Increasingly available information is illustrating the value of management on feeder cattle prices. Information from more than 2,000 lots was collected from a single market facility in western Wisconsin from 2004 through 2006 to examine factors affecting feeder cattle prices. Factors such as weight, breed, haircoat color, sex, lot size, and management practices commonly associated with preconditioning programs are found to affect feeder cattle prices in a market where dairy calves are predominate. This information provides support for implementation of a statewide preconditioning program

Cox, Tom

Halfman, Bill

Lehmkuhler, Jeffrey W

English

Clemson University: TigerPrints

The Journal of Extension Volume 47 Number 6 Article 21 12-1-2009 Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market Bill Halfman University of Wisconsin- Extension, bill.halfman@ces.uwex.edu Jeffrey W. Lehmkuhler University of Kentucky, jeff.lehmkuhler@uky.edu Tom Cox University of Wisconsin, tlcox@wisc.edu This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License. Recommended Citation Halfman, B., Lehmkuhler, J. W., & Cox, T. (2009). Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market. The Journal of Extension, 47(6), Article 21. https://tigerprints.clemson.edu/joe/vol47/iss6/21 This Research in Brief is brought to you for free and open access by the Conferences at TigerPrints. It has been accepted for inclusion in The Journal of Extension by an authorized editor of TigerPrints. For more information, please contact kokeefe@clemson.edu. December 2009Volume 47 Number 6Article Number 6RIB7Return to Current IssueFactors Affecting Wisconsin Feeder Calf Prices ata Local Livestock MarketBill HalfmanAssociate ProfessorUniversity of Wisconsin ExtensionMonroe CountySparta, Wisconsinbill.halfman@ces.uwex.eduJeffrey W. LehmkuhlerAssistant ProfessorUniversity of KentuckyAnimal and Food SciencesLexington, Kentuckyjeff.lehmkuhler@uky.eduTom CoxProfessorUniversity of WisconsinAgricultural & Applied EconomicsMadison, Wisconsintlcox@wisc.eduAbstract: Increasingly available information is illustrating the value of management on feeder cattle prices.Information from more than 2,000 lots was collected from a single market facility in western Wisconsin from2004 through 2006 to examine factors affecting feeder cattle prices. Factors such as weight, breed, haircoatcolor, sex, lot size, and management practices commonly associated with preconditioning programs arefound to affect feeder cattle prices in a market where dairy calves are predominate. This information providessupport for implementation of a statewide preconditioning program.IntroductionRapidly rising input costs have resulted in reduced margins for many livestock operations. There continues tobe interest in factors affecting feeder cattle markets across the United States. Several factors affect pricesoffered for feeder calves, which include but are not limited to weight, sex, time of year marketed, lot size,price of corn, hide color, and an array of management related factors.Recent information from Iowa demonstrated that groups of feeder cattle announced as being enrolled in athird party verified preconditioning program resulted in premiums over other groups of feeder calves (Bulut& Lawrenece, 2007). For 3,613 lots of Northern Plains feeder cattle sold in the fall of 2005, it was noted thatFactors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:241/8lots sizes of 11-20 head brought $4.97/cwt over lots with five or less head (Luepp et al., 2007). These feedercattle also received $0.80/cwt more if they received a respiratory vaccine and $1.65/cwt premium if theyreceived a clostridial, respiratory viral, and pasteurella vaccine. Factors such as sex, hide color, and weightwere also noted as affecting prices received. Barham and Troxel (2007) observed that both breed andhaircoat color impacted feeder calf prices sold in the Southeast U.S. These studies have been conducted instates where beef cattle are a major agricultural commodity.The objective of the work reported here was to help Wisconsin feeder calf producers determine managementtraits that affected feeder calf prices in a state where dairy is the major agricultural commodity. Data werecollected on over 2,000 lots of feeder cattle sold in Wisconsin during 2004 through 2006 to model thesefactors and support management recommendations that enhance feeder calf prices.Materials and MethodsThe livestock market facility in Sparta, Wisconsin holds two special feeder calf sales each month. Theprimary interest in this location was that a group of local producers initiated a preconditioning program fortheir members in 2002. It was observed that