Previous Page: Feedlot costs of gain (COG)

The last pound

Figure 6 presents my projected fall 2009 feeder-cattle prices for western Nebraska. I project 550-lb. steer calves in fall 2009 at $116/cwt., and 800-lb. feeder steers off grass at $96. These prices are based on April 29, 2009 feeder-cattle futures. Readers in other parts of the U.S. can adjust these projected Nebraska prices by their regional basis.

The projected price slides (labeled “price drop”) are based on late April 2009 western Nebraska sale barn prices. This large drop will ensure the buy/sell margins for 2009 marketings are large negative numbers for both backgrounding and retained ownership of 2009 calves. In fact, I predict that large price drops (slides) will again lead to negative backgrounding and retained ownership profits with 2009 calves.

The “value of the last pound” column depicts the market value of the last pound of weight added. The value of added weight is always less than the average market price. For example, when weaning 600-lb. calves instead of 550-lb. calves, the value of the last 50 lbs. is $78.67/cwt. or $39.33. Don’t value the last 50 lbs. at the projected $112/cwt. average price.

As you push for heavier weaning weights, remember that the value of the last pound is always less than the average price. Heavier weaned calves also tend to come with increased costs per pound. So, heavier calves cost more and tend to bring less per cwt.

My highest profit ranch herds aren’t those that produce the biggest calves. They’re those that produce calves for the lowest cost per cwt. of calf weaned.

Harlan Hughes is a North Dakota State University professor emeritus. He lives in Laramie, WY. Reach him at 701/238-9607 or harlan.hughes@gte.net.