Weekly, Oklahoma State University Extension Beef Cattle Nutrition Specialist Paul Beck offers his expertise on the beef cattle industry. This is part of the weekly series known as the “Cow Calf Corner,” published electronically by Dr. Derrell Peel, Mark Johnson, and Beck. Today, he discusses profitability for stockers in today’s cattle market.
Why Stocker Programs Work
Feedlots prefer calves that are weaned, healthy, and accustomed to feed and water. Derrell Peel stated in the March 3 Cow-Calf Corner Newsletter (https://extension.okstate.edu/programs/beef-extension/cow-calf-corner-the-newsletter-archives/2025/march-3-2025.html) “In the current market with relatively low feedlot costs of gain and tight feeder cattle supply, feedlots are willing to place cattle earlier and at lighter weights putting a squeeze on stocker producers.”
What is the potential for adding value and improving the odds of positive stocker cattle margins?
Stocker Cattle Opportunities
I used the Beef Basis Price Forecasting Tool (https://beefbasis.com/basis-forecasting/) to run a few scenarios to consider. For a baseline, I used a 450 #1 medium to large frame steer calf purchased in a large group in central Oklahoma with a price forecast of $400 per hundred pounds. This steer with low risk for disease or death loss would cost $1,800 per head in today’s market.
450 pound steer x $4/pound = $1,800 per head initial cost
We will sell this calf in western auction markets close to the feedlots at 850 pounds. To get this steer to 850 pounds we would expect2 pounds per day over 200 days and sell in December at a projected market of $283/ hundredweight for $2,405 per head.
850 pound steer x $2.83/pound = $2,405 per head selling value
The total gross margin on this set of steers is projected to be $605 per head (2,405 selling value – 1800 initial cost). The value of gain, or gross margin per pound of gain, for this steer would be $1.51 per pound ($605 gross margin/400 pounds of gain).
2,405 – 1,800 = $605 gross margin = $1.51/pound value of gain
850 – 450 400 lbs gain
An Alternative is to put together a group of 650-pound medium to larger frame #1 and 2 bull calves in local auction markets in the east in single head lots and smaller groups. Small groups, intact bulls, and #2 muscling all receive discounts at the sale barn, providing an opportunity to upgrade cattle for increased returns. Using the Beef Basis Price Forecasting Tool, these bulls are valued at $271/hundredweight costing $1,762 per head. When sold as steers in a large group in the west closer to the feedlots these steers in September at 850 pounds the calves are valued at $282/hundredweight. The value of gain is projected to be:
2,400 – 1,762 = $638 gross margin = $3.19/pound value of gain
850 – 650 200 lbs gain
Purchasing a mismanaged bull calf and adding value by castration, grouping and effective marketing has the potential to increase the value of gain by over 200%.
Health is Key
Animal health is one of the most significant drivers of cost in stocker operations. A 1% death loss on $1,800 calves translates to an additional $18 per head in prorated cost that must be covered by the remaining calves. Respiratory disease is especially costly in newly received high-risk comingled calves not only incurring the cost of treating the disease and death loss but also having long-term impacts on performance. Bull are over twice as likely to be treated for bovine respiratory disease, have 2.4-times greater death loss than steers, and cost on an average $65/head more to receive. These increased costs and risks appear to be bearable with the added value in the current market.
Bottom Line
The old adage is still true “Buy low, sell high, keep them alive, and put gain on them cheap”. When managed properly, stocker programs can add significant value to your cattle operation. Prioritize animal health, forage quality, nutrition, and cost control. With the right approach, stocker producers can upgrade discounted calves and turn a profit.
