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Market May Favor Early Intensively Grazed Stockers

Wes Ishmael

April 23, 2012

2 Min Read
Market May Favor Early Intensively Grazed Stockers

 “Record-high stocker prices this spring have producers and their lenders nervous about the financial exposure of summer stockers,” says Derrell Peel, Oklahoma State University Extension livestock marketing specialist. “Feeder prices have dropped the last month but the change has actually decreased the stocker margin, i.e., the value of gain for summer stockers. Moreover, the changing price relationships have changed the implications for stocker production and marketing.”

In his recent weekly market comments, Peel explains the price of 475-lb. steers in mid-March was about $203/cwt. (Oklahoma) for an initial stocker value of $959/head (actual weights and weighted average prices). The price of 725-lb. steers at the same point in time was $160/cwt., or a value of $1,165/head.

“This implied a value of gain of 81¢/lb. for 250 lbs. of gain,” Peel explains. “Using last week’s (week of April 9) Oklahoma auction averages, the 475-lb. steer price was $190/cwt., or $905/head. The 725-lb. steer price was $151/cwt. with a $1,095/head value. This implies a value of gain of 76¢/lb.” 

However, Peel points out the current sharp price break of about $20/cwt. at 600-700 lbs. makes for a value of gain of about 40¢/lb.  

“This means that stocker gains are being valued at 80¢-$1.00/lb. up to about 600 lbs. (for steers), followed by very low value gains for the next 100 lbs. or so, and then by higher value gains again between 725 and 875 lbs.,” Peel says. “Using last week’s (week of April 9) actual prices and weights, gains up to 619 lbs. were worth $1.07/lb. but the next 100 lbs., up to 726 lbs., were worth only 35¢/lb. Gains above this level, up to 875 lbs., were worth 70¢-75¢/lb.”

Consequently, Peel says, “The current price breaks may favor early intensive stockers, which utilize more lightweight animals; and less total gain per head compared to season-long stockers, which put on slow gains late in the summer and which would produce little value in the current market structure.”

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