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Large Animal Science Library

LA153 Raising and Selling Market Cattle
Matches these 2015 National AFNR Career Cluster Content
Standards:
ABS.03.01, ABS.04.01, ABS.4.02, ABS.05.01, AS.01.02,
AS.03.01, AS.03.02, AS.03.03, AS.05.01.
Common Core State Standards:
Reading #1, 4 and 7; Writing #2, 7 and 8; Speaking & Listening
#2; and Language #4 and 6. Click for CCSS details.

MAIN IDEA: What preparation should be done prior to

purchasing feeder cattle for production and sale? What costs
are associated with raising market cattle? What options are
available for selling slaughter cattle?

A host of variables determines the profitability of a cattle

feeding enterprise. Feeder cattle operations start with young,
weaned calves from about 400 to 600 pounds which are then
grown out to finished weight (also called slaughter weight or
market weight) of about 1,100 to 1,300 pounds. Size and cost
of feeder cattle, feed availability and cost, and potential marketing channels all affect profit or loss. Ultimately, producers
hope to realize a profit from the sale of animals. An agribusiness must remain profitable over time to stay in business.

DEVELOP A BUSINESS PLAN

Before entering a cattle feeding enterprise, a sound business plan should be developed. A business plan is a formal
statement describing the goals and objectives of a business, including financial information and budget estimates. The
plan should evaluate the profit potential before investment of resources. You can learn more about making a business
plan in AgEdNet.com lesson AB243 Making Your Small Business Start-Up Plan and in other lessons in the
AgEdNet.com Agribusiness Library.

The first step in developing a business plan for raising and selling market cattle is investigating the cost of calves or
feeder cattle and the projected sale price at the end of the project. Current feeder cattle prices published in local farm
papers or on the CME Group (Feeder Cattle Index) webpage provide an estimation of the cost to purchase feeder
animals. Live cattle futures prices found at the CME Group can provide an indication of the final value of finished cattle.
Price information is also available from the U.S. Department of Agriculture's National Daily Feeder and Stocker Cattle
PM Summary.

After securing price estimates of feeder cattle and slaughter cattle, calculate the amount and cost of feed each animal
will eat. Cattle generally gain one pound of live weight for every six pounds of grain eaten. This number is often reported
as the "grain-to-gain ratio." Another ratio, called the "feed-to-gain ratio" or "feed efficiency ratio" includes the forage

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portion of the ration. The feed-to-gain ratio may average around 7:1 (seven pounds of combined grain and forage
consumed for each pound of weight gain). All ratios vary depending on the feedstuffs used and cattle genetics.

If we assume a 7:1 feed-to-gain ratio, about 4,550 pounds of feed will be needed to raise a single steer (castrated male
animal) or heifer (female cow which has never had a calf) from 600 to 1,250 pounds (650 pounds of gain X 7 pounds of
feed per pound of gain). About 80% of this feed will be grain (4,550 X .80 = 3640 pounds of grain), for a grain-to-gain
ratio of 5.6:1 (3,640 pounds of grain divided by 650 pounds of gain = 5.6:1). The remainder of the ration will be
comprised of forage (4,550-3,640 = 910 pounds of forage). Feed prices can be estimated by calling a local mill.

Additional expenses may include transportation, bedding, veterinary services or supplies, marketing expenses and
interest owed on any borrowed money. These costs will vary depending on location and facilities. Consideration must be
made for additional costs for specific situations.

Finally, subtract all predicted expenses from projected receipts to estimate your potential profit or loss.

FACILITIES

Cattle can be raised under a variety of conditions. Cattle grow most efficiently when kept at temperatures around 55 F.
Moreover, cattle can tolerate colder conditions better than humans would. Cattle should have a clean, dry, draft-free
place to lie down, as well as access to shade during the hot summer months.

Some producers raise slaughter cattle in confined conditions on a "manure pack" (packed straw and manure). Confined
cattle should have access to at least 100 square feet per head. Other producers provide additional space in outside lots
with little more than a windbreak for protection from the elements.

