Successful price risk management is only a shot in the dark without
knowing your break-even price for the calves’ ending weight.
small improvement in average daily gain has on the break even, he says. An improvement of .1 of a pound per day will add up to a signifi cant amount of weight over a 6-month period of ownership, he says. “Successful stocker operators optimize their calves’
performance to get the most return from every penny they invest in obtaining the gain,” Childs says.
Increasing revenues Increasing revenues also requires attention to detail. “Producers are paid by pounds across the scale,
so it makes sense to minimize shrink,” Childs says. Low-stress handling and transportation are as impor- tant when cattle depart the ranch as when they arrive. Cleanliness, room, moderate temperatures and good load-out facilities are still important. Another detail that deserves attention is the mar-
keting venue. Operators should consider whether it is in their best interest to sell in the country or at an auction market. “As a general rule of thumb, it is benefi cial to sell
in the country in a declining market, provided the operator has suffi cient experience and information,” Childs says. “It is more benefi cial to sell in an auction market during a rising cattle market.” With that said, each venue and each situation have
nuances. Producers who choose to sell in the country must
be very well-informed or run the risk of mispricing their cattle or missing the base weight. “In the country, operators must have a very accurate
idea of what the cattle weigh and what the cattle are worth when the base weight is negotiated,” he says. “If they don’t, they will be penalized by the slide.” A slide is a price adjustment defi ned for a cattle pur-
chase contract. When a contract is drawn, a slide adjust- ment is calculated based on the estimated average pay weight of the cattle on that contract. This adjustment considers that, based on how much weight the cattle gain, the estimated and actual pay weights may differ. A price slide allows the contract price to be adjusted up based on the difference between the estimated and the actual pay weights of feeder cattle.
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TULIA FEEDLOT INC.
CUSTOM CATTLE FEEDING 7405 FM 928 Tulia, Texas 79088
Phone: 806-668-4731
If you want to discuss
the particulars of feeding your cattle, call
Tulia Feedlot, Inc.
Manager: John Van Pelt
Asst. Manager: Grady Van Pelt
Artwork by Dino Cornay May 2015 The Cattleman 53
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