As we move into 2018, it will soon be time to think about whether to pull cattle off wheat so it can be harvested for grain or to leave the cattle on the pasture through wheat graze-out. One of the biggest concerns this past fall was the lack of moisture received. This will ultimately impact producers' decisions this spring, too.
In evaluating the graze-out or wheat for grain options, a partial budget can be a useful tool. For this, we'll assume you could continue with a 650-pound steer in March and take him to 800 pounds in early May. Estimated prices in Oklahoma City are $158.85 per hundredweight and $137.47 per hundredweight, respectively. We'll also assume 1.25 head per acre during this springtime period of graze-out. Ultimately, an additional $86.66 in revenue could be generated with graze-out wheat.
The expected cash price for wheat in south-central Oklahoma early next June is $3.92 per bushel. Using the five-year average Oklahoma wheat yield of 29.4 bushels per acre, a revenue of $115.25 could be generated by cutting wheat for grain. Revenue is only half the picture as we must also take costs into account. With harvesting wheat, you'll have the associated fungicide, weed control, combining and hauling costs to consider. With stockers, you'll still have the cost of hauling them to the auction barn.
Taking all this into account, it appears that taking the stockers through graze-out will be more advantageous by about $21 per acre. However, the picture starts to change if you can beat Oklahoma's five-year average yield of 29.4 bushels per acre. If you can produce 35 bushels per acre, you could expect the same returns as grazing out cattle. Any improvements in yield will favor pulling cattle and cutting the wheat for grain.
As always, keep your pencils sharp. These price relationships will have changed by the time you read this article. Crunch these numbers for your own operation, and don't hesitate to contact your Noble Research Institute economist.