The outlook for replacement bulls and heifers

As an industry, will this restocking then continue on in response to the near-record-high prices of all classes of beef cattle? If that is where we are headed, then we must contemplate buying some young replacement bulls and cows.

Rob Hogan

Whether we retain and grow our own or just outright buy them, we can expect a whole new normal in our managerial expectations of our cow herd finances as we restock.

First, let’s look at the bull side of our operation. Some of the changes we can expect will look like the following: annual bull depreciation (ownership cost) I estimate to be roughly $1,080 per bull per year and annual maintenance cost of the bull, that is, pasture and supplemental protein and energy to be fed in the deepest part of the winter.

In southwest Texas, this is estimated to be $550 per year (direct or out-of-pocket cost).

Thus, total annual cost would be $1,630 per bull per year. If the bull breeds an average of 25 cows per breeding season, and 90 percent of these cows are settled, then the bull cost for this operation is $72 per cow settled per year.

This is based on the following assumptions: $7,000 initial cost of the young bull, he will have an expected four years of service in the herd; at the end of his useful service he will be sold as a cull at 1,800 pounds at a price of $149 per hundredweight; loan rate on operating funds will be 5.25 percent; the bull will be able to breed 25 cows per year successfully; his pasture cost will be $225 per animal unit per year; and the normal wintering, vet and health management costs will be charged to his annual cost.

The initial cost of the bull makes considerable difference, too. Had the bull cost $1,500 less (say, $5,500), then the total annual cost would be reduced to $1,250, almost $400 per year less, and had the bull cost $1,500 more ($8,500), then his total annual cost would be $2,130, $500 per year more.

So why spend more money on a bull other than just a “plain vanilla” bull? If the calves we wean from a given bull are selling on the market for $243 per hundredweight (for example), then a 10-pound-per-calf increase in weaning weight on the bull’s expected 25 progeny would increase the total revenue of a “better” bull by some $608 per year.

However, a higher-priced bull does not always mean a better bull or a bull that puts more weaning weight on the calves.

replacement heifers

With respect to replacement heifers, currently a 500-pound weaned heifer will cost about $1,320 (a 575-pound heifer at $229.32 per hundredweight). It should cost about $700 to grow, breed and develop the heifer to a heavy bred condition.

Then adjusting the final cost for some heifers that will be culled and sold from the group, and then the expected cost to raise and develop the heifer, will be approximately $2,150 per heifer.

This is the cost to raise (or buy), breed and develop our own heifers with the following assumptions: The heifer calves will be weaned at 7 months old, bred at 14 months, and she will calve at 23 months if she is successfully pregnant.

We further assume the heifers will be fed 20 percent range cubes for four months each year as a winter supplement (no hay), and the heifers will be grazed on native pasture all year. Open and non-performing heifers will be sorted off and sold.

If we conduct a net present value analysis to compute the total estimated income stream we could expect from a first-calf heifer, then the resulting value will be between $2,700 and $3,750. This value is determined by the underlying assumptions that were made.

Thus, a heavy bred replacement heifer can be raised for $2,150, and the most we could pay for the heavy bred heifer would be the net present value of the lifetime income stream she produces, or approximately $3,000 to $3,200.

It should be noted that if we pay the full net present value for her, this would include all the net profit she could make in her lifetime.

PHOTO 1: Annual maintenance costs for replacement bulls mostly equate to pasture and supplemental protein and largely come in the middle of winter.

PHOTO 2: The estimate for heifers is $700 to grow, breed and develop her to a heavy bred condition. Photos courtesy of staff.