Not sure I fully understand cattle prices, a little help

[tncattle]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head. Also, if you are conditioning them and selling to a feedlot at 750-800- pds. how is that figured also? I know I might not have the correct weights for each scenario so feel free to adjust accordingly. I'm really trying to figure all this out. I've been kind of out of the learning loop for about 2 months.

 

[Aaron]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head.

Estimate your costs for feeding them and an eventual selling price which will pay for the initial cost, plus inputs, plus profit. Then buy the 400 lbers, have two calves die on you, a bunch get sick, cattle prices crash and smile when you break even. :lol: :cowboy:

 

[somn]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head. Also, if you are conditioning them and selling to a feedlot at 750-800- pds. how is that figured also? I know I might not have the correct weights for each scenario so feel free to adjust accordingly. I'm really trying to figure all this out. I've been kind of out of the learning loop for about 2 months.

Market rate is how ever much someone is willing to pay for something they really want. High dollar cattle in one producers eyes could be next to worthless in another producers eyes. You will need to know what you have for sale and how bad someone else wants them. Last Friday I watched some nice 8 wt sters bring $99.00 cwt and I seen some 4 wt steers bring $116.00 cwt.

8 x $99.00 = $792 per head
4 x $116.00 = $464.00 per head.

I haven't been to an auction in many years where they still sell feeder cattle over 200# by the head but they might at some of the smaller sale barns without a scale. I'm not good enough to do it that way. I'm not sure if there are enough of those old school boys alive anymore to even have 1 auction in this country.

 

[tncattle]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head.

Estimate your costs for feeding them and an eventual selling price which will pay for the initial cost, plus inputs, plus profit. Then buy the 400 lbers, have two calves die on you, a bunch get sick, cattle prices crash and smile when you break even. :lol: :cowboy:

Well, thanks for the answer but obviously that didn't answer my questions. I actually have someone that will custom graze them and condition them. This includes everything that is needed from pasture, feed, shots, doctoring when sick etc. It is 90 program and averages .55 cents a head a day. Obviously you want to buy/sell by truckload numbers like 55-60 head. I'm still trying to figure out exactly how to read the prices.

 

[EAT BEEF]

I don't realy understand the question but some guys will run stockers on summer pasture for $15.00 a mounth. Wheat pasture .35-.40 per lbs of gain.

 

[Howdyjabo]

Let me see if I have this right

You have someone that will precondition(90 days) loads for you; pay for and give the vaccinations, pay for and give all the medicine and do ALL the other work.
for .55 /lb gained.

Couple questions to add if that all correct
How is deathloss going to be handled?
How are they going to be weighed on the way out?
And what makes you think the calves will still be there in 90 days? :)
Is there a guarantee of weight gain?

 

[Howdyjabo]

Are the wheat grazers still only charging .35-.40 /lb gain??

 

[tncattle]

Let me see if I have this right

You have someone that will precondition(90 days) loads for you; pay for and give the vaccinations, pay for and give all the medicine and do ALL the other work.
for .55 /lb gained.

Couple questions to add if that all correct
How is deathloss going to be handled?
How are they going to be weighed on the way out?
And what makes you think the calves will still be there in 90 days? :)
Is there a guarantee of weight gain?

OK let me try to be as clear as I can cause I'm probably not being as specific so as to understand. I mistyped the average price per head a day. It comes out to around .75 per head per day for a 90 day pre-condition program. That includes everything and they weigh them free on their scales at beginning and end. They have been doing this for almost 30 years and have a 1% death loss and average gain is 1.5 pds a day. The calves will BE THERE in 90 days as this is their reputable business and legally binding contracts are signed. If I find out more costs I will post about this as well as I'm not trying to hide anything just trying to figure out if this is a possible option for me. They have 1500 acres of prime grazing pasture of which I visited today and it's nice. Please ask questions I may have left out answers to.

 

[dun]

If ti's any help, our backgrounding costs this year averaged 67 cents per pound of gain.

