Not sure I fully understand cattle prices, a little help

[BTRANCH]

Your right about the truck, wrong about the hat (don't like em), Is there a rule against asking about a lot of different subjects or does it just bother you the way I go about it?[/quote]

Ask away, Bruce. That is what this forum is for. For all the people that jump into the cattle business feet first and then find themselves with sick cows, dead calves and no clue what to do, you have steadily been fighting the learning curve for almost a year now.

At some point though, the rubber is going to have to meet the road. Whatever you decide, start small. There is no shame in having 3-5 head to get your feet wet. Sometimes, you can OVERTHINK things. ;-)

 

[Dave]

One of the other ways to look at this is to call some buyers/feedyards and ask what they would pay for the size cattle you plan to have if they were contracted to them for delivery 90 days out. Beings as you are talking truck load lots there are people who will buy them that way. I have a friend who has a couple hundred of 6 wt steers. He just contracted them for a mid July delivery at $1.02 weighing 850. You can actually contract for a delivery price and size on cattle that you don't even own yet (that is a bit risky).
There are three main points to figure on. The cost to buy. The cost of gain. And the price when you sell. Too many people wait until they are ready to sell and just take what they get rather than forward looking and locking in a price that makes a profit.

 

[tncattle]

- $.65/hd/day (day 1-45) $.45/hd/day (day 45-shipping)
- medicine at cost. I would budget between $20-25.
- feed at cost plus 10%. This includes hay too. Currently, our starter
ration is $175/ton and grower ration is $168/ton. The starter is fed the
first 28 days. I target 3.5% bodyweight during the first 45 days and then
2% beyond that.
- facility charge is $1/hd. My vaccine program includes 3 rounds through
the chute. Morbidity historically runs 15-20%.


This might make it more clear, this is from the operation that pre-conditions the cattle.

 

[Jogeephus]

- $.65/hd/day (day 1-45) $.45/hd/day (day 45-shipping)
- medicine at cost. I would budget between $20-25.
- feed at cost plus 10%. This includes hay too. Currently, our starter
ration is $175/ton and grower ration is $168/ton. The starter is fed the
first 28 days. I target 3.5% bodyweight during the first 45 days and then
2% beyond that.
- facility charge is $1/hd. My vaccine program includes 3 rounds through
the chute. Morbidity historically runs 15-20%.


This might make it more clear, this is from the operation that pre-conditions the cattle.

That's a pretty high death loss for 4 weight calves if you ask me.

 

[tncattle]

- $.65/hd/day (day 1-45) $.45/hd/day (day 45-shipping)
- medicine at cost. I would budget between $20-25.
- feed at cost plus 10%. This includes hay too. Currently, our starter
ration is $175/ton and grower ration is $168/ton. The starter is fed the
first 28 days. I target 3.5% bodyweight during the first 45 days and then
2% beyond that.
- facility charge is $1/hd. My vaccine program includes 3 rounds through
the chute. Morbidity historically runs 15-20%.


This might make it more clear, this is from the operation that pre-conditions the cattle.

That's a pretty high death loss for 4 weight calves if you ask me.

No, the way he used the term Morbidity rate referred to how many will actually get sick not die. The death rate loss % is 1%.

 

[Jogeephus]

Ok. My bad. One other question. I am assuming the list is his words. (Maybe I won't make an A of my self again ) But as it reads to me, the cost of the feed and the hay is on top of the daily cost. Otherwise, why would he mark this up 10% or am I reading this wrong.

 

[Darhawk]

Ok. My bad. One other question. I am assuming the list is his words. (Maybe I won't make an A of my self again ) But as it reads to me, the cost of the feed and the hay is on top of the daily cost. Otherwise, why would he mark this up 10% or am I reading this wrong.

It isn't your bad, it's their's, the definition of "morbidity" is, in the cattle business, "the percentage of dead animals per population resulting from any specific disease or cause". Sickness is treatable, death is finite.

It burns me when folks try to make up new definitions for established words and procedures just to cover their situation or arguement. If morbidity is 15-20%, that means 15 to 20 dead calves................period.

I now return you to our regularly scheduled discussion.

 

[tncattle]

Ok. My bad. One other question. I am assuming the list is his words. (Maybe I won't make an A of my self again ) But as it reads to me, the cost of the feed and the hay is on top of the daily cost. Otherwise, why would he mark this up 10% or am I reading this wrong.

