The recent market has been brighter than bright for dairies selling dairy-beef crossbred calves. It is not unheard of for these day-old calves to bring $600 to $700 or more, significantly more than full dairy calves.

As the saying goes, though, past performance is no guarantee of future success.

“No market stays static, and the market for beef-on-dairy calves is no exception,” says Brady Hicks, manager of Simplot Animal Sciences. “What is your plan to deal with future calf market fluctuations? If you don’t have a strategy in place, now is a good time to do so.”

Changing breeding targets

The increased value of beef calves from dairy farms has been welcome during a time when margins have been tight and input costs challenging.

As a result, beef semen use in dairy herds has increased greatly. In 2021, beef semen sales totaled a record high of 8.7 million units, up 6.2 million units since 2016.

Dairies have also increased their skills to produce higher quality crossbred calves. Matings are now based more on desirable beef market traits, like growth and carcass characteristics, than simply providing a crossbred calf with a black hide.

Still, crossbred calves offer some challenges for the beef value chain, including inconsistent size between animals and generally longer days on feed than native beef cattle.

“Full beef calves from beef embryos incorporated into a strategic dairy breeding program using in vitro fertilization (IVF) offer the benefits of consistent growth, increased average daily gain performance and the potential for higher dairy profits,” says Hicks.

In some markets, these calves sell for $850 or more at one day of age – significantly higher than crossbred calves.

Recent research at Texas Tech University helps explain some of this difference. It shows:

The researchers also noted that when embryo transfer was used to make pregnancies in Holstein and Jersey cows, the progeny of straightbred beef genetics was more moderate in frame size and wider than half-siblings with either Holstein or Jersey maternal genetics.

“This outcome means these animals are more desirable by feeders and packers because they usually fit better in facilities and help create more uniform pen groups,” explains Hicks.

Market outlook

Opportunities for beef-on-dairy strategies remain strong for the foreseeable future, especially beef embryo-based programs.

“Since feeders and packers seek uniformity between animals and efficient growth, they are willing to reward dairies for these efforts, at least while the national beef herd rebuilds following years of drought and economic hardships,” notes Hicks.

According to USDA’s Economic Research Service May 2024 Beef Market Outlook, the forecast for fed steer prices $188 per hundredweight, a year-over-year increase of 3%. Further tightening of cattle supplies available for placement in feedlots in late 2024 and into 2025 is anticipated to support improved prices next year.

While this forecast is optimistic and bodes well for calf prices over the next year or so, if you have adopted beef-on-dairy, it’s essential to have a roadmap to cope with price reductions or the potential loss of a market for your calves as the situation changes.

“Develop and strengthen key marketing relationships to ensure market access and create opportunities to offset price downturns while taking advantage of current conditions,” advises Hicks.

Also, constantly evaluate the quality of the calves delivered to customers. “Select the breeding strategy that will bring you and your value chain partners the most long-term value,” concludes Hicks.

To learn more about Simplot Animal Sciences, visit Simplot.com/animalsciences.