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The Cattle Business - R.O.P. Update

Livestock Update, May 1998

Bill McKinnon, Extension Animal Scientist, Virginia Tech

The closeout information on the first set of steers fed at Decatur County Feedyard which were consigned to the Virginia Retained Ownership Program has been completed. The steers performed in the feedlot and on the rail better than any past set of R.O.P. cattle. The on-feed average daily gain averaged 4.4 lbs./day with a 5.7 dry matter feed conversion. Based upon Virginia take-up weights the average daily gain still ran at 3.8 lbs./day. The sixty-seven head of steers left Virginia on Sept. 20, 1997 with an average weight of 729 pounds and were fed for an average of 133 days with a cost of gain of $.47/lb. The steers were marketed to Excel in three sorts beginning on Jan. 2 and wrapping up on Feb. 13.

The Va. R.O.P. steers participate in the Decatur Beef Alliance and are sold to Excel packers in Dodge City, Kansas on a carcass grid format. The par value carcass for the grid weighs between 550 and 950 pounds, grades Choice-, and is a Yield Grade 3.00 to 3.49. The shipment of Virginia steers averaged netting $42 per head over the current Kansas live steer prices assuming a 63% dressing percent. When compared to the available "in the beef" carcass price, the Virginia steers netted $37 per head more on the grid formula.

The Virginia Cattle graded 67% Choice or better and 33% Select. The cattle had an average USDA yield grade of 1.9 with 56% of the steers producing Yield Grade 1 carcasses. Roughly, 9% of the cattle were Yield Grade 3 with there being no Y 4's. The cattle sorting technology utilized at Decatur County Feedyard as part of the Decatur Beef Alliance makes use of scales, hip height measurements, and ultrasound. The ultrasound technology helps the feedyard management to meet their target of selling cattle before they reach .43 of an inch of back fat.

As with cattle finishing across the country in early 1998, the profit picture was gloomy. The large numbers of finished cattle arriving at the same time the Asian market is in turmoil and there are ample supplies of pork and poultry put extreme pressure on the market all winter. The September shipment of R.O.P steers averaged losing $70 per head while much of the rest of the industry was considerably higher. To calculate profit or loss on the R.O.P. cattle, each steer is weighed and graded at take-up. Each steer is assigned a price per cwt. based upon how he would have sold in graded sales across the state during the week of shipment. A 10% interest rate is assumed on the value of the feeder steer and the cost of trucking to the feedyard. As with most pens of cattle there was a tremendous variation in profit between individual cattle. From the most profitable to the least profitable steer (excluding one "realizer" steer), there was $293 difference in profit. Much of the time the problem in profitability lies in the bottom 10% to 20% of the cattle. There was difference of $251 per head in profit between the bottom 10% and the top 10%.

An additional shipment of 126 R.O.P. cattle was made on December 2. The December shipment was primarily spring born calves. Marketing of those cattle began in early March. Another load of 70 R.O.P. steers was also sent to Decatur County Feedyard on March 25 to accommodate the producer wishing to background his calves through the winter.

The Virginia Retained Ownership Program is conducted as an educational program to help Virginia producers learn more about the post weaning performance of their cattle and to gain some knowledge of custom feeding. The next shipment of R.O.P. steers will be in mid-September to serve the needs of the fall calving herds. For more information regarding the Retained Ownership Program, contact the local Extension office or the Virginia Cattle Feeders Association.

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