I think your reading the same as me. The way I'm reading it is: whatever it cost him in total feed plus 10%. Yes this is added to the .65 and .45 daily cost of per head per day.

 

[Jogeephus]

Ok. My bad. One other question. I am assuming the list is his words. (Maybe I won't make an A of my self again ) But as it reads to me, the cost of the feed and the hay is on top of the daily cost. Otherwise, why would he mark this up 10% or am I reading this wrong.

I think your reading the same as me. The way I'm reading it is: whatever it cost him in total feed plus 10%. Yes this is added to the .65 and .45 daily cost of per head per day.

This would leave things pretty open ended and definitely stacked in his favor. I'm not knocking him - he might be as fine a fella as I ever would meet - but he does have his bases covered pretty good. If I wanted to find fault in this type arrangement, I think I could find a lot of holes in it which would make me want to get some references - preferably not relatives of his. Buying 80 some odd head of cattle will be expensive. Returns will be meager. Risks high. Potential to make good money low. Potential to lose with our market uncertainties - moderate/high. Your ability to control the ship once its in motion - little to none.

Personally, I'd get some references, keep calculating and asking questions like you are doing, consider how much money you could afford to lose then go with my gut feeling. Good luck with whatever you decide.

 

[Wild Cattle]

Ok. My bad.

It isn't your bad, it's their's, the definition of "morbidity" is, in the cattle business, "the percentage of dead animals per population resulting from any specific disease or cause". Sickness is treatable, death is finite.

It burns me when folks try to make up new definitions for established words and procedures just to cover their situation or arguement. If morbidity is 15-20%, that means 15 to 20 dead calves................period.

.

Another classic example of misinformation on this board MORBIDITY means sick cattle, MORTALITY is death loss.

 

[Wild Cattle]

With the new cost info...with 1%DL and NO freight I show a net loss of $3.74/hd. That is if cattle bought @$1.40 on 400# and sold @$1.30 on 535#...buy and sell price is subject to change in the real world. In this case it would be prudent to contract the cattle or use the option market to protect the selling price......


It does not matter wheather he is going to really do this or not that does not change the facts about the deal and someone might be reading this thread who is going to do it and needs to get some accurate facts.

I make my living in the yearling business, it ain't no hobby.....if I don't figure a deal right I don't eat, and the banker eats me. HAHA

 

[tncattle]

Ok. My bad. One other question. I am assuming the list is his words. (Maybe I won't make an A of my self again ) But as it reads to me, the cost of the feed and the hay is on top of the daily cost. Otherwise, why would he mark this up 10% or am I reading this wrong.

It isn't your bad, it's their's, the definition of "morbidity" is, in the cattle business, "the percentage of dead animals per population resulting from any specific disease or cause". Sickness is treatable, death is finite.

It burns me when folks try to make up new definitions for established words and procedures just to cover their situation or arguement. If morbidity is 15-20%, that means 15 to 20 dead calves................period.

I now return you to our regularly scheduled discussion.

Darhawk,
Just google the term "Morbidity" and you'll see how it can be and is used.

 

[BTRANCH]

In the insurance business, MORBIDITY refers to sickness or disability

MORTALITY refers to death.

Either way, with the morbidity rate that high, I would think you would need to back out that 15-20% as either non-performing or at best under performing and there goes your profits.

The only way I see this as a good deal is if you can lock in your selling price on the backside as suggested. Otherwise, you could take a major hit financially.

 

[TexasBred]

For whatever it's worth:

In medicine, epidemiology and actuarial science, the term morbidity can refer to
the state of being diseased (from Latin morbidus: sick, unhealthy),
the degree or severity of a disease,
the prevalence of a disease: the total number of cases in a particular population at a particular point in time,
the incidence of a disease: the number of new cases in a particular population during a particular time interval.
disability irrespective of cause (e.g., disability caused by accidents).
The term morbidity rate can refer either to the incidence rate or to the prevalence rate of a disease. Compare this with the mortality rate of a condition, which is the number of people dying during a given time interval, divided by the total number of people in the population. Morbidity is often measured by ICU scoring systems.

 

[Howdyjabo]

How can there be that much of a change over it originally costing .55/lb gained? Or was that his estimate of what the gain would end up costing on his contract?
And how did it go from low pasture gains to paying for feed and hay? (on feed 1-1.5lbs/day is not real good gain rates for 90days-no matter what type of calf is being put in)

As far as the Morbidity being high- . The type and means of putting calves together will determine how much morbidity to expect. It Ranges from calves already preconditioned (in one group) running from 0-10% all the way up to big cutting bulls put together as individuals off sales being 20-30%. And thats averages which means some loads are much higher and some are much lower.

