Riskiness in Summer Stockering

Curt Lacy
Extension Economist-Livestock

The spring flush of green grass and the encouragement of recent rains have many producers considering stockering calves through the summer. However, before they do so stockmen should carefully consider the riskiness and likelihood of payoff for such an endeavor.

Feeder cattle prices in Georgia typically decline from March through the remainder of the year. Thus producers who purchase calves in March-April and graze them through the summer are usually buying when prices are the highest and selling when prices are lower.

During the past ten years 500 pound steers purchased in March have sold for 83 percent of their purchase price as 700 pounders in August. For example, a 500 pound steer purchased in March for $85/cwt. would be expected to sell for $70/cwt. in August. Assuming a one percent death loss, the breakeven cost of gain in this scenario is 31 cents per pound of gain.

To evaluate the potential profitability of summer stockering on bermuda grass, University of Georgia stocker budgets were used considering the average scenario shown above, a best case scenario where calves sell for 96 percent of their purchase price, and a worse case scenario of calves selling for 68 percent of the purchase price. Considering price and production risk, the chances of making a profit are about four in one-hundred.

In this example the cost of gain was about 60 cents per pound. Producers who can lower their cost of gain either through higher stocking rates or reduced input costs may be able to turn a profit but they must closely consider all costs including death loss, shrink, and interest.

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