The Enid News and Eagle, Enid, OK

March 26, 2011

Milking it for all it’s worth

Cattlemen weigh cost of operation versus the return

By Joe Malan, Staff Writer
Enid News and Eagle

— There are several stages in the cattle market, and each stage requires dollars invested to get the bovine to the next stage of the market.

Greg Highfill, Oklahoma Cooperative Extension Service livestock specialist, says it annually costs an average $400 to $500 per cow to bring it to the stocker cattle sector of the market.

“Sometimes, the market price for weaned calves is below break-even and sometimes above,” Highfill said. “Right now it is well above.”

The cattle market has seen record prices in recent months, possibly from high market demand.

As of early last week, a 500-pound weaned steer was bringing $1.60 per pound, or $800, which is easily a record level.

Cattle in this stage are sold once they generally reach between 400 and 600 pounds.

The next stage of the cattle market is the stocker cattle sector. The stocker cattle phase is when the people who buy weaned calves graze them on either winter wheat or summer grass, depending on when they’re purchases.

“If (the buyer) has a winter wheat pasture, they’ll buy those calves in November and raise them in winter wheat and sell them right now,” Highfill said. “If they have summer grasses, they’ll buy them right now, run them on summer grass and sell them next August, September or October.”

The upkeep cost for each head of cattle in each grazing season is about $175 to $300.

Once the feeder cattle reach between 700 and 900 pounds, they are sold into the feedlot sector, where the animals are fed a concentrate grain diet for 120 to 180 days.

The cost of feeding a head of cattle for that period is about $450 to $600. There may be additional costs of $50 to $100 per head.

A major factor that influences profitability in the stocker cattle industry is the buy-sell margin, Highfill said, which is the cost of the calf upfront versus how much you get in the end.

“As the market increases in price, we have to adjust the buy-sell margin,” Highfill said. “As you get caught in a price increase, it is much tougher to make a profit.”

Cattle in the feedlot sector generally are raised until they each weigh 1,200 to 1,450.

Highfill said when you average the three costs — $500 for the cow-calf producer, $250 for the stock producer and $550 for the feed lot, the final expense for all three sectors combined is about $1,300 for a finished beef cow.