High demand for quality

A nearly unprecedented spring sales season reflected growing demand for the Angus breed. American Angus Association midyear fiscal reports show nationwide cattle sales have continued the pattern set last fall, with spring sales inching higher and higher. The average price for a registered Angus bull, from Oct. 1, 2014, through April 30, 2015, reached nearly $7,000 per head — up more than 35% compared to year-ago figures.

Registered Angus females have seen an even larger spike, with averages up about 50%, at more than $5,000 per head. The total gross sales of registered Angus genetics, according to sale figures reported to the Association, were up more than 30% over last year, at nearly $392 million.

“It’s been a tremendous year to watch these prices unfold in the Angus market,” says Bryce Schumann, Association CEO. “Higher prices reflect a strong demand for registered Angus genetics and a growing interest toward rebuilding with quality.”

Near-record figures from the organization are proof that cattlemen are beginning to act on plans to increase their operations and build the nation’s beef supply. Other key indicators across the industry show the expansion phase of the cow herd is, in fact, beginning to take place.

The Jan. 1 inventory of heifers and heifer calves on feed was at 34.3%, according to a recent report from CattleFax, which states that typically 35% or less indicates intensified herd expansion.

More heifers kept on the ranch will mean more populated pastures in the years ahead. Recent auction market and harvest data indicate more of those pastures could be black.

Pull-through profit

The Certified Angus Beef LLC (CAB) “Here’s the Premium” 16-year comparative calf-price study released at the start of the current fiscal year showed continued market incentives for black Angus calves.

While calf prices have risen across the board in the past two years, both Angus steer and heifer premiums over non-Angus calves set records. The fall 2014 report gathered auction prices on nearly 14,000 calves of known Angus vs. non-Angus genetics at 10 markets across the country. Angus steers and heifers averaging 524 and 509 pounds (lb.), respectively, brought a combined average of $6.93 per hundredweight (cwt.) over all other calves of similar size and condition.

“As more areas of the country recuperate from drought and producers begin to look at rebuilding their herd numbers, indicators show more are doing so with quality in mind,” says CAB consultant Larry Corah, noting the growing economic importance of marbling to beef demand. “Great progress can be made when producers keep beef quality in mind on both the cow and bull side.”

USDA harvest data show cattlemen are producing the highest percentage of Choice and higher carcasses since the agency implemented its current grading system in the 1970s. The industry reached the historic average of 70% Choice and Prime grades in 2014, and first-quarter 2015 data show that trend climbing to 73% in the first eight weeks.

CAB acceptance rates reached a record 25.6% in 2014, and are keeping pace at that same rate in the first half of this fiscal year. Increasing consumer demand for quality is also reflected in a recently updated Kansas State University economic model that shows demand for Certified Angus Beef brand product up 129% during the past 12 years, compared to demand for USDA Choice, up 8%.

Brett Spader, with DV Auction and AngusAuctions.com, says recurring drought in recent years caused many producers to cull their bottom-end cows, and now market conditions are allowing some to purchase higher-end genetics that will pay bigger dividends when a growing supply forces market fluctuations.

“The current state of the beef business requires a responsibility to consider how each genetic decision will affect future progeny. We all know we’re on the verge of serious, sustained heifer retention, but it’s never been more important to invest as much as you can in genetics that are going to drive your commercial operation forward,” he says. “You’ve got to look at the grand scheme of where we are in the beef industry and consider how many people will be retaining heifers that will impact our beef production cycle for the next 20 years.”

Decisions made today have the potential to shape the business for years to come. That’s why, Schumann says, the American Angus Association offers its members and their commercial customers the industry’s most comprehensive single-breed database and suite of prediction tools.

Added value, reduced risk

At a time of heightened cattle prices, it’s also critical that those animals perform as expected. Expected progeny differences (EPDs) enhanced with genomic data allow cattlemen to reduce risk when making selection decisions and add value back into their herds.

“I’ve noticed that if genomic data [GE-EPDs] are in a sale catalog, they definitely look at those numbers, and it seems to spark their interest even more,” says Jay Nordhausen, Association regional manager in Nebraska and Colorado. “The fact that we are increasing the predictability of what they’re getting — it just makes for a more solid product at the end of the day for commercial cattlemen, and it’s definitely been seen throughout the spring.”

In addition to genomic data, the Association provides a comprehensive line-up of performance measures to give producers the information they need to meet the goals of their operation. From selection indexes to a growing list of EPD offerings, cattlemen can evaluate what’s working in the herd and pinpoint areas for improvement.

In the Pacific Northwest, Association Regional Manager Jake Troutt says bull buyers paid specific attention to dollar value indexes ($Values), specifically beef value or $B, this season as a way to ensure their return on investment.

“With the cattle market being how it is and bulls bringing more money than they typically have in the past, commercial cattlemen are much more particular in what they select for genetics,” Troutt adds. “The dollar-beef index ($B) was a driving factor in many decisions.”

The dollar-beef index is expressed in dollars per head and represents the expected average difference in future progeny performance for postweaning and carcass value. (Complete definitions and descriptions for Association-calculated indexes and EPDs are available online.)

“As we prepare for what could be unprecedented growth, a focus on quality and performance will set an operation up for success for generations,” Troutt says.

Angus breeders and commercial cattlemen are encouraged to contact the regional manager in their territory for assistance locating Angus seedstock, preparing marketing plans or evaluating performance within their herd.

Visit www.angus.org for the latest sale reports and other news from the American Angus Association.