Many farmers will have store bullocks weighing 500kg to 600kg on-farm at present. With little movement in beef prices so far this year, farmers may well be considering what options are available to marketing these animals.

While some farmers will opt to offload animals now, others may take a different approach and continue feeding cattle with the aim of finishing them out of the shed around June.

All three options have their merits, but which one is more profitable?

Alternatively, with plenty of silage available, some farmers will continue storing cattle, before grazing and killing stock in the autumn.

All three options have their merits, but which one is more profitable? The only way to know is to draw up a simple budget of input costs and sale value.

Budget

The purpose of this exercise is to provide a rough guide to what margins exist in each option, using typical input costs and a realistic sale price.

The budget isn’t binding, it is merely a steer in one direction over another. Market prices in three months’ time may well turn in your favour, or they may not.

This is why it is important to consider all factors when weighing up your options. Outlined are some of the pros and cons for three options to market store cattle this year, based on an example farmer that bought store bullocks last autumn.

Example

The example assumes the farmer bought store bullocks on 20 October 2019. Purchase weight was 500kg at a cost of €2.10/kg, or €1,050/head, based on Mart Watch data for that week.

Bullocks are good quality R+ to U- continental animals, capable of good liveweight gain on an intensive feeding system and highly saleable in the live ring.

From purchase to 1 March, bullocks are fed 25kg/day of good quality silage costing €20/t, reflecting the abundance of grass last summer, which diluted ensiling costs.

Concentrates (€250/t) are fed at 3kg/head from purchase to 1 March, giving a combined winter feed cost of €164/head.

Assuming an average gain of 0.6kg/day, bullocks should weigh around 580kg on 1 March. At this point, the farmer must decide the way forward, with the costings under all three options outlined in Table 1.

  • Option 1 – Sell live on 1 March

This option is straightforward and assumes the farm is not under any movement restrictions. After wintering the bullocks to 1 March, the farmer decides to sell the cattle, believing there will be no upturn in beef price.

Sale weight is 580kg at an average price of €2.20/kg, making the bullocks worth an average of €1,276.

After deducting the purchase price and wintering costs of €164, there is a surplus of €62. However, there is no allowance for labour or fixed costs included in this example.

  • Option 2 – Intensively finish on 1 June

Option two sees the bullocks moved on to an intensive finishing diet from 1 March, which aims to get cattle killed on 1 June.

Daily liveweight gain during the finishing period is taken as 1.2kg/day, given the quality of bullocks and silage.

This brings the bullocks to 690kg liveweight, which at 57% kill-out, gives a carcase weight of 393kg. Bullocks are fed an average of 20kg/day of silage and 8kg/day of ration.

Beef price is taken at €3.85/kg, including all in-spec bonus and QA payments. After deducting feed costs and purchase price, the end margin is €63. Again, labour and fixed costs are excluded.

This option relies on beef prices rising significantly between now and June, along with animals hitting maximum performance during the finishing period to give a good return on capital and time invested.

  • Option 3 – Store and kill off grass

The final option sees cattle stored until 1 May on good-quality silage. Meal is fed during March at 2kg/day, but cut from the diet in April.

Cattle are grazed on good quality grass from May until 1 August. An average of 5kg/day of a high maize ration is fed to finishing cattle for the month of July, to improve fat cover in the final weeks prior to slaughter.

A small vet cost is factored in for a cheap wormer, purely because the animals are bought in and there is no knowledge of previous treatments, with a miscellaneous cost to cover fertiliser for grazing.

Bullocks have a final target liveweight of 700kg prior to slaughter. Kill-out is 55% due to grass finishing, giving a carcase weight of 385kg.

Once all costs are deducted, there is a margin of €79 before labour and fixed costs are included

Beef price is taken as €3.70/kg to reflect the time of year when more grass cattle are available.

Once all costs are deducted, there is a margin of €79 before labour and fixed costs are included.

However, this example assumes there is sufficient grazing ground available to carry these animals at grass, something that may not be available.

In a wet summer, cattle performance will be compromised, meaning carcase weight and conformation will be reduced, impacting negatively on beef price.

Comment

The three example options show the value of working out costs associated with finishing cattle and how dependent profit is on a rising market, as best practice is assumed under each option.

From the three options and costs outlined, the farmer would be better off cashing in the cattle on 1 March, unless they can guarantee a rise in beef price.

Hopefully, this will happen in the months ahead. By completing the budget, the farmer will be aware of the three possible margins and can decide which option they hope gives the best reward.

Read more

Five tips to prepare cattle for an early turn-out

Dawn Meats reduces minimum days on final farm for in-spec bonus