Evaluating Stockering Alternatives. Fall is the time of year when many beef cattle producers purchase calves or hold their own calves to stocker until spring of next year. This alternative may be appear to be attractive this year since we are in the expansion phase of the cattle cycle. However with high calf prices, the risk of ownership becomes greater since the main cost of stockering is the calf itself.

One of the main considerations in the profitability of a stockering enterprise is the buy-sell margin (BSM), which is the difference in the sales price and the purchase price of the calves. Typically this margin is negative as heavier calves sell for less per pound than lighter calves.

At the current prices, BSMs in Georgia average about -$15 when buying a 450 pound steer in October and selling a 750 pound steer in Mar-April. This means that on average, if you buy a 450 pound steer for $100 per hundredweight ($/cwt.) you could expect to sell a 750 pound steer for about $85/cwt.. However, historically when prices are at these levels margins are extremely volatile, ranging from -$11.28/cwt. to -$22.25/cwt., so managing feed and other costs are critical to capturing profits.

Assuming the typical BSM of -$15/cwt. at current prices, leaves about $187.50 (750# * $85/cwt - 450# * $100/cwt.) to pay for pasture, feed, death loss, and other expenses. This works out to about $0.63 per pound of gain breakeven.

University of Georgia budgets show a feed only cost of gain of about 30 cents per pound and a feeding cost of gain, which encompasses all variable feeding costs, of about 52 cents per pound. Estimated total costs, which includes fixed costs is about 62 cents per pound of gain. So depending on your ability to put pounds on cheaply, it appears that a profit potential exists for stockering calves this fall

As with any business venture you should you should calculate expected returns and expenses for your operation, especially considering what happens if there is a large buy-sell margin. Your local extension office can help you with budgets and other information in evaluating stocker alternatives this fall. (Curt Lacy)

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