Also having a calf get sick is not good.It does have some long term costs and when we are talking about 20$ /hd profits it doesn't take much to fall into the REd.But....... its not the end of the line for 95% of them if they were caught before too much lung damage occurred. If you are having major losses from calves getting sick theres something wrong with management(or you hit the dreaded train wreck).

Right now its hard to pencil a profit in backgrounding calves unless you can do it on cheap grazing and do all the work yourself.
And as much swing as I have seen in your cost and program outlines you don;'t SEEM to understand enough of whats involved to make an informed judgment- and theres not enough time in the day to catch you up here.And your figures and management plans keep changing so no one can give you good advice. Most of the money made in backgrounding is made on buying the right calves at the right price-at the right time.....the actual growing out is just done well to make sure you don't throw away the profit you started with when you bought the calves right.
Right now you SEEM to be a contractors dream come true.

 

[tncattle]

How can there be that much of a change over it originally costing .55/lb gained? Or was that his estimate of what the gain would end up costing on his contract?
And how did it go from low pasture gains to paying for feed and hay? (on feed 1-1.5lbs/day is not real good gain rates for 90days-no matter what type of calf is being put in)

As far as the Morbidity being high- . The type and means of putting calves together will determine how much morbidity to expect. It Ranges from calves already preconditioned (in one group) running from 0-10% all the way up to big cutting bulls put together as individuals off sales being 20-30%. And thats averages which means some loads are much higher and some are much lower.

Also having a calf get sick is not good.It does have some long term costs and when we are talking about 20$ /hd profits it doesn't take much to fall into the REd.But....... its not the end of the line for 95% of them if they were caught before too much lung damage occurred. If you are having major losses from calves getting sick theres something wrong with management(or you hit the dreaded train wreck).

Right now its hard to pencil a profit in backgrounding calves unless you can do it on cheap grazing and do all the work yourself.
And as much swing as I have seen in your cost and program outlines you don;'t SEEM to understand enough of whats involved to make an informed judgment- and theres not enough time in the day to catch you up here.And your figures and management plans keep changing so no one can give you good advice. Most of the money made in backgrounding is made on buying the right calves at the right price-at the right time.....the actual growing out is just done well to make sure you don't throw away the profit you started with when you bought the calves right.
Right now you SEEM to be a contractors dream come true.

I'm giving you the facts as I learn them so obviously there will be mistakes on my part. What you seem to have forgotten is I HAVEN"T bought/paid or signed any contract for anything as of now. BTRANCH made the statement about locking in your selling price to a buyer at the beginning and that's exactly what I'm looking into right now. I'm also about top call a couple of guys that have used the pre-conditioning farm I'm considering to see how they did. I'm all for critical advice but I love how some many on here that have done something one way forever attack anything that is different from what they know. Keep it coming, I can take it.

 

[Howdyjabo]

Hey I am all for different. I do it all the time.
And doing homework to see if different will work is good,
But it SEEMS(to me) you started this conversation WAY too early in the homework process.
You Gave us confusing /useless information to work with -and now you are the aggravated victim.

No more coming from me Good or Bad.

 

[tncattle]

Hey I am all for different. I do it all the time.
And doing homework to see if different will work is good,
But it SEEMS(to me) you started this conversation WAY too early in the homework process.
You Gave us confusing /useless information to work with -and now you are the aggravated victim.

No more coming from me Good or Bad.

Well, I don't feel like a "victim" and my wife says I don't seem aggravated, so I'm not sure where your coming from. But since no more is coming from you I guess we'll never know. Shucks.

 

[Wild Cattle]

I personally do not see much or any value in keeping yearling in a background yard more than 30 days....It just costs to much. Get them mass treated for BRD, 3 rounds of vac, wormed and the sicks doctored and get them outside on cheeper feed(grass, wheat). Cattle that are bought right will make money.

Most of the cattle I handle are mass treated for BRD, vac'ed, and wormed...Cut and dehorned if needed, and put on feed for a week and they are then re-vac'ed and sent to pasture. All doctoring from then on is done on the end of my rope.

Paul T

 

[jbar]

man,to read all this you would think it's brain surgery.