Feed Lot

APR-MAY 2017

Feedlots and cow/calf operations in the beef industry who feed 500 or more has annually on grains and concentrates; maintain 500 or more beef cows; backgrounder, stocker/grower, preconditioner; veterinarian, nutritionist, consultant

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QUALITY BEEF GRADE, DRESSING PERCENTAGE AND GRIDS The average cattle feeder wants to be rewarded for above-average beef quality, and many have turned to some type of value-based "grid" marketing to earn premiums. After selling a few pens on a packer grid, some feeders lament it's less about quality and more about dressing percent, the whole-carcass yield of beef, including bones in those cuts. Taking a closer look, Paul Dyk- stra, beef cattle specialist with the Certified Angus Beef ® (CAB ® ) brand, admits that number is important. "Falling below the industry stan- dard of 63.5% dressed weight means we start out on the grid sev- eral dollars behind the alternative live-weight sale price," he says "Cattle that hang more pounds of saleable carcass weight as a per- centage of live weight obviously put us at an advantage." The rest of the grid proposition p l a y s o u t t h r o u g h p r e m i u m s and discounts based on carcass quality grade, including CAB brand premiums, along with yield grade (lean-to-fat ratio) and "outs" due to nonconformance. Quality and yield grades drive dollars, and the illustrations show how those numbers add up ($/hun- dredweight/head), comparing in- dustry-average cattle to those of high quality grade. The tables apply a fairly repre- sentative set of grid premiums and discounts to the two pens of steers," Dykstra says. "We can ban- ter about what the grade percent- ages should be on high-marbling cattle, but these figures are well be- low the extremes we've seen. Our math includes the 2016 average Choice-Select spread of $9.37/cwt., much wider than the current spread. As some cattle of higher quality grade tend toward higher yield grade as well, the high-mar- bling pen shows the disadvantage of more Yield Grade 4 discounts, for argument's sake." Results for this comparison show a $6.79/cwt. premium for the high-marbling pen over the cash market, a $44.05/head advantage over the industry average pen. "In contrast, if we focus strictly o n d r e s s i n g p e r c e n t , a f a i r l y common 1-point difference above or below industry average creates a $27.30/head impact with a base price of $195/cwt. and live weight of 1,400 lb.," Dykstra notes. "Ideally, we'd own multi-faceted cattle that give up nothing in dressing percent and simply capture further premiums. This example just shows quality drivers can over- come the dressed-yield driver in some pens." FL 8 FEED•LOT  April/May 2017 FEEDLOT FOCUS Industry average Pen $ / cwt. category % Impact Prime 5% $  1.00 CAB ® 17% $  0.85 Choice 75% $  2.11 Select 20% ($  1.87) qG total $  2.08 yG 1 5% $  0.20 yG 2 30% $  0.60 yG 4 15% ($  1.05) yG 5 0% $  0.00 YG total ($  0.25) Premium / cwt. $  1.83 Premium / Head $16.31 High quality Pen $ / cwt. category % Impact Prime 15% $  3.00 CAB ® 55% $  2.75 Choice 85% $  2.39 Select 0% ($  0.00) qG total $  8.14 yG 1 0% $  0.00 yG 2 20% $  0.40 yG 4 25% ($  1.75) yG 5 0% $  0.00 YG total ($  1.35) Premium / cwt. $  6.79 Premium / Head $60.36 QUALITY BEEF GRADE, DRESSING PERCENTAGE AND GRIDS QUALITY BEEF GRADE, DRESSING PERCENTAGE AND GRIDS Hot Live Dressing Weight $ Per Head carcass Weight % Difference Difference Weight 62.5% 875 1400 lb. 14 lb. $27.30 63.5% 889

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