 

[SCRUBS620]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head. Also, if you are conditioning them and selling to a feedlot at 750-800- pds. how is that figured also? I know I might not have the correct weights for each scenario so feel free to adjust accordingly. I'm really trying to figure all this out. I've been kind of out of the learning loop for about 2 months.

What I think you are asking is how do you work backwards to get a buy price you can make a profit on? I might be way off base but here goes (this is the way I do it so if I missed something let me know but be gentle). First figure up your break evens for different weight calves. This is going to involve figuring your expected final weight times the expected price recieved (Selling Price or SP), the costs of raising the animal; including feed, vet, meds, interest, taxes, etc. (Costs) and an anticipated death loss as a Decimal (DL).

Profit = 0

Profit = (SP - BP - Costs)/(1+DL)

0 = (SP - BP - Costs)/(1+DL)

0 + BP = (SP -BP - Costs)/(1+DL) +BP

BP = (SP - Costs)/(1+DL)

BP/Weight = $/lb Breakeven

Example

SP = $800
Costs = $250
Death Loss = 2%

BP = ($800 - $250)/(1+.02)
BP = $550/(1.02)
BP = $539.21

$539.21/450 = $1.198/lb

Just remember this is for a $0 profit. This is the very most you could give without ending up with a loss so the idea is to see how far under this number you can get ;-) .

This is easily set up with a spreadsheet program like Excel. It is more useful to see a range of numbers since somethings are unknown (selling price/lb of $0.85 vs $0.99 would make a big difference).

Try searching for Cattle Break Even Calculations on the web. Several universities have come up with programs. One I found for free that let you plug in all of the numbers was at http://www.iowabeefcenter.org/pdfs/Feed ... ulator.xls
This gives you a matrix of bid prices based on the data entered, a variation on feed cost (but this one is set up for corn) and a variable price per lb sold. Hope this fits with what you were asking.

 

[BC]

I don't realy understand the question but some guys will run stockers on summer pasture for $15.00 a mounth. Wheat pasture .35-.40 per lbs of gain.

Just like everything else, wheat pasture prices went up. Cost of gain on them is now about $0.50 per lb. Heard some in Oklahoma got $0.60 per lb. That is still cheaper than the grow yards this past winter.

 

[EAT BEEF]

I don't realy understand the question but some guys will run stockers on summer pasture for $15.00 a mounth. Wheat pasture .35-.40 per lbs of gain.

Just like everything else, wheat pasture prices went up. Cost of gain on them is now about $0.50 per lb. Heard some in Oklahoma got $0.60 per lb. That is still cheaper than the grow yards this past winter.

Your probably right I didn't take anything to wheat this past year but the two guys I have talked to paid .40 this past winter. I hate to think what it will cost this coming year.

 

[tncattle]

If someone is buying weaned calves at 400 pds. at the current market rate how do you figure what you pay per head. Also, if you are conditioning them and selling to a feedlot at 750-800- pds. how is that figured also? I know I might not have the correct weights for each scenario so feel free to adjust accordingly. I'm really trying to figure all this out. I've been kind of out of the learning loop for about 2 months.

What I think you are asking is how do you work backwards to get a buy price you can make a profit on? I might be way off base but here goes (this is the way I do it so if I missed something let me know but be gentle). First figure up your break evens for different weight calves. This is going to involve figuring your expected final weight times the expected price recieved (Selling Price or SP), the costs of raising the animal; including feed, vet, meds, interest, taxes, etc. (Costs) and an anticipated death loss as a Decimal (DL).

Profit = 0

Profit = (SP - BP - Costs)/(1+DL)

0 = (SP - BP - Costs)/(1+DL)

0 + BP = (SP -BP - Costs)/(1+DL) +BP

BP = (SP - Costs)/(1+DL)

BP/Weight = $/lb Breakeven

Example

SP = $800
Costs = $250
Death Loss = 2%

BP = ($800 - $250)/(1+.02)
BP = $550/(1.02)
BP = $539.21

$539.21/450 = $1.198/lb

Just remember this is for a $0 profit. This is the very most you could give without ending up with a loss so the idea is to see how far under this number you can get ;-) .

