Compensating For High Feed Prices

Based on current feed prices and December cattle markets, cattle placed in feedlots right now may not lose money, but may not turn a large profit either, says Grant Crawford, University of Minnesota Extension Beef Educator.
calendar icon 18 September 2011
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High corn prices are making it hard to turn a profit feeding cattle. Modified distiller's grains are currently a much better value than corn. Other regionally or seasonally available feedstuffs can also be utilised.

Here are the calculations:

Use current feed prices of $6.25 per bushel for corn and $90 per ton for modified distiller's grains. Then a contemporary feedlot ration containing 60 per cent corn, 25 per cent modified distiller's grains, 10 per cent cornstalks, and five per cent supplement (dry matter, or DM, basis) would cost approximately $235 per ton DM.

Let's say you place 900-pound yearlings in the feedlot in July at $1.30 per pound. Assume a 3.5-pound average daily gain and 23-pound dry matter intake with a $235 per ton ration cost. The feed and total costs of gain would be 77 cents and 96 cents per pound, respectively, and the breakeven fed cattle price would be about $1.18 per pound. That translates to slim profits at best.

However, other feedstuff options can reduce corn in cattle rations, and reduce the impact that high corn prices have on cattle feeding returns. When comparing these feedstuffs to corn, it is important to know the energy content (in megacalories of net energy for gain per pound, or Mcal NEg per pound) of each feedstuff to put them on a price per unit of energy basis.

This means that if modified distiller's grains can be purchased and delivered to the feedlot for less than $119 per ton, they are a better value than corn. Current modified distiller's grains prices range from $85 to $100 per ton.

Wet beet pulp, for another example, is generally available in sugarbeet producing areas from October to April. Based on current prices, a feedlot operator could pay up to $37.50 per ton for wet beet pulp in place of corn. Wet beet pulp can often be acquired for free or less than $10 per ton at sugarbeet processing plants.

The bottom line is that there are many options to lower cattle feed costs. It is very rare to completely replace corn with an alternative feedstuff, but doing some calculations will help establish a baseline for partial replacement of corn to lower ration costs and increase returns to cattle feeding.

September 2011
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