ONA REPORT

published in

THE FLORIDA CATTLEMAN AND LIVESTOCK JOURNAL


April 2017

At What Weight Should I Sell My Feeder Calves?


For questions or comments regarding this publication contact: Chris Prevatt, University of Florida, IFAS


A commonly asked question around sale barns and at extension programs is “Do I sell these light-weight feeder calves or hold and sell them as heavier feeder calves?” The real answer to this question is that it will depend on your individual situation. The answer of course depends on market prices going forward, value of gain, cost of gain, labor availability, forage and feed situation, condition of brood cows, and anything else that you would want to include in the analysis.

Since Florida no longer has a state market reporting system, let’s take a look at a recent Alabama Livestock Market Report and evaluate feeder calf market prices and the price differences between feeder steers of different weights. Table 1 describes the auction market price as reported by USDA, Alabama Livestock Market Report, on February 24, 2017. The feeder steer prices beginning with the 300-pound steer calf, when expressed as dollars per pound, was the highest at $1.67/lb.

OREP_0417_table1


Feeder steer prices per pound moved consistently lower as calf weight increased with the lowest price for the 700-pound feeder steer price at $1.23 per pound. As most cattle producers know, feeder calf prices per pound almost always decreases as weight increases. Alternatively, when feeder steer prices are expressed as dollars per head, the 300-pound feeder steer price was the lowest at $501 per head. The highest price was $861 per head for the 700-pound feeder steer. Notice that feeder steer prices expressed on a dollars per head basis increases as weight increases ($501, $624, $720, $792, and $861 for the respective weights).

Feeder steer price differences between weights is expressed in dollars per pound and dollars per head, respectively in Table 1. The price per pound decreases between weight categories as the feeder steer weight increases. Interestingly the price difference per head changes between weight categories varies widely and ranged from $69 to $123 per head. Thus, if you can add 100-pounds of gain for less than $69 per head, adding weight will be profitable for all weight categories. Most cow-calf producers can add weight to 300-pound and 400-pound feeder calves without incurring significant costs since these calves are nursing and grazing on pasture. Some producers can add weight to 500-pound feeder calves without spending much money. However, most producers will incur some additional costs to add 100-pounds of gain to 600-pound calves for supplemental feed and care after weaning. Producers simply need to keep the additional costs incurred per head for adding 100-pounds of gain to an amount that is less than the market price difference per head of adding the weight. If the additional costs per head to gain 100-pounds are going to exceed the market price difference per head (additional value of gain), you need to sell the feeder calves. Also, producers need to understand the price difference calculated above ($69 to $123 per head for each additional 100-pounds of gain) may vary over time due to changing market conditions. However, the value of gain on the light-weight calves tends to be higher than for heavier-weight calves.

The price difference from the light weight feeder steers as a base allows you to view the price differences as you add weight to various endpoints. This measurement is commonly used by stocker operators. The feeder steer price difference per pound between the 300-pound (base) and 700-pound feeder steers for example was -$0.44 per pound. However, when expressed on a dollars per head basis the feeder steer price difference from the base was $360 per head ($861 - $501). This says that the market as of this date valued 400-pounds of additional gain at $361 per head. Unfortunately, these values may be more or less when you market your calves as it will depend on market forces in the future.

Using the information above, the value of gain between weights can be expressed in dollars per pound between each weight category. The value of gain between 300 and 400-pound feeder steers was $1.23 per pound. The value of gain between weight categories ranged from $0.69 to $1.23 per pound of gain. Thus, if you can add each additional pound of gain for less than $0.69 per pound of gain, then this is a profitable decision to add weight for all weight categories. Likewise, the value of gain from the base of the 300-pound feeder steers to each successive weight category allows you to evaluate the value for various endpoints. The value of gain from the base ranged from $0.90 to $1.23 per pound of gain. Again, if you can add weight gain for less than $0.90, you would sell the 700-pound feeder steer. Please note that the value of gain “is not” the same as the market price in the examples in Table 1. The only time the value of gain per pound “would be equal” to the market price per pound is when there is no difference in the price per pound between different weights of feeder calves (300 and 400-pound calf would have to sell for the same price per pound).

This article documents that the higher priced calves are actually the heavier calves. The question that each cattle producer has to answer is “Can I earn more net income by selling heavier feeder calves?” Evaluating the costs and returns of each incremental increase of 100-pounds of weight gain will help you decide whether adding additional pounds to your calves would be economical.


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