It is important for producers and growers to calculate what they can afford to pay for feeder cattle given the expected higher corn prices, forecasted sale prices next winter and spring, beef yardage values (production costs) and desired level of profitability.
A 550 pound steer purchased at $129.00/cwt. would cover production costs only (breakeven; no profit) when corn is priced at $8.00/bushel.
The same steer purchased at $145.00/cwt. with $7.00/bushel corn price would just cover production costs.
Given the volatility in projected corn yield and price, it will be challenging to decide what to pay for various classes of livestock.
To assist with this decision, an factsheet entitled “What can I afford to pay for feeder cattle during 2012-2013?” presents multiple tables on breakeven purchase prices and expected returns to management for cattle sold and fed corn at different prices.
Breakeven purchase price and return to management are presented for beef steers (with purchase weights of 550, 800, and 950 pounds), beef heifers (with purchase weights of 475, 750, and 900 pounds) and Holstein steers (with purchase weights of 300, 600 and 900 pounds).