What Do I Pay For Feeder Cattle?

It’s that time of the year to look at placing cattle for another feeder season. We always ask ourselves, “how high do I need to bid to purchase my cattle?”

There are some factors that we should consider before giving that final nod or an affirmative yes on the phone. First we should evaluate our cost over the next few months before we load the cattle on the truck and send them to market. We should know exactly what our feed costs will be. We have the feed in the field but what is the value of that commodity? We need to figure what the crop would be worth if we sell it, rather than, feed it through the cattle. Place a “$$” value on your silage and corn and what your added protein and mineral costs will be. Then, figure the estimated days on feed from your starting date until the time they are finished at the preferred weight that you want to sell them. You also need to assign a value for processing, implants, and de-wormer. You need to assign a yardage fee to cover feeding equipment, electricity, and bedding. When you have completed these costs, you can look at a marketing strategy so you have an idea as to what your selling price will be. We have several opportunities with different vendors that we can forward price these cattle; a price that we are comfortable with. Some producers who know what their input costs are will know how much they can pay to purchase feeders and then lock their selling price that same day or soon after the cattle arrive. This is risk management and you can be assured of a profit, or you may want to “ride it out” and get whatever the market is paying when they are finished cattle. We do have more extensive information today on the feeder cattle we purchase compared to past years. We know the history on the cattle and it is easier to start cattle with less death loss. Remember, we are feeding cattle in our area to market our crops. It is important to know the value of your feeds and try to protect your investment with a secured strategy.

by Curt Umble, Agri-Basics, Inc., Nutritionist