Back to the Fundamentals…Hopefully

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

 

After a tremendous string of record cattle prices in the first three quarters of the year, the market was ripe for a significant correction.  For the past six weeks cattle futures and cash markets have been dominated by a near continuous stream of political rhetoric, speculation, and fears mixed with a small amount of reality. Hopefully, the federal government is distracted now by other things and will spend less time meddling in cattle and beef markets.

 

The political uncertainty provided outside money in cattle futures, with big long positions, an opportunity to take some profits, and aided by computer algorithms, have no doubt pulled Live and Feeder futures too low (and taken cash markets with them).  Much of the outside money will likely reset positions going forward.  After all, futures markets left several chart gaps in this correction that look to be filled going back up. 

 

Maybe cattle markets can get back to the fundamentals, which have not changed through all of this.  With some government data flowing again, the fundamental picture has clearly not changed from the trajectory heading into the shutdown.  The October and November Cattle on Feed reports show continued slow erosion of feedlot inventories with placements and marketings showing a more dramatic picture of tight cattle supplies.  October placements were the lowest in the data series back to 1996 and the 12-month moving average of placements shows that average feedlot placements the past year have been the lowest since July 2016, a bit over nine years ago.  October feedlot marketings were the lowest for the month since 2015, with average marketings for the past twelve months the lowest since October 2016.  November 1 feedlot totals were down 2.2 percent year over year and average inventories the past year are the lowest since November 2018 after twelve consecutive months of declining feedlot inventories.  Feedlot inventories are expected to continue decreasing with smaller feeder cattle supplies, no Mexican feeder imports and heifer retention still ahead.  The October heifer on feed inventory was 38.1 percent, unchanged from the July level. 

 

So far this year, fed steer and heifer slaughter is down 5.2 percent but since June has been down 7.6 percent from one year ago.  Steer and heifer carcass weights are higher again this year but not enough to offset declining slaughter.  Fed beef production is down 2.7 percent so far this year and combined with an 8.2 percent year over year decrease in nonfed beef production leads to a decrease in total beef production of 3.6 percent year over year.  In the past 24 weeks, beef production has been down 5.8 percent. 

 

Cattle markets are expected to recover from the correction but the timing is unclear.  With the year winding down and holidays approaching, cash and futures may mostly coast out the remainder of the year and reset in January.  However, if the politicians will be quiet, significant recovery might happen in the next couple of weeks before December finally wraps up.  Volatility is still a major factor in cattle markets.

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Building Better Genotypes – Selection and Mating, Build Back Better – Replacement Heifers Series – Article 4

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

 

The equation: Phenotype = Genotype + Environment, represents how the level of performance of a trait (Phenotype), is the result of genetic makeup of the animal and all environmental (non-genetic) influences. Genotype can be thought of as the underlying genetic potential of animals to reach a level of performance for a given trait. Genotypes are established at conception, inherited from parents. Selection and mating decisions made by cattle producers impact genotypes. Thereby, wise selection and mating decisions, informed by analyzing the components of your production system, have the potential to create better genotypes.

 

Genotype has Two Components, these are

Breeding Value (BV), which is based on the additive effect of individual genes. BV is the sum total of these additive effects of individual genes, across an animals entire genome, which influence any specific trait of interest. BV is the best indicator of a bull or heifers genetic value as a parent. Expected Progeny Differences (EPDs) are estimates of an animal’s BV. Selection of breeding stock based on EPDs is a powerful tool to improve the additive genetic merit of cowherds and calf crops. EPDs are available for reproductive traits, growth traits and carcass traits. Since BV is based on the additive effect of individual genes, it is transmittable from generation to generation. Additive genetic change is cumulative and permanent in selected populations of cattle.

 

Gene Combination Value (GCV), also commonly referred to as the non-additive component of genotype, is the effect of gene pairs at loci across the genome. Mating decisions, involving the choices we make to crossbreed or inbreed, determine GCV. For example, if we make the mating decision to use an Angus bull on our Hereford cows, we are crossbreeding for the sake of creating hybrid vigor (heterosis). The resulting F1 generation of black-baldy calves will have a maximum level of individual heterosis based on GCV, as an Angus gene will be paired with a Hereford gene across all loci. Since GCV is based on the pair of alleles at a given locus, and since genes from a specific locus can’t be transmitted in pairs, GCV can’t be passed from parent to offspring.     

