RANCHING Business
on. Producers can also consider enrolling the cattle at a special sale or locate a buyer who will recognize the value of the extra management, he says. “The best advice I could give anyone is to dig into
the markets and get as much information as possible,” Nichols says. “It changes every single day and you can- not rely on what you think you know.” Many operators use the futures market, which is a
subject for a different article. It is useful, but to succeed requires a high level of understanding and informa- tion. Another tool when trading options is purchasing “puts,” which is akin to insurance to protect investment in the cattle if the market breaks. “To succeed in the marketplace, an operator has to
understand what the cattle are worth on the front end and on the back end,” Nichols says. “They also have to understand their own risk tolerance and prepare to mitigate that risk.”
Stocker cattle by the numbers With record high cattle prices, it takes a signifi cant
amount of capital to put a group of cattle together, meaning the risk is higher than ever before because the margins are tight.
“The difference between the purchase price and
selling price is the margin of profi t,” Nichols says. “The trick is not paying too much for the calf on the front end, putting weight on the calf in a cost-effective man- ner in the middle, and understanding — and protect- ing — the value of the calf in the future.” To be effective, a stocker operator has to have a
rock-solid grasp of all the pertinent numbers including break-even, cost of gain and value of gain.
Break-even A break-even is the sale price ($ per hundred pounds/
cwt) at which the owner of the cattle does not make or lose money. In the stocker business, there are actually 2 break-
even points an operator should consider, Nichols says. The fi rst comes before a calf is purchased. “One of the biggest considerations is buying cattle
at the right price so producers can hit their projected end point,” he says. “It is a matter of producers asking, ‘If I want to make X-dollars per head, what can I pay for an animal and still make money?’ “They have to calculate backward from their end- point to fi nd the answer. The key is being honest about
CHANGE IS IN THE AIR.
The change of weather can be rough on your livestock. Get ready with Ragland tubs and blocks, made with quality ingredients using processes that help your herd be ready for the change.
Special Lix and Cash Cow Poured Supplements
Tubs in125 or 200 pound sizes. They’re a convenient, economical way to get your herd the nutrients they need. Durable and palatable, Ragland tubs help your herd make the most of available forage year round.
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Tough enough to be fed in bunks or on the ground, versatile enough to feed to all types of ruminants. Money-Maker gives your herd protein, vitamins and minerals to keep them growing and healthy through tough weather.
Deer and Game Blocks
Hunters and conservationists can help wildlife weather winter better with our Deer and Game Blocks. Ragland Mills’ Deer and Game Blocks have the protein and minerals wildlife need to thrive even in harsh seasons.
Your herd will be happier and healthier with Ragland Mills. Trust us, it works.
Call 1-888-549-8014 to find a dealer near you, and visit
raglandmills.com for a complete list of our proven products.
70 The Cattleman September 2015
thecattlemanmagazine.com
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