few calves were enrolled in the program. The intent was todetermine the impact of various factors affecting feeder calf value to help the cattle association improveparticipation in the program. The data were collected by a single individual who sat in the buyers' area of thelivestock marketing facility while gathering the information as it was presented to potential buyers.For 95% of the sales, all lots were monitored. Partial information was gathered from the other five percent ofthe sales with some lots at the beginning or lots offered late in the sale being missed. A few additional lotswere missed which are estimated to be less than 0.1% of all lots. A total of 7,237 head of cattle were soldduring these feeder calf sales. Lots comprised of animals of mixed sex were discarded resulting in a total of2,008 lots used for this analysis.A spreadsheet was used to develop forms for recording information on each lot of feeder calves. Thefollowing characteristics were recorded as announced by the auctioneer or ringman: number of head, averageweight, sex, sale price, vaccinated, booster vaccination, knife castrated, and weaned prior to arrival. Forclarification, vaccinated indicated that the animals received one set of vaccinations, and booster vaccinationindicated they received an initial dose plus a booster vaccination. These vaccinations relate to the commonviral respiratory vaccines, though calves may have also received additional vaccinations. The followingobserved characteristics of the lot were also determined: haircoat color, breed/ secondary color, horns, purpletag (local precondition program), average condition, below average condition, over conditioned or fleshy,sick, gut fill, dirty, mud, old (indicative of longer tails, larger head size, larger horn base, etc) and other.All data were compiled into a single file. Breed/hide color were aggregated to black, red, mixed, other beefbreeds, Holstein, and other dairy breeds. Number of head per lot was aggregated into lot size categories of:less than or equal to 5 head, 6-10 head, and greater than 10 head. Data for descriptive characteristics weretreated as categorical data (either yes or no). For example if one animal had horns, the entire lot was coded as"yes" for horns. Frequencies were determined using a statistical software package (SAS v. 9.1). Impact onfeeder calf value was analyzed using the experimental procedure GLMSELECT (SAS v. 9.1) with arandomly selected 25% of the data used to test the model and 25% to validate the model, and the remaining50% of the data used to estimate the final model parameters. Price was modeled against the various feedercalf lot classification variables. The selected model parameter estimates found to be significant at aprobability level of 0.05 are reported.Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:242/8Results and DiscussionThe distribution of lots over the course of the data collection period is shown in Table 1. The number of lotsrecorded in October was greatest, with the fewest lots recorded in June. This is a result of both the number ofsales attended per month as well as the number of lots offered on each sale date. Not every sale was attendedduring the 3-year period. An effort was made to attend the sales during the anticipated feeder calf runs thatoccur in the fall, which partially explains the difference in the number of lots per month. The constantavailability of dairy calves partially explains why a large seasonal variability was not noted. An increasedeffort to record data was put forth for the 2005 market year as indicated by the greater lot numbers recordedduring this time. The fall runs typical of spring calving beef cow herds were attended in all 3 years.Table 1.Distribution of Feeder Calf Lots Sold at Sparta, Wisconsin Auction Market by Month and YearTime of Sale Lots Percent of TotalJanuary 117 5.8March 122 6.1April 268 13.4May 205 10.2June 115 5.7July 137 6.8September 125 6.2October 490 24.4November 228 11.4December 201 10.02004 533 26.52005 1205 60.02006 270 13.5It was observed that 82% of the lots recorded had less than or equal to five animals per lot (Table 2). Thelargest lot sold during this recording period was 78 head. Only 28 lots of the more than 2,000 lots recorded,contained 20 head or more; illustrating the challenge for feeder calf buyers to obtain semi-load lots of similarcattle from a single source.Table 2.Number of Feeder Calves per Lot Sold at Sparta, Wisconsin Auction Market from 2004 to 2006Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:243/8Lot Size Lots Percent of Total≤ 5 head 1649 82.126-10 head 242 12.05> 10 head 117 5.83Breeds were diverse in the lots recorded. Holstein feeder calves