Using planning prices

Here how a rancher can use the Table 1 planning prices. If I were to run grass steers in summer 2009, I would use the spring 600-lb. feeder calf price of $107 going on grass and the September 850-lb. price of $92 coming off grass.

This $92 price for 850-lb. feeders is a median price extrapolated from the 800-lb. September price of $95 and the 900-lb. September price of $88. These planning prices suggest a buy/sell margin for grass steers of a minus $15/cwt. of initial weight.

Even before the animals are purchased, I can project a marketing loss of $90/head on the initial 600 lbs. This loss must somehow be recovered from low-cost gain on grass. Is it possible? That’s the challenge of grass cattle in summer 2009.