It’s been another summer for the record books. Last year we couldn’t buy rain, and this year we can’t get it to stop. I guess the only constant we can count on is change.
For stocker operators who don’t worry so much about dry hay production, the wet weather has kept the pastures growing nicely. This should promote higher gains per acre and allow for some stockpiling. Stockpiled forages can be used for late-season grazing of current stockers, or for a new batch of stocker calves. This is an advantage of running stocker cattle; if a market opportunity presents itself, you have the flexibility to take advantage of extra feed or cheaper fall priced calves.
What about this year? The stocker grazing season is about over and for some farms has already ended. One of the tools stocker operators now have is the Livestock Market Reporting service provided by an agreement between Cornell University and the U.S. Department of Agriculture Market Service and funded by the New York State Department of Agriculture and Markets. This provides detailed prices on feeder and slaughter cattle and can be located at the USDA.
A sample of the July feeder cattle sale at Finger Lakes Livestock Exchange (FLLE) in Canandaigua, New York, is shown in the table at right. Note first the large difference between medium and large 1 (ML1) steers and medium and large 2 (ML2) steers. ML1 cattle are heavier muscled than ML2 cattle.
For example, an ML1 steer with an average weight of 778 pounds brought $134.44/cwt compared with the 724-pound ML2 steers at $126.03/cwt. That’s a difference of $8.41/cwt or $60 to $65/hd. Use this website to evaluate effect of weight, sex, frame score and muscling on the price for feeder and slaughter cattle.
Feeder Sale Results
Albany, New York, Saturday, July 8, 2017, USDA — Cornell University Finger Lakes Livestock Exchange Special Feeder Sale — Canandaigua, New York, Feeder Cattle Weighted Average Report for July 7, 2017
- Today: 474
- Last sale: 449
- Year ago: N/A
Compared to the last sale, feeder steers sold mostly $4 to $5 lower. Holstein steers sold steady to $1 lower. Feeder heifers sold $3 to $4 lower. Feeder bulls from 300 to 700 pounds sold $2 to $3 higher while the 700- to 1,100- pound bulls sold $4 to $5 lower. Cattle supply: moderate. Demand: moderate. Feeder cattle supply consisted of 30 percent steers,11 percent Holstein steers, 43 percent heifers and 16 percent bulls, with 73 percent weighing over 600 pounds. Cattle supply consisted of 191 steers, 193 heifers and 90 bulls.
Now let’s examine the projected profitability of running stocker cattle this summer. At the May 8, 2017, feeder sale at FLLE, 451-pound ML1 steers brought $147.65/cwt and 544-pound steers sold for $147.89.
I used a spreadsheet developed by Oklahoma State University to make the calculations with cattle placed on pasture at two weights, 450 pounds and 550 pounds. I assumed that the cattle were purchased two weeks before pasture turnout and fed a receiving diet consisting of hay and grain. They grazed for 150 days with an average daily gain of 1.5 pounds. While on pasture, the cost of gain was $0.60/pound of gain. Total feed cost of gain, which included the receiving program, was $0.69/pound and $0.71/pound for low- and high-weight steers. A summary of the expenses is shown as follows with a break-even needed to cover these costs.
How do we know if these cattle that are projected to be sold in October will meet their breakeven? A tool developed through a collaboration with Custom Ag Solutions Inc., Kansas State University and the USDA’s Risk Management Agency can be found at BeefBasis.com. At this site under forecasting tools you will find basis and price forecast. Using Virginia as the location, when I ran this tool it predicted that low- and high-weight steers would bring $140/cwt, above the breakeven. This tool also gives you a confidence interval, which is the expected range in price. For this scenario the interval is $134/cwt to $147/cwt. At the bottom end of the interval the low-weight steers would still be profitable whereas the high-weight steers would lose approximately $17/hd.
There are a lot of variables unique to each stocker enterprise, which can change the aforementioned example. However, for the astute producer, it looks as if running stocker cattle in 2017 will be another profitable year.