Stockers on winter pasture made fantastic returns during the 1996-97 season. The weather cooperated with adequate moisture and a mild winter. And the dramatic rise in stocker-feeder prices made an impressive impact on profitability. Returns to margin operators as measured by 'value of gain' have been the largest since 1990 and near the best of all time.
As we approach the 1997-98 winter pasture-stocker season, 450 ? 550 pound steers are about $30 per hundred weight or 50% higher than a year ago. Feeder steers (650-750 lbs.) are $20 to $25 per hundred or 32% to 41% higher than a year ago. Not coincidentally, corn is $2.86 a bushel or 54% lower (from $5.31 to $2.45) than a year ago. The prospects for continued increases in cattle prices from these levels are not good. However, the profit potential for winter pasture stockers is far from dismal.
My calculations as of July 15th indicate that $1.00 a pound 370 pound steers purchased in October 1997 and grazed on an intensive winter pasture program have a variable cost break-even of $73.55 per cwt. in May 1998. Currently, the futures market, with a $1 Oklahoma City positive basis, is offering $84.30 for these cattle. This translates into a 'value of gain' of $69 per cwt.?near values received this year and considerably above the past eleven years average of $55.55 per cwt.
Below is a summary table from a spreadsheet that analyzes the costs and returns to winter pasture-stocker enterprises. For a copy of this spreadsheet and/or a copy of 'Stocker Cattle and Small Grain Pastures', contact me at the Foundation.
Thought for the month: "We are what we repeatedly do. Excellence, then, is not an act, but a habit." Aristotle.