August 31, 2015

(Dan) Hey folks, welcome to DocTalk. I’m Dr. Dan Thomson, thanks for joining us today. My friend and colleague Dr. Chris Reinhardt is our guest. And we’re gonna talk about some things associated with calf prices, preconditioning, animal health, even all the way to the carcass values, some of the applications we see in the feedlot. Thanks for joining us. I know you’re gonna enjoy this show.

Closed Captioning brought to you by AgriLabs, the Perfect Pairing of Performance and Value.

(Dan) Hey Chris, welcome to the show. (Chris) Thank you sir. (Dan) Folks, Dr. Chris Reinhardt. He is a professor here in Animal Science and Industries here at Kansas State University and he is our State Feedlot Specialist and is a good friend of mine and somebody that I bop up and down the road around Kansas and outside of Kansas with. And do a lot of research and have a lot of respect and appreciation for what Dr. Reinhardt does for the beef industry and for what he does for the state of Kansas and… you know there’s a lot going on in this industry right now. (Chris) A lot. (Dan) It is exciting, exhilarating, anxiety…about any kind of adjective you can use to describe it has been that and more. (Chris) It’s been a crazy basically 18 months, 24 months, it sure has. (Dan) When I see calves going out, these 270 weight calves going out for five bucks a pound in regional sale barns, you know I can remember a day when we paid less per pound for a steak. (Chris) That’s true. (Dan) This is just being weaned and mooing. And you know, what is with these calf prices and cattle prices? (Chris) The way I summarize it, excuse me, I summarize it all down to the world wants more of what we do and what we make. And so there is a pull through, it’s a long convoluted root from the consumer’s plate and export markets all the way back to that 270 pound calf. But it is for the most part being driven by global demand for beef. But then on the, I’ll call it, the local or the regional level that you and I talked about previously, there’s a ton of grass compared to just the past three years. There’s grass we haven’t had and seen for quite a while and people are wanting to make good value out of that. (Dan) And I think it’s interesting too that we have these shifts in where the droughts have occurred. And our friends in California are going through a severe drought now and it wasn’t but…when I look back at some of our closeouts from 2012 and 2013 you know where we were really going through the drought and we didn’t have the grass opportunities. And of course, now when you look at the rains that have come through this high plains region, whether it’s southern high plains or northern high plains, we’ve really got a lot of opportunities to place cattle out on grass. But then there also are empty holes in the feedlots. (Chris) There are empty spots in the feedlot and they’re pulling calves. We’ve got relatively cheap grain and so everything is clicking right in the right place for the rancher right now. (Dan) You bet. And I think that’s something that understanding is that feedyards still wind up being a margin business. And so good times and bad times for the beef industry or cattle prices in general, they’re more of a flat part of the industry because they’re gonna buy ’em high and sell ’em high, or buy ’em low and sell ’em low. Hopefully. Or buy ’em low and sell ’em high that’s where we wanna be. But it really is a good time for the rancher and the opportunity to cash in on some leaner years. (Chris) It’s a really good time to have calves for sale. (Dan) Yep and some cow/calf pairs and a bull and everything. But when we come back let’s talk, we’ll jump into some of the things about preconditioning and some of the pull through marketing, signals that we’re seeing even in this up cattle market. You’re watching DocTalk, more after these messages.

