What About This Fall?
by Mark Skiles
The date of this writing is September 1. By the time it gets into your hands, I hope your ponds are full and your winter pasture is 6" tall, but what if this isn't the case? If you have spring born calves, what are they worth? The simple answer is, "They are worth what someone else is willing to pay you for them." The real question is "What criteria will that someone else use when calculating the price they are willing to give for your calves?" Without winter pasture, your calves will go to a dry winter program or to a feedlot.
The purpose of this article is not to project fall calf prices, but it is food for thought. Decreasing the cost of production or increasing the projected selling price will increase the maximum purchase price. Please note that these two examples do not include profit and remember it is difficult to stay in business achieving breakeven.
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| To determine the value of a 500-lb steer calf on Oct 15 to a dry winter program, assume the following cost structure: |
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| Backgrounding | $45 |
Supplement
(4#/hd/day 150 days, 11/15 to 4/15, $150/ton) | $45 |
| Gain 1#/hd/day | |
Grass Lease
(.25/lb of gain for 180 days, 10/15 – 4/15) | $45 |
| Interest | $24 |
| Death Loss | $10 |
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| Total | $169 |
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| This information, along with April Feeder Futures closing at $69.15 CWT, a positive OKC Basis of $6.73 CWT and selling costs of $2.25 CWT, allows you to calculate that you have a 680 lb steer worth $73.63 CWT on April 15. Subtracting the production costs ($169) from the ending value ($500) allows determination of the maximum amount that can be given for this calf at purchase. ($500 - $169)/500# = $66.20 CWT. |
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| To determine the value of this same calf to a feedlot, assume the following cost structure: |
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| Backgrounding | $45 |
| Gain: | |
| Feedlot | 550# (2.7# per day for 204 days) |
| Backgrounding | 25# |
| Cost of Feedlot Gain .45 per lb of gain | $248 |
| Death Loss | $10 |
| Interest | $30 |
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| Total | $333 |
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| This information, along with June Live Cattle Futures
closing at $61.75 CWT and a positive Amarillo basis of $0.10
allows you to calculate that you have a 1075# steer worth
$61.85 CWT on June 7. Subtracting the production costs
($333) from the ending value ($665) allows determination of
the maximum amount that can be given for this calf at
purchase. (665 - $333)/500# = $66.40 CWT |
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