This is easily set up with a spreadsheet program like Excel. It is more useful to see a range of numbers since somethings are unknown (selling price/lb of $0.85 vs $0.99 would make a big difference).

Try searching for Cattle Break Even Calculations on the web. Several universities have come up with programs. One I found for free that let you plug in all of the numbers was at http://www.iowabeefcenter.org/pdfs/Feed ... ulator.xls
This gives you a matrix of bid prices based on the data entered, a variation on feed cost (but this one is set up for corn) and a variable price per lb sold. Hope this fits with what you were asking.

First off, thanks for the detailed answer and I did look at most of the info on the website. I understand now how the cattle are sold but there are still many unknowns that I need to learn from someone who knows the business or does this for a living. I do understand you want and need to cover all your bases and expect the unexpected but also need someone to simplify this process. There was almost an endless amount of info on the Iowa website and I was a bit overwhelmed. I need to figure out a way to figure out the total cost of buying the cattle and ALL the expenses that will come with the 90 day custom feeding/boarding/doctoring. Then have a realistic idea of what they can be sold for to see if this is worth trying. I do understand you are playing the market and there is risk involved.

 

[dyates]

I don't think anyone else fully understands cattle prices right now either. Close friend sold several feeder steers last week. The lightest group averaged 550 pounds and brought 1.20, or $660 a head. The heaviest group averaged 850 pounds and averaged .87, or $745 dollars a head. That's only $85 for 300 pounds of gain. If you pay someone 50 cents a pound for gain on your cattle, you lost $65 dollars a head at those prices. :?:

 

[somn]

I don't think anyone else fully understands cattle prices right now either. Close friend sold several feeder steers last week. The lightest group averaged 550 pounds and brought 1.20, or $660 a head. The heaviest group averaged 850 pounds and averaged .87, or $745 dollars a head. That's only $85 for 300 pounds of gain. If you pay someone 50 cents a pound for gain on your cattle, you lost $65 dollars a head at those prices. :?:

You first need to understand puts and calls then you can understand the cash cattle market.

 

[tncattle]

I don't think anyone else fully understands cattle prices right now either. Close friend sold several feeder steers last week. The lightest group averaged 550 pounds and brought 1.20, or $660 a head. The heaviest group averaged 850 pounds and averaged .87, or $745 dollars a head. That's only $85 for 300 pounds of gain. If you pay someone 50 cents a pound for gain on your cattle, you lost $65 dollars a head at those prices. :?:

You first need to understand puts and calls then you can understand the cash cattle market.

Well, here goes. Can you explain the puts and calls to someone that is trying to learn that stuff?

 

[dyates]

I can't explain it. If you are like 95% of the cattle farmers east of the Mississippi who have 40 cows or less and sell calves through your local stockyards, then I don't think it matters much.

 

[tncattle]

I can't explain it. If you are like 95% of the cattle farmers east of the Mississippi who have 40 cows or less and sell calves through your local stockyards, then I don't think it matters much.

Well then I'm the other 5% cause I'm wanting to explore the option of buying/selling truckload sizes on a 90 day pre-conditioning program.

 

[EAT BEEF]

I can't explain it. If you are like 95% of the cattle farmers east of the Mississippi who have 40 cows or less and sell calves through your local stockyards, then I don't think it matters much.

Well then I'm the other 5% cause I'm wanting to explore the option of buying/selling truckload sizes on a 90 day pre-conditioning program.

Are you wanting to have a yard or just invest in cattle and pay them to pre-condition?

 

[tncattle]

I can't explain it. If you are like 95% of the cattle farmers east of the Mississippi who have 40 cows or less and sell calves through your local stockyards, then I don't think it matters much.

Well then I'm the other 5% cause I'm wanting to explore the option of buying/selling truckload sizes on a 90 day pre-conditioning program.

Are you wanting to have a yard or just invest in cattle and pay them to pre-condition?

Definitely no yard. Invest and pay them to pre-condition is what I'm looking into.