(Dan) Hey folks, welcome back to DocTalk from the Beef Cattle Institute at Kansas State University. I’m Dr. Dan Thomson with the co-director of the Beef Cattle Institute with myself, Dr. Chris Reinhardt. And he’s a professor over in the Animal Science Department and we’ve had a good relationship between vet med and animal science and that’s really what the Beef Cattle Institute is about is collaboration and kind of like the real world, it isn’t just a vet question or just a nutrition question. (Chris) That’s the way we’re gonna get to the heart of all of these issues that affect the beef industry day after day. (Dan) I don’t ever remember when I was in practice, or when I was working in a cattle feeding operation, that it was a unilateral or singular issue. It involved everybody on the premise to solve the issues that we need to get done. But one of the things that you’re sitting there with a group of calves out on your ranch and you’re gonna get these record prices, and you decide, you know what, why am I gonna monkey around with preconditioning? And so you take the point in time where do I precondition or do I not precondition? And how do we talk to people about doing the right thing even in this up cattle market? (Chris) Two things Doc is, number one the data screams loudly for value, I’ll talk strictly in terms of animal health and the value of the animal performance-wise, carcass data-wise, of calves that don’t get sick when they come to the feedlot or to the stocker operation. But then secondly I’ve thought about that a lot the past couple of weeks is, do you want to market your calves this year or do you want to start forging some long-term relationships? There’s every chance that calf prices won’t be continuing to sky rocket for the next 10 or 20 years. If we can help ranchers create a long-term program, a long-term animal health program that’s gonna create value for the next owner of those calves. I think those are things that need to also go into the equation. (Dan) Absolutely, so let’s jump into some of the health and well-being someone that’s..we’re both participating on the feedlot side. When I’m paying record prices, the one thing that I don’t want is excess death loss. (Chris) That is the most obvious loss in any operation. (Dan) Yep. And we talk about it as it’s just an economic signal. It’s a lot more than that. (Chris) Some have said death is the ultimate breach of animal welfare. (Dan) And you know, we understand that we’re gonna have diseases. We have children that get sick, we have calves that are gonna get sick. We’re not gonna prevent it. But we also understand what good husbandry brings to the table. And so, what are some of the things we’ve got a little bit here before we go to break, if you were gonna tell somebody in a nutshell, why do you want to…why should they precondition? (Chris) The performance that will be reaped by the next owner all the way down to the carcass value are abundant and really well documented. (Dan) Cool. Well let’s take a break. When we come back, we’re gonna talk about the perception of calf value, we’re gonna talk about how those calves perform in the feedlot and then we’ll eventually get to talking about that carcass and the value of the carcass feedback to you the rancher. Thanks for watching DocTalk. More after these messages.

(Dan) Hey folks, Dr. Dan back with Dr. Chris Reinhardt. We’re from the Beef Cattle Institute at Kansas State University and Chris when we left we were talking about preconditioning, the health, the performance and things to that. And you and I have discussed the difference between a low-risk calf and a high-risk calf generally has been used as a health indicator or a morbidity ranker. With the high-risk calves being the mismanaged cattle that come in that have the high spike in morbidity, and the low-risk cattle being the ones that were managed correctly, that have a lower…but the high-risk and low-risk doesn’t necessarily just mean health does it? (Chris) Let’s tie it back to what you had mentioned previously about death loss. If I don’t know how sick those calves are going to be and I don’t know how many are gonna die, I’ve got huge risk on the economic side. (Dan) And so then we’re talking about the inability to forecast or predict on how those calves are going to feed and the inability to predict. There’s more variability in the closeout. (Chris) Huge and in a feeder’s and stocker operators are gonna be paying $1,200-$1,500 dollars for a single animal. They want to know that that animal is going to perform, stay alive and hopefully lead to a profitable outcome. And you know I think that we see some of the people out there, the bigger operations will say well, you know, we don’t need to feed preconditioned calves. And so as the increase in the size of your operation goes up and the more of these animals that you buy, the more likelihood is you’re gonna hit that projection average for morbidity and mortality and they do wind up being easier to project as a whole. But if you’re feeding one pen or two pens or three pens, or maybe a thousand head or two thousand head, it can be tremendously devastating if you get the wrong mismanaged cattle coming into your operation. (Chris) Strike one and you’re out. You mentioned some of these ranches in the high plains that have grass for the first time in three years, they’re not gonna be feeding ten turns in a row. They kinda got one jag this summer to make it work. And they buy 1,500 head of calves that turn out to be, pardon my French, but junk they may lose the whole enchilada. (Dan) Yep and when you start to think about some of these wrecks or things that we could get in to, it really does boil down to what sort of risk you as someone who’s buying the calves, is willing to take on those cows. (Chris) That’s exactly right. And so, the amount of money, the amount of capital being invested in feeder cattle right now is historically high. And so all of our operators need a tremendous line of credit. They have to have some assurance that it’s gonna pay back and they’re gonna be in business next year. (Dan) Yep. So by definition, we’ve got about 30 seconds here before we have to go to break, but for definition, what’s your definition of a properly managed or preconditioned calf? (Chris) Theoretically if I could control the entire process, that calf would be weaned from its Mother for a minimum of 30, but better 45 days, bunk broke to where we’ve taught it how to eat out of a bunk a good blended ration out of a good feeding system, the ability to eat out of a mechanical watering device of some kind, and more importantly and then have all the foundation vaccinations. At least one round of the virals, possibly the bacterials and I’ll let you comment on that. But basically if we could do everything we do at the feedlot, only do it at the ranch for a minimum of 45 maybe even two months, that calf is gonna be ready to come to the feedlot and perform. (Dan) Prepare the calves. Thanks for watching DocTalk. More after these messages.

