Paul Dykstra, beef cattle specialist with Certified Angus Beef LLC, developed a calf price breakeven calculator to help producers figure out the bottom line.
"This tool helps you understand the market and make the tough calls on whether to accept a bid," he says. "It can also help you make an informed decision on whether to retain ownership and finish your cattle."
Available at www.cabpartners.com/facts/breakeven.php, the breakeven calculator is a spreadsheet that can establish a reference point for producers. But an accurate calculation can only be determined if users enter precise data.
"Numbers you plug in must be solid, either taken from herd history, futures markets or a feedlot manager who has records of similar calves with similar history," Dykstra says. "The more you can document similarities, the more accurate results."
The calculator begins with an ending price for fed cattle, projected from the Chicago Mercantile Exchange Live Cattle Futures. It works backwards to predict some aspects of how your calves will perform in the feedlot, accounting for input costs and the final premiums and discounts.
This calculator is unique because it factors in the premiums and discounts associated with percent Prime, the Certified Angus Beef brand, Choice and lower quality grades, Yield Grades and carcass weights.
When all the numbers are entered, the calculator shows cost of gain and breakeven. "If you're the seller, you might see that as a floor price," Dykstra notes. "On the other hand, a buyer might see breakeven as the ceiling."