In these times of changing feed prices, it has never been as important to thoroughly understand how profitable it is to feed cattle. However, many of the existing series that you find on the web from USDA or extension sources base their cost and return estimates on monthly data and on prices observed in more western locales. Weekly data is preferred to monthly data because it gives you a better feel for how volatile returns can be on a group-by-group basis. And, of course, for those operating in the Eastern Corn Belt , we would prefer to base decisions on local prices.
This month I’ll discuss a new weekly series I’ve calculated and posted on my web page ( http://aede.osu.edu/people/roe.30/livehome.htm ). The series reflects the average returns to cattle finishing for two different types of finishers. These series borrow from recent work by John Lawrence at Iowa State that use updated budgets for rates of gain, time on feed and updated labor costs. The data reflects feed, fat cattle and feeder pig prices that are reported in the Eastern Corn Belt .
The first series is calculated for finishing 550-pound feeder steers. The feeder steers are priced using the USDA’s weekly price series for Kentucky auction markets, which reports prices for cattle in 50-pound weight intervals. I use the average of the midpoint of the price ranges for the 500-550# and the 550-600# feeder steers. I assume these calves face a 2% death loss during their 30 weeks on feed and that they consume 61 bushels of corn, 116 pounds of 48% soybean meal and 0.65 tons of hay. All other costs, including other ration components, vet charges, labor, utilities, facilities, etc. are assumed to cost $121.50. I assume these cattle finish at 1150 pounds with 60% grading Choice 2-3 and the remainder grading Select or low Choice. I use the Eastern Pennsylvania auction prices reported out of Lancaster , PA. I use prices for Toledo corn, central Illinois 48% soybean meal and central Illinois hay (grass hay grading good).
The second series focuses on finishing 750-pound yearling steers to 1250 pounds (65% Choice 2-3 and 35% Select or low Choice). I assume these cattle face a 1% death loss during their 22 weeks on feed and that they consume 63 bushels of corn, 110 pounds of bean meal and 0.35 tons of hay. All other items are assumed to cost $73. Many of these production and cost assumptions are based on recent Iowa State steer budgets. Of course, every producer may face slightly different feed efficiencies, death loss and other costs. Therefore, I’ve set up the spreadsheet so you can alter one or more of the components for either of these series; this, in turn, changes the entire series of data generated and the resulting summary statistics.
The spreadsheet contains data for feeder steers placed beginning the first week of 2002 through the end of April of 2007. The summary statistics reveal several interesting trends. The seasonal profit pattern for calf finishers show that finishing these cattle during the winter months – December through March – resulted in negative returns during the 2002-2006 time period under the prevailing assumptions. All other months yielded similar, mildly positive returns.
In contract, for those finishing yearlings, these winter months were among the strongest in terms of returns. Indeed, for yearling finishers, only July and August averaged negative returns over these years while every month from October through April represented strong returns.
The spreadsheet also allows a user to input projected weekly prices for feeder steers, fat cattle and feed stuffs over the next several years on the ‘weekly data’ sheet. This allows a user to generate updated, customized returns series for planning purposes.