(Dan)Hey folks, welcome back to DocTalk. Dr. Dan Thomson, Dr. Chris Reinhardt from Kansas State University and the Beef Cattle Institute and before we jump into this next segment, you know one of the questions that I always get is get an apples to apples on backgrounding versus preconditioning calves. Preconditioning is weaning those calves on the ranch of origin getting ’em bunk broke 30 to 45 days, proper vaccination, castrations, dewormed, everything to prepare them to go to the next phase. Backgrounding is where you can buy any calf and you bring ’em into an operation and they’re co-mingled off the ranch of origin and started. So, just to get terminology, sometimes we mix precondition have a preconditioning yard versus a backgrounding yard, that’s really a backgrounding yard if it’s off the ranch. But Chris we’ve got a couple minutes here, let’s talk about the effects of not preconditioning on carcass value. Because a lot of people, that’s the end goal is producing that good quality carcass. (Chris) Yea, we’re in the food business, we’re not just in the cattle business. (Dan) And so talk to me a little bit about if I don’t precondition, if these calves do get sick, what am I doing to performance and inevitably that carcass? (Chris) Two things, there’s really two kinds of sickness. There’s the one kind as you well know, that just never gets better. And they don’t eat well, they don’t gain well, and they wind up I’ll call them going to an alternative marketing pathway. There’s the more common form of disease is simply where calves come down with some respiratory disease for a period of time. And what we’ve learned over the past few years is, for every day that calf is sick he is not competing with his penmates. As he gets over that disease and battles back, he does perform normally, in quotes, but he’ll always be behind. So, we’re gonna have to feed that calf longer if we have that opportunity to attain that same carcass end point. (Dan) So, in other words, if a calf’s sick or not consuming feed where they should be because of clinical illness for 21 days, they could be 21 pounds… (Chris) Easy. (Dan) …or 30 pounds behind the cohort that was healthy. (Chris) Exactly. (Dan) But once they get over that they can perform and gain and lay down marbling and things to that nature, but in that time when they have that depressed intake from being sick, that’s when we have that stall or that pause, they hit the pause button on growth. (Chris) And they hit the pause button unfortunately, on marbling deposition. (Dan) Gotcha. So, increased sickness equals increased days on feed and that does what to the carcass? (Chris) If I have the opportunity to feed those calves longer, I can get them to grade acceptably. Unfortunately it costs me another 20 or 30 days on feed. (Dan) Gotcha. And that’s gonna cost you feed, interest and many different things. (Chris) Exactly. Well thanks for being on the show today. As always it’s great to have you. (Chris) Great topic. Thanks for the invite Doc. (Dan) Folks, Dr. Chris Reinhardt. And if you want to know more about what Chris and I do here at Kansas State University you can find us on the web at Remember always work with your local practitioner. Thanks for watching DocTalk. I’m Dr. Dan Thomson and I’ll see you down the road.

Closed Captioning brought to you by AgriLabs, the Perfect Pairing of Performance and Value.

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