Cattle producers are gaining access to some great tools and mobile apps that help take the guesswork out of marketing livestock, and the backgrounder and stocker margin calculator found at BeefBasis.com is no exception.
Glynn Tonsor, associate professor of agricultural economics at K-State, helped develop the resource and says cow-calf operators considering backgrounding and commercial stockers looking to buy calves will especially benefit from the online tool.
“Let’s say you’re entertaining purchasing a 550 lb calf in the middle of September, and you’re thinking about putting 200 lbs. on him between then and the middle of February - that’s about a 1.3 lb average daily gain,” he says. “The value of gain in that story right now is projected to be $61/cwt, so if your cost of gain is $60 or higher, that’s probably not something that looks very favorable.”
Tonsor says the key reason for the low value of gain projections is the notable pull down between the September feeder cattle contract and the deferred.
“If instead of making a September purchase, you wait until the middle of November and you buy a 600 lb calf and you only put 100 lb on, that value of gain would be $104,” he says. “Simply given, it sounds like two extremes, but the market is actually encouraging people to plan to purchase later, maybe heavier and maybe put lighter weights on.”
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