dry F/G = 6.63 lbs.• 158 days on feed

• >850 lb. carcasses• 866 lb. carcass wt.• 787 lb. placement wt.• 0.98% death loss• DMI = 20.34 lbs.• ADG = 3.30 lbs.• Dry F/G = 6.20 lbs.• 169 days on feed

Multi-year closeouts on more than 470,000 head.

Steer Performance Comparison

• 700-800 lb. carcasses• 784 lb. carcass wt.• 782 lb. placement wt.• 1.05% death loss• DMI = 19.29 lbs.• ADG = 2.93 lbs.• Dry F/G = 6.63 lbs.• 158 days on feed

• >850 lb. carcasses• 866 lb. carcass wt.• 787 lb. placement wt.• 0.98% death loss• DMI = 20.34 lbs.• ADG = 3.30 lbs.• Dry F/G = 6.20 lbs.• 169 days on feed

Steer Performance Comparison

• 700-800 lb. carcasses• 784 lb. carcass wt.• 782 lb. placement wt.• 1.05% death loss• DMI = 19.29 lbs.• ADG = 2.93 lbs.• Dry F/G = 6.63 lbs.• 158 days on feed

• >850 lb. carcasses• 866 lb. carcass wt.• 787 lb. placement wt.• 0.98% death loss• DMI = 20.34 lbs.• ADG = 3.30 lbs.• Dry F/G = 6.20 lbs.• 169 days on feed

Steer Performance Comparison

• 700-800 lb. carcasses• 784 lb. carcass wt.• 782 lb. placement wt.• 1.05% death loss• DMI = 19.29 lbs.• ADG = 2.93 lbs.• Dry F/G = 6.63 lbs.• 158 days on feed

• >850 lb. carcasses• 866 lb. carcass wt.• 787 lb. placement wt.• 0.98% death loss• DMI = 20.34 lbs.• ADG = 3.30 lbs.• Dry F/G = 6.20 lbs.• 169 days on feed

Steer Performance Comparison

• 700-800 lb. carcasses• 784 lb. carcass wt.• 782 lb. placement wt.• 1.05% death loss• DMI = 19.29 lbs.• ADG = 2.93 lbs.• Dry F/G = 6.63 lbs.• 158 days on feed• 1,225 lb. live weight

• >850 lb. carcasses• 866 lb. carcass wt.• 787 lb. placement wt.• 0.98% death loss• DMI = 20.34 lbs.• ADG = 3.30 lbs.• Dry F/G = 6.20 lbs.• 169 days on feed• 1,353 lb. live weight

1,225 lbs.1,353 lbs.

The heavier-finishing steer creates more value in the

feedyard… +$52.05 per head advantage

$4.25

“The industry wants a steer that can produce a 700- to 800-lb. Choice carcass with a Yield Grade less than 3.”

ChoiceYG 3 or less

700-800 lbs.

“The industry wants a steer that can produce a 700- to 800-lb. Choice carcass with a Yield Grade less than 3.”

ChoiceYG 3 or less

700-800 lbs.

850 lbs. plus

(2) Health in Feedyards

Cattle health in the Feedyard

• “Old problem” but still identified as the #1 production problem feedyards face

• Impact on performance and carcass quality is well documented

• We have the technology and know how to get cattle better prepared to leave the farm or ranch…implementation is lacking

Many cattle still need stronger immunity when they leave home.

Impact of Health & Death Loss*

Death Loss ADG DMC Profit per head

0% - 0.5% 3.13 6.69 +$14.30

0.5% - 1.5% 2.99 6.89 +$2.25

1.5% + 2.86 7.03 -$19.49

*775 to 850-lb. yearling-fed steers sold January thru March 2010

2.4% difference between best and worst groups (0.48% vs. 2.88%).

(3) Traits correlated with Grid Premiums

Traits correlated with grid premiums

South (KS-TX) Correlation

• Prime/Choice 0.60• Dress Percent 0.37• YG 4 & 5 0.00• YG 1 & 2 -0.24• Heavies -0.29• Darks -0.32• Standards -0.49

222,557 steers & heifers

North (CO-NE) Correlation

• YG 1 & 2 0.39• Prime/Choice 0.35• Dress Percent 0.22• Darks -0.08• Standards -0.21• YG 4 & 5 -0.46• Heavies -0.46

113,858 steers & heifers

Up to 25%Other Breeds

25% to 50%Continental

50% to 75%Angus

Breed Composition Pyramid: Ideal Feeder Animal

First choice in feeders: AN x Continental

• 50% to 75% Angus and 25% to 50% Continental • Good feeding, Good grading, Good yielding animal that is

usually the right size• Higher percentage British cattle lack often muscle, yield and

produce too many YG 4s.• Higher percentage Continental cattle lack quality grade, and

often get too big before they finish.

Balanced combination of Angus and Continental breeding is tough to beat.

Creating more valuable feeder calves

• QSA-PVP (Age & Source)• Load-lot groups • Post-weaning management • Health protection• Right genetics within breeds• Right combination of breeds $

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The End