Feed costs are a significant part of the total cost of gain cattle. Feedyards usually price ingredients at cost, and add a markup to cover operating costs. Costs are usually quoted per ton of finished ration, with the most variation resulting from variations in moisture and net energy levels.
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Feeding cost of gain
The feeding cost of gain is an important factor in cattle production. This cost is impacted by feed costs, genetics, flesh condition, weather conditions, and health of cattle. Increases in corn and alfalfa prices have caused increases in feed cost. Feed conversion rates have also increased, making the feed cost more expensive than before.
Feed conversion and the average daily gain are the primary factors in calculating the feeding cost of gain in cattle production. Other factors that impact feeding COG include corn and alfalfa prices. Higher corn prices result in higher feeding COG and, therefore, lower net returns.
Average daily gain
Cattle gaining weight is important if you want to increase the price of your beef. Feed costs roughly 60-70 percent of the cost of producing beef, so the faster the cattle gain weight, the more you can expect to profit. There are several factors to consider when calculating the average daily gain for cattle.
Calves were retrospectively followed for at least 180 days after arriving on the farm. During this time, their average age was 24 days. The average calf mortality was 4.5 percent for calves born on fattening farms that purchased milk calves and 2.6 percent for fattening farms that purchased weaned calves. Across the four types of farms, the average ADG for study calves was 1.074 kg/day.
Feed prices
The price of feed is an important factor in the cost of gain cattle. During the first half of the year, feed prices will be the highest. This is primarily due to the fact that feed conversion rates are lower during this time. During the second half of the year, the price will be lower.
Feed prices for gain cattle are affected by the price of corn and alfalfa. A dollar increase in corn or alfalfa prices will result in a decrease of $0.87 per cwt. In contrast, an increase of $5 per ton in alfalfa prices will result in an increase of $0.50 per head.
Financing options
If you are unable to pay the full cost of feed for your cattle operation, there are several financing options. You may be able to obtain a loan that allows you to make monthly payments for the feed you use. However, you must consider the cost of interest. If you are paying the full cost of feed, the rate of interest you will pay could be higher than the rate of return you receive on your initial capital.
If you are unsure of your equity position, you may want to discuss your options with a banker. The first step is to decide how much risk you can tolerate. While there are several ways to mitigate risk, there is no surefire method that guarantees a profit. For example, you may be able to hedge your financial risks by purchasing livestock from commercial feed yards.
Net returns
This article examines the relationship between the feeding cost of gain and net returns for cattle finishing. The cost of gain and feeder to fed cattle price ratios were determined using regression analysis. The results show that an increase of $1 in the cost of gain reduces net returns by $3.70 per head, while a 1% increase in the feeder price reduces net returns by $8.63. Feeder prices are an important factor for profitability, and they can be influenced by a number of factors.
Net returns are the additional pounds an animal gains compared to its original price. This value must exceed the cost of gain in order for the producer to make a profit. Profitable cow-calf producers must calculate the value of the additional pounds from the purchased price to the projected sale price.
