Because prices for heavier weight stocker cattle have remained atypically static as lightweight prices have grown this past month, heavier weights on fewer days of winter wheat is making more sense.
“While there is a substantial price rollback for lightweight stockers, there is a break at about 600 lbs. for steers (roughly 550 lbs. for heifers), above which there is relatively little price rollback,” explains Derrell Peel, Oklahoma State University Extension livestock marketing specialist. “This dramatically impacts the value of gain for different beginning weights.”
Using weighted average prices and weights from Oklahoma City last week, Peel explains the average value of adding 200 lbs. to a 425-lb. in-weight steer is about $32/cwt. At an in-weight of 475 and 525 lbs., the value of gain for 200 lbs. is about $53/cwt. At a starting weight of 575 lbs., the value of gain jumps to $74/cwt. At an in-weight of 625 lbs., it’s $86/cwt.
“These values suggest that producers may benefit by buying heavier animals which will have a higher value of gain and greater profit potential in a short winter grazing season,” Peel says. “A short grazing period also favors using high quality, healthy animals that will gain quickly.
"Both steers and heifers appear to have this price break for heavier weights at this time. Of course, the animals will not actually be sold until February or March and the market may correct the price relationship by that time. However, current March feeder futures values make it possible to lock in the higher value of gain now,” he adds.
You can read more of Peel’s thoughts in this week’s OSU Cow-Calf Corner at cowcalfcorner.okstate.edu/Newsletter.htm.