Cattle can be fed a limited amount of feed each day in a homemade trough mounted about 36 inches off the ground.
Cattle fed only once a day will require more feeding space. Additionally, cattle should have access to clean, fresh water
at all times.

Appropriate loading facilities assist in transporting cattle. Solid-sided gates should be used in corrals and loading chutes
so cattle cannot see outside of their immediate surroundings. Cattle should be loaded in groups whenever possible.
Patient handlers are perhaps the most essential key to a successful loading experience.

FEEDING

Some producers mix the grain and forage portions of the diet before feeding. These complete diets are sometimes
called total mixed rations or TMRs. Other producers just feed the grain portion of the diet to cattle and allow free-choice
access to forages. Alternately, some producers give cattle access to self-feeders which allow cattle to eat free choice or
whenever they are hungry.

Regardless of the feeding system, cattle should be introduced to grain slowly and incrementally to avoid digestive
interruptions. Many producers begin by offering cattle three pounds of grain per head per day for the first week, then
increasing the amount of grain offered by three pounds per week until the amount of grain reaches about 80% of the
animal's intake. If cattle refuse to eat all the grain offered, the amount of grain is reduced until the cattle consume all
offered feed.

Commercial cattle feeds contain nutrients necessary for adequate growth and muscle development. Protein
requirements lessen as cattle grow. For example, 400- to 600-pound feeder cattle may require supplemental protein
depending on the forages in the diet, but cattle approaching market weight usually require only high-energy grains with
no supplemental protein. Overfeeding protein is expensive.

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Most cattle feeds rely on corn, wheat, barley or milo as an energy source and soybean meal as a protein source. High-
energy corn silage is often used as a source of forage by commercial feedlots. Vitamins and minerals are included in
commercially prepared feeds, but must be added to home-mixed diets. Natural protein sources such as soybean meal
are sometimes used in growing cattle diets, but bacteria in the rumen are capable of incorporating nonprotein nitrogen
(NPN) sources such as urea into bacterial proteins for digestion. For best results, most producers rely on professional
help from animal nutritionists to correctly formulate rations.

Dry matter requirements:

Average feed intake increases as cattle grow. Generally, growing cattle are expected to consume 2.2% of their body
weight in dry matter each day. Dry matter (DM) is the weight of a feed ingredient after water has been removed. A 600-
pound calf would need 13.2 pounds of DM per day, while a 1,200-pound steer would need 26.4 pounds of DM per day.
The calculations are shown in examples 1 and 2 below.

Example 1: A 600-pound calf

Equation: Cattle weight x 2.2% = Pounds of dry matter per day
Calculation: 600 lbs. x 0.022 = 13.2 lbs. of DM per day

Example 2: A 1,200-pound steer

Equation: Cattle weight x 2.2% = Pounds of dry matter per day
Calculation: 1,200 lbs. x 0.022 = 26.4 lbs. of DM per day

As fed requirements:

Most grains and dry forages contain about 90% dry matter (except silage), so to calculate feed intake on an as fed
basis, divide dry matter intake by .90. The 600- and 1,200-pound steers would be expected to consume about 14.7 and
29.3 pounds of feed as fed, respectively. The calculations are shown in examples 3 and 4 below.

Example 3: A 600-pound calf

Equation: Pounds of Dry Matter divided by 90% = Pounds of Feed as Fed
Calculation: 13.2 lbs DM / 0.9 = 14.7 lbs. of feed as fed

Example 4: A 1,200-pound steer

Equation: Pounds of Dry Matter divided by 90% = Pounds of Feed as Fed
Calculation: 26.4 lbs. DM / 0.9 = 29.3 lbs. of feed as fed