made up the majority (39%) of the lots,followed by beef steers with black haircoat color (Figure 1). Given that Wisconsin has 1.2 million dairy cowsand only 260,000 beef cows (USDA-NASS, 2004), these percentages were not surprising. The frequency ofblack haircoat color was approximately double that of lots recorded as having a red or red/white haircoat.This finding of nearly twice the number of black-hided cattle to red agrees with information reported by the2005 national quality audit of fed cattle (NCBA, 2007). Most of the common dairy breeds (Holstein, Jersey,Brown Swiss, Guernsey, and dairy crosses) were observed along with less common beef breeds such asWhite Park, Pinzgauer, and Longhorn. These data clearly demonstrate two key principles: 1) the largenumber of Holstein steers sold at the Sparta, Wisconsin sale barn and 2) consistency with other informationsources reporting that the majority of beef feeder calves have black haircoat color.Figure 1.Distribution of Lots by Haircoat Color/Breed CompositionOf the 2,008 lots used in this analysis, only 8.5% were horned (Table 3). Less than 1% of the lots wereidentified as being enrolled in the local preconditioning program, which was of interest in the study. Thoughnot enrolled in the Purple Tag program, nearly 22% of the lots were announced as having been vaccinated,and 7.5% were recorded as being boostered for respiratory disease. It is important to note that this is not to beinterpreted as only 22% of the calves marketed being vaccinated; rather only 22% of the lots were announcedas being vaccinated. The information related to management of the cattle with respect to mud, manure,sickness, and body condition score, which can have negative impacts on prices, appears to have positivelyinfluenced the management associated with the lots sold in this market as few lots were characterized assuch.Table 3.Characterization of Feeder Calf Lots Monitored at the Sparta, Wisconsin Livestock Auction Market1Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:244/8Variable Lots Percent of All LotsShots 431 21.5Boostered 150 7.5Purple Tag precondition 15 0.8Knife castrated 125 6.2Horns 170 8.5Average Condition 172 8.6Below Average Condition 39 1.9Excessive Condition 36 1.8Sick 8 0.4Weaned 107 5.3Gut Fill 18 0.9Dirty 87 4.3Mud 53 2.6Old 25 1.31 Lots were assigned based on information announced by the auctioneer/ringman asrelated to lots and/or subjectively scored by an individual.It was noted that several factors significantly affected prices (Table 4). A typical weight slide was observedand estimated to be $12.91/cwt. This was in the range of $10/cwt slides reported by Luepp and co-workers(2007) and the $17/cwt slide reported by Bulut and Lawrence (2007). Even though 82% of the lots consistedof five head or less, increasing lot size was found to increase the price in this Wisconsin market. Barham andTroxel (2007) reported that lots containing 2 to 5 head sold for $2.86/cwt higher than single lots in thesoutheast.Bulut and Lawrence observed that prices paid for feeder cattle lots increased as lot size approached semi-loadlots and then declined as they exceeded semi-load lot size. Last, Luepp and co-investigators (2007) observedinconsistent year-to-year responses for lot size, with prices increasing for all three lot size categories in 2005.However, prices increased for lot sizes of 11-20, but declined for lot sizes greater than 20 head in 2006.Regional and seasonal differences likely exist for the demand of feeder calves based on the number offeedlots and/or farmer-feeders. Smaller farmer-feeders, which are common in Wisconsin, regularly marketand buy small numbers of feeder calves. This is expected to support the prices of smaller lot sizes perhapsmore than in cow-calf states that export the majority of feeder calves.Bull and heifer calf lots were observed to sell at discounted prices compared to steer lots. This is similar toprevious data and typical of what is observed in the markets. Hide color and/or breed type was observed toimpact feeder calf prices. Holstein lots were estimated to sell for nearly $14/cwt less than lots of black beefcalves. The impact of hide color also agrees with previous findings in which black coat color lots sold for apremium.Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:245/8Table 4.Model Parameter Estimates for Factors Affecting Feeder Calf Prices at a Sparta, Wisconsin LivestockAuction MarketVariable Parameter Estimate SE P-valueIntercept 161.56 3.646 <0.001Weight, lb -0.1291 0.0125 <0.001Weight*Weight 0.0000499 0.00001122 <0.001Sale order*Sale order -0.000304 0.0000850 <0.001Lot size 1.377 0.1383 <0.001Lot size*Lot size -0.0213 0.00329 <0.001Month of sale -0.633 0.1070 <0.001Sex = Bull calf -5.15 1.220 <0.001Sex = Heifer -9.13 0.924 <0.001Sex = Steer Base Base <0.001Black haircoat color 7.04 1.213 <0.001Red haircoat color Base Base <0.001Mixed haircoat color 4.56 1.469 <0.001Other beef breeds -2.80 1.806 <0.001Holstein -7.07 1.248 <0.001Non-Holstein dairy breeds -16.36 1.634 <0.001Horns present -4.07 1.360 <0.001Vaccinated 2.93 0.946 <0.001Average condition -5.84 1.334 <0.001Below Average Condition -18.53 2.635 <0.001Sick -22.02 5.278 0.028Old -15.93 3.669 0.028Management practices did influence feeder calf prices based on the modeled data. Lots announced as beingimmunized were projected to bring nearly $3/cwt more than those lots that were not announced as havingbeen immunized. Dehorned or polled lots sold for higher prices than horned lots, which agrees with previousfindings. Average condition and below average condition feeder calves were discounted, while the impact ofexcess condition or fleshy cattle were not found to significantly affect prices in this data set, presumably dueto the lower number of "Fleshy" lots and the large degree of variation. Cattle presented showing symptoms ofillness, as assessed by the recorder, sold for severe discounts. The discount was in between that reported forFactors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:246/8Iowa lots observed to be sick (-$9.36 or -$12.40) and the sick lots observed in the southeast (-$37.88/cwt).ImplicationsMany factors affect feeder calf prices. These findings provide Extension Educators and producersinformation related to factors that affect the value of feeder calves marketed in a dairy state. Extensioneducators can utilize this information to demonstrate how management practices can add value to feedercalves. The following general statements, with respect to management can be concluded from the studyreported here.Sick, below average condition and old feeder calves are discounted in the market. Producers shouldconsider the economics of nursing sick calves back to a healthy condition before marketing them, orthey should humanely euthanize these individuals.1. Castrating, dehorning, and vaccinating feeder calves can add an average of $12/cwt for male feedercalves under similar market conditions. These practices are required for preconditioning programssupporting efforts to increase participation in the local precondition program.2. The information provided can be utilized by Extension educators to develop decision-making tools forproducers to utilize with respect to management practices and expected margins. Further, these findingsprovide a baseline for studying the impact of increased management and evaluation of the effort to increaseparticipation in preconditioning programs in the future.ReferencesBarham, B. L., & Troxel, T. R. (2007). Factors affecting the selling price of feeder cattle sold at Arkansaslivestock auctions in 2005. Journal of Animal Science, 85:3434-3441.Bulut, H., & Lawrence, J. D. (2007). The value of third-party certification of preconditioning claims at Iowafeeder cattle auctions. Journal of Agricultural and Applied Economics, 39:625-640.Luepp, J. A., Lardy, G. P., Haadem, K. L., Maddock-Carlin, K. R., Dvorak, W. W., Froelich, K. J., Kramlich,J. R., Payne, G. L., Hansen-Lardy, L. K., & Odde, K. J. (2007). Factors influencing sale price of NorthDakota calves. 2006 Beef Cattle and Range Research Report, pg. 36-39.United States Department of Agriculture. (2004). 2002 census of agriculture. National Agricultural StatisticsService. Retrieved July 23, 2007 from: http://www.nass.usda.gov/censusNCBA, 2007. Executive summary of the 2005 National Beef Quality Audit.The SAS System for Windows (Version 9.1) [Computer software and manual]. (2002). Cary, NC: SASInstitute, Inc.Copyright © by Extension Journal, Inc. ISSN 1077-5315. Articles appearing in the Journal become theproperty of the Journal. Single copies of articles may be reproduced in electronic or print form for use ineducational or training activities. Inclusion of articles in other publications, electronic sources, or systematiclarge-scale distribution may be done only with prior electronic or written permission of the Journal EditorialOffice, joe-ed@joe.org.Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:247/8If you have difficulties viewing or printing this page, please contact JOE Technical Support.Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market 12/18/09 06:48:248/8

Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market

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Factors Affecting Wisconsin Feeder Calf Prices at a Local Livestock Market

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