 

Tips for Building Better Genotypes

• Each selection and mating decision should be intentional, deliberate and made for a purpose. Selection decisions impact BV. Mating decisions impact GCV.
• Choose breeds (and breeding stock within those breeds) with high breeding value for traits of economic importance to your operation.
• Crossbreeding (to increase GCV/hybrid vigor) does not replace additive genetic merit, it builds off of it.
• Purebred animals are an essential component for effective crossbreeding programs.

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Preconditioned Calves Add Value to Stocker and Feeder Enterprises

Paul Beck, OSU Cooperative Extension Beef Cattle Nutrition Specialist

 

Over the years, premiums paid for preconditioned calves have generally increased alongside rising calf prices. Preconditioning reduces morbidity and mortality from bovine respiratory disease (BRD) and improves subsequent performance by getting calves better prepared for the stressors of the marketing and production systems. Historic calf prices and Oklahoma Quality Beef Network (OQBN) premiums over the last 12 years were summarized by Kellie Curry-Raper in a previous Cow-Calf Corner article. Last year, 500- to 600-pound preconditioned steer calves received a $23.36/cwt premium over non-preconditioned steers. This $128 per-head premium can only benefit stocker and feedlot operators if the increased revenue and decreased production costs outweigh the added purchase cost.

 

Data from multiple research sources were compiled to evaluate whether reduced health risk and improved performance provide sufficient economic return to justify paying premiums for preconditioned calves.

 

I began by comparing treatment rates from published research describing morbidity and death loss of preconditioned vs. auction-market calves (Richeson et al., 2012; Ward et al., 2017). I then applied performance impacts and economic consequences associated with treated vs. untreated calves from Beck et al. (2025) to estimate the effects of BRD during the stocker and finishing phases.

 

 

Based on comparisons of preconditioned and non-preconditioned calves during receiving, we estimated that preconditioning decreases total BRD treatments by 88%, with a 90% reduction in first pulls, 95% reduction in second pulls, a 60% reduction in third pulls, a 63% reduction in chronic cases, and 80% fewer death losses. Using estimates of the long-term impact of BRD on performance (Beck et al., 2025), these health advantages translated into higher gains, fewer days on feed, and increased harvest weights for preconditioned steers. These differences occurred even though treated steers were deemed recovered demonstrating that early health challenges have lasting consequences through slaughter.

 

 

The $23.36/cwt average premium for preconditioned calves results in approximately $128 higher initial cost. However, this increased cost is offset by a $13.67/steer decrease in BRD treatment costs, a $111/steer reduction in total cost associated with death loss, and a $73/steer reduction in chronic-animal costs. These comparisons also do not fully account for the additional labor required to pull and treat non-preconditioned calves.

 

Improved gains during the stocker phase increased the value of gain by $26/steer, and decreased finishing days combined with increased harvest weights improved the final value of preconditioned steers by an additional $48/steer compared with non-preconditioned steers.

 

Overall, the improved performance and reduced health challenges of preconditioned calves provided a net benefit of $144 per head, representing a return on investment exceeding 110%. This calculation does not include additional advantages, such as reduced labor, improved animal welfare, and better carcass quality—factors that further favor preconditioned calves.

 

While results will vary between operations, the evidence overwhelmingly supports the value of preconditioned calves relative to their added cost.

 

References

• Beck, P. A., M. R. Beck, D. Rivera, E. B. Kegley, and G. W. Horn. 2025. Applied Animal Science 41:284-297. Effects of beef calf health status during receiving on subsequent performance during stocker and finishing phases of production
• Curry Raper, K. and D. Peel. 2025. Yet During 2024. Strong Cattle Markets Threatened by Uncertainty and Volatility
• Richeson et al. 2012. Professional Animal Scientist. 90:1972-1985. Weaning management of newly received beef calves with or without continuous exposure to a persistently infected bovine viral diarrhea virus pen mate: Effects on health, performance, bovine viral diarrhea virus titers, and peripheral blood leukocytes