“Marketing on a Carcass Weight Basis”
by Chris Reinhardt, feedlot specialist
This is dangerous ground. The topic of fed cattle marketing can and has filled volumes. But there is one aspect of marketing to be acutely aware of this time of year: endpoints.
If you market fed cattle based strictly on live price, the simple rule is that when the cost of that day’s gain (cost of feed+yardage) exceeds the value of that day’s gain (live price*that day’s gain), feeding more days will cost more than it will return.
If you sell in the beef with no direct premium or discount for carcass parameters, the equation changes slightly. It is still based on daily value gain vs. daily cost, but it changes to cost of that day’s gain vs. the value of that day’s CARCASS gain. This is where it gets interesting. Although overall dressing percentage may be 62-64%, dressing percentage of each pound of live weight increases with days on feed, and dressing percentage of live weight added at the end of the feeding period may exceed 80%. That is, if the steer is gaining 2.5 lbs/day, carcass gain is potentially 2 lbs. Also, because of the increasing dressing percentage with days on feed, rate of carcass gain does not decrease as rapidly as rate of live weight gain.
The reason this is important is that for the carcass weight seller, net value of cattle does not decrease as dramatically at the end of the feeding period as it does for the live seller. If you’ve recently switched from selling cattle on a live to a carcass weight basis, keep this in mind when determining optimum marketing endpoint.
