What Drives Value In a Feedyard Steer?

Burt Rutherford
BEEF Online

Is there a “holy grail” of feedyard efficiency, the one factor that will determine the color of ink at the bottom of the closeout?
Yes and no. While there are several factors that determine the value of a feedyard steer hanging on the rail, and therefore its potential profitability, one stands out—and that’s dry matter conversion or feed efficiency.
That’s what Decatur County Feedyard at Oberlin, KS, discovered when it analyzed a data set of 185,000 animals. While all feedyards are very intense in their data collection and analysis, Decatur County takes it to a higher level, individually identifying all the cattle it feeds and selling the cattle on the same grid to the same packer every week, which allows them to collect individual carcass data.
According to Kevin Unger, manager of the Decatur County Feedyard, looking at the data just on a lot-by-lot basis revealed that there was routinely a spread of from $554 to nearly $1,200/head difference in value. “That’s a huge number,” he says, and one that, if the reasons for the differences can be identified, can help a cattle feeder swing the odds very much in his favor.
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So they looked at the individual data from each animal. Since there was a wide range of weights and prices, they slid all cattle to 625 lbs. in-weight and standardized prices at $6/bu. corn and $120/cwt. fed cattle. Those were the market averages at the time they did the analysis several years ago.
“What we found was, for us, dry matter conversion amounted to 35% (of the value of the carcass); carcass traits (quality grade and yield grade) amounted to 30%; carcass weight was 18%; and animal health was 17%,” Unger says.
In addition, he says market timing is a big factor in profitability. “Nobody in our outfit is good enough to tell you what the market is going to do,” he admits. So they look at historical data, which tells them that there are two highs in the fed cattle market – in the spring, usually in April; and a smaller peak in the fall.
“That’s a big concept for us,” Unger says. “And it also shows in our data on profitability. So market timing is one of the best hedges you can have against market volatility.”
Beyond that, his experience shows that how cattle are managed prior to their arrival at the feedyard has an effect on value. “We can have the best genetics in the world, but if we don’t manage them properly, we cannot make progress. So best management practices drive value, whether it’s animal health, nutrition, animal handling, animal welfare, whatever it is. Don’t forget the things that keep us in business.”