For immediate release (October, 2005)
Feeding Calves for More
Profit
Steve Metzger
, Farm Business Management Coordinator,
Carrington
Research-Extension
Center
CARRINGTON
,
N.D.
- With prices for fall weaned calves at historically high levels many producers
are attempting to determine if selling them or feeding them to heavier weights
is the correct decision for their operation.
How might beef producers work through the maze of information concerning
sale prices, feed costs, rates of gain and other livestock information to
determine what is in the best financial interest of their own operation?
Producers who are considering selling or feeding calves need to consider a
variety of facts and figures that can greatly affect the bottom line.
Does the producer have the facilities to feed calves at home or should
arrangements be made with a commercial yard?
While home lots may be utilized for about 10 cents per day commercial
lots will typically charge from 25 to 30 cents per head per day.
Other items such as veterinary care are usually provided by the
commercial feedlots and added to the daily lot charges.
Key items for producers to understand are the importance of the cost of
the ration on a per pound of gain basis and the importance of the daily rate of
gain for the calves being fed. Beef
calves can be fed today for approximately 25 cents per pound of gain with each
pound of gain selling for prices well above the one dollar per pound mark.
The correct ration formulation is also a key component to the daily rate
of gain. An additional gain of just
one-half pound per day can add as much as $40 of additional net income onto the
sale value of a 550 pound calf when it is fed to a weight of approximately 850
pounds.
The price paid for calves will obviously have a great
impact upon the final net return. For
example, calves weighing 550 pounds and valued at $1.25 per pound will have a
breakeven price that is approximately $7 less per hundred-weight than the same
weight calf purchased at a cost of $1.35 per pound.
This translates into an additional $58 of net income for a calf that
gains two and one-half pounds per day and weighs approximately 850 pounds at the
time of sale.
Potential calf feeders also need to understand the price protection that
can be afforded them through the use of futures or options on futures.
Backgrounded calves can today be price protected at $1.10 per pound
through most of January of 2006 through the purchase of a January put option for
less than 2 cents per pound. This
provides the livestock feeder with the opportunity to lock up a futures price
while greatly reducing price risk.
Beef producers may go online at www.ndfarmmanagement.com
and under the reports section to view beef backgrounding and finishing budgets
for various weights of calves with various prices, rates of gain and assorted
feed costs. These breakeven prices
and budgets were developed with the listed “Feeder Calf Budgeting
Spreadsheet”. Producers may with
the use of the Excel™ spreadsheet program run these from the web site or
download them and use them in that manner. The
Excel program is not needed to simply view the feeding and budgetary
information.
Producers will
find additional information on this and other crop and livestock enterprises as
well as a variety of other farm data at the
afore-mentioned website. Additional
information on the North Dakota Farm Business Management Program may be secured
by contacting Steve Zimmerman, State Supervisor for Agricultural Education at
the State Capitol, at 701-328-3162. The
Farm Business Management program is sponsored by the North Dakota State
Department of Career and Technical Education.
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