Defining the stocker cattle sector should be relatively straightforward. Producers add weight to calves removed from their mamas before those calves enter a feedlot.

By and large, it’s a margin business that revolves around the value of gain – what the market is paying for additional weight – relative to the cost of adding that weight. Pay too much up front and margins are so narrow you’ll have a hard time ever catching up.

A Closer Look: Managing The Margin Is Critical In Today's Environment

Looking more broadly, stocker cattle and those who run them serve as the lynchpin of the entire cattle and beef business.

For one thing, this sector acts as governor to the industry engine, receiving cattle from a national cowherd that churns out most of its calves in the spring of the year, then parceling them out so that feedlots, beef packers and consumers have a steady supply throughout the year. This warehousing function also enables the industry to absorb supply shocks within and across years, whether it’s drought forcing more cattle to market than usual, or cowherd attrition serving up fewer calves.

Even before the recent higher grain price paradigm, the forage-focused nature of most stocker enterprises offered a more valuable alternative use to forage. With higher grain prices, cheaper forage-based gains are one way the industry can be more price-competitive with other meat proteins.

The stocker sector also removes incalculable levels of variation from the industry. No one can turn the proverbial sow’s ear into a silk purse, of course, but stocker operators can gather, manage and market load-lots and pen-lots of similar cattle. This packaging offers more value to buyers because management can be more consistent. In turn, that offers more value to the industry.