Demand for stocker and feeder cattle remains strong as most of the lightweight calves are headed for stockpiled grasses or winter annual pastures.

Growing conditions have been ideal for both stockpiling cool season grasses and for winter annual production, since most places have received adequate precipitation and temperatures have been warm enough to promote forage growth.

Many stocker producers who purchased calves in late spring and early summer were able to profit $200 to $300 dollars per head on feeder cattle marketed the past few months.

The profit margin for fall purchased calves may be a little thinner, but it still appears positive.

Using the Tennessee weekly average price for a 523 pound ($163.22 cwt.), 626 pound (152.58 cwt.) and 669 pound steer (146.73 cwt.) then those steers could be purchased for $853, $955, and $981 per head respective- ly.

Assuming they are grown for 120 days at an average daily gain of 1.8 pounds then they would weigh 739 pounds, 842 pounds, and 885 pounds respectively when marketed on March 15.

If we assume the cost of gain is $1 per pound of gain then it would cost $216 per head. The total cost would then be $1,070 for the 523 pound steer, $1,171 for the 626 pound steer, and $1,198 for the 669 pound steer.

This is a large investment in stocker calves, and it does not come without risk. The risk is if an animal dies or the market tanks then a large sum of money could be lost.

 

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However, with greater risk comes the opportunity for a larger reward.

If we use the March futures price for feeder cattle of $164.90 cwt. and the average annual basis of feeder cattle marketed in load lots in Tennessee from 2009 to 2011 then the sales prices would be $161 (739 pounds), $156 (842 pounds), and $154 cwt. (885 pounds) and total revenue would be $1,187, $1,314 and $1,358 respectively.

This would then result in an expected return of $118 for the 523 pound steer, $143 for the 626 pound steer, and $161 for the 669 pound steer purchased in November and marketed in March.

Technically speaking:

Based on Thursday’s (Nov. 14) closing prices, December closed at $132.98. Support is at $132.68 then $132.03. Resistance is at $133.33, then $133.98.

The RSI is 56.79. February closed at $134.52. Support is at $134.32, then $133.82. Resistance is at $134.82, then $135.32. The RSI is 57.00.

April closed at $134.95. Support is at $134.70, then $134.20. Resistance is at $135.10, then $135.38. The RSI is 55.76.

January feeders closed at $165.20. Support is at $165.09, then $164.87. Resistance is at $165.32, then $165.54. The RSI is 51.73. March feeders closed at $164.90. Support is at $164.80, then $164.20. Resistance is at $165.00 then $165.38. The RSI is 52.38.

May feeders closed at $165.90. Support is at $165.70, then $165.53. Resistance is at $165.95 then $166.60.

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