MARKETING

Conventional methods of marketing slaughter cattle include sales through local livestock auctions or directly to a
packing plant. Sale price depends on slaughter weight as well as the degree of finish (fatness). Producers selling cattle
directly to a packer may choose to be paid based on carcass quality via a grid pricing system. The grid pricing system is
based on quality grade (based on marbling) and yield grade (lean-to-fat ratio). You can learn more about markets in
these AgEdNet.com lessons:

MK421 Selecting Markets for Cattle

MK429 Making Cattle Marketing Decisions
MK463 Plan Before Buying or Selling Cattle

Other marketing methods are also available. Producers who raise only a few cattle may consider private sales of custom
slaughtered beef to friends, neighbors or relatives. Privately sold slaughter cattle, sold by the half or quarter, often
realize more income than those sold through conventional channels. Some producers look for specialized market

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opportunities to produce and market their animals as "natural" or "grass-fed"" or through the USDA-certified National
Organic Program. You can learn more about organic beef production in AgEdNet.com lesson OR124 Producing and
Marketing Organic Beef

Futures contracts offer a way for producers to "lock in" a price months in advance for their cattle to help ensure a profit.
See AgEdNet.com lessons MK322 Locking in Cattle Feeding Profit Margins and MK305 How Livestock Farmers Use
Futures for more about this topic.

If cattle are marketed through a youth livestock sale in conjunction with a fair or roundup, buyers from local businesses
should be solicited well ahead of time. Identify key individuals within each targeted business, and make personal visits
asking for support at the sale. Buyers should be properly and promptly thanked after the sale.

PROJECT ANALYSIS

After selling market cattle, summarize and compare all expenses and receipts for the enterprise with budgeted
expenses and receipts (income). Evaluate the accuracy of your budgeted predictions and analyze any discrepancies.

SUMMARY: Raising cattle for slaughter requires a good business plan and adequate housing, feeding and watering
facilities. Finishing cattle should be fed a high grain diet in order to finish properly and receive the highest possible price
when marketed. Several options exist for marketing cattle in order to realize the highest possible price. The business
plan and budget should be analyzed at the conclusion of the enterprise.

INTERNET RESOURCES:

** CME Group - Agricultural Products

https://www.cmegroup.com/trading/agricultural/

** CME Group - Cash-Settled Commodity Index Prices

https://www.cmegroup.com/market-data/reports/cash-settled-commodity-index-prices.html

** Dr. Temple Grandin - Livestock Handling Systems

http://www.grandin.com/design/design.html

** eXtension - Dry Matter Determination

Explains how the percentage of dry matter in feeds is determined
https://dairy-cattle.extension.org/2019/08/dry-matter-determination/

** North Dakota State University Extension - Cattle Producer's Guide to Feedlot Terminology
https://www.ag.ndsu.edu/publications/livestock/cattle-producers-guide-to-feedlot-terminology

** North Dakota State University Extension - 4-H Youth Value-Based Beef Cattle Production
https://www.ag.ndsu.edu/impactstatements/impact-statements/2008-statements/08mckenzie-naze-4h.pdf/view

** Oklahoma Cooperative Extension Service - Program to Estimate Feedlot Cost of Gain

http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-1973/CR-304web.pdf

** Texas A&M University - Value-Based Marketing of Beef

https://meat.tamu.edu/research/value-based-marketing/

** U.S. Department of Agriculture - National Daily Feeder and Stocker Cattle PM Summary
http://www.ams.usda.gov/mnreports/lspdfss.pdf

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Lesson plan prepared by Dr. Robert E. Mikesell Jr., Department of Dairy and Animal Sciences at The Pennsylvania
State University and Dr. MeeCee Baker, Pennsylvania Department of Agriculture Ag Education Coordinator.
Lesson update reviewed by Darla J. Romberger, agriculture instructor/FFA advisor.
Copyright © 2000-2016 Stewart-Peterson Inc. All Rights Reserved. RMMB/tl,nc 001090
STEWART-PETERSON is a registered trademark.
Photo credit: NRCS photo shows feeder cattle in a hoop structure. Corn stalks have been used for bedding.

END STUDENT SECTION

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