For Immediate Release                                                    
Nov. 8, 2004

Contact:  Burt Rutherford at TCFA                
Dr. Ted McCollum at (806) 677-5600

GRID OR LIVE?  KNOW THE DIFFERENCE TO SUCCESSFULLY MARKET YOUR CATTLE

            There is a difference between marketing cattle on a grid and marketing them live, according to Dr. Ted McCollum, and that difference can mean money made or money lost, depending on the quality of the cattle being sold. 

            Speaking at the 2004 Annual Convention of the Texas Cattle Feeders Association (TCFA) in San Antonio, McCollum, Extension beef specialist from Amarillo, told cattle feeders that in order to achieve the optimum value from a pen of cattle sold on the grid, it may be necessary to have some discounts.   

            After the murmur died down, McCollum explained his thinking.  "It is difficult to visually sort cattle at arrival so they are absolutely uniform enough to avoid having some out cattle in the pen," he said. 

            If a feeder's goal in grid marketing is to not have any "out" cattle-YG 4s or heavy carcasses-then the pen may be sold early.  "There may have been a percentage of that pen that could have stayed on feed longer and benefited from increased weight and potentially an increase in quality grade," McCollum explained. 

            To illustrate his point, he walked through the math.  "Let's say the YG 4 discount is $20 per cwt. on a carcass or $150 per head.  Then let's say that added days might add 2% G 4s, or three head in a 100-head pen.  Those three head would cause a $450 discount."

            Then he asked feeders, "Could you stand that $450 discount over the entire 100 head?  Possibly so, depending on the weight and finish of the other cattle."  "But the principle to keep in mind is let's don't shell out of a bunch of cattle just because we've got three or four of them that look like they're a problem." 

            On a related note, McCollum told cattle feeders that the relationship between cost of gain and value of weight gain is different when selling cattle on a grid versus selling on a live basis.  "Most of the data I've seen would indicate that somewhere around 75-80% of the live weight gained at the end of the feeding period is actually in the carcass." 

            So if a feeder is looking at a pen of cattle, trying to decide whether to sell or hold them longer, he's apt to look at the live cost of gain, which is always the most expensive at the end of the feeding period.

            But when marketing on a grid, your value point is on a carcass weight basis.  "So the incremental cost and value of gain might be viewed differently," McCollum said.    A variety of grids are in use today.  "Some are proprietary, some can be used by anyone marketing cattle.  They are all common from the standpoint that they have a base price to which premiums and discounts for USDA quality and yield grades, carcass weight and other traits are added or subtracted," he told cattle feeders.

The base price and the premiums and discounts vary among packers and across time.  "The same set of cattle may or may not bring the same money on all grids, and the grid that gives the better results one week may not be the grid with better results at some time in the future." 

[Home] [Back] [Printable Form]