OU 359

May 29, 2001

COWS—AN ALTERNATIVE TO STOCKER CALVES
P.J. Rathwell, Extension Ag. Economist

Cull cows are often overlooked as a stockering alternative and a good source of income to a farming operation.  Generally, cow supplies are readily available in late fall, soon after calves are weaned and sold.  Stocker cows are frequently thin and in less than optimal condition from having raised a calf and typically are sold because of old age, body condition or poor performance.  Stocker operators purchase these culls, feed them to restore body condition and resell them for slaughter.  Frequently, cattlemen are able to purchase these cows at low weights and prices.  Weight gain, a change in grade and a seasonal increase in price over the feeding period are used to cover feed costs and generate positive returns to the cattleman’s time and efforts.

There are three factors you need to consider as you evaluate buying and stockering cull cows:  the seasonality of cow prices, cull cow slaughter grade price differentials and the cost of feed.  Let’s discuss these factors and analyze the decision to purchase. 

Cull cow prices generally follow a consistent seasonal pattern.  Prices are the lowest in the fall and peak in late winter and early spring.  Summer prices are near the average for the year.  Figure 1 shows cull cow prices for the years 1999, 2000 and 2001.  Cull cow prices rise as the supply of cull cows on the market declines.  The lowest prices occur as the supply of cull cows increase—during the fall calf-weaning period.  The highest prices are during the winter months when slaughter cow availability is at its lowest point.

Prices for cull cows are based on their USDA carcass grade or their expected carcass grade.  The most common grades, in order of worst to best, are:  lean (90%), breaker (65-75%), breaker (75-80%) and boner (80-85).  The difference between the prices paid for these classes is based upon the age of the animal, the amount of fat covering and the expected dressing percentage.  (Cow grades basically compare meat to fat.  The boner grade (80 to 85% lean meat) is the ideal grade.  Exceptionally lean cattle are discounted (the bone to meat ratio of the carcass comes into play in very lean cattle).

Slaughter cow price differentials greatly impact the value of the cow.  Carolina’s price differentials between grades can easily exceed $10 per cwt. depending upon the time of the year, supply availability and processor demand (Figure 2).   The price spread between boner and breaker (65-75% lean) appears to average near $7 per cwt. except in the fall and winter months.  The spread declines as supplies increase in the fall (in large supply periods the boner price will fall and approach the breaker price).

The third factor to consider in evaluating a stocker cow program is the cost of the feed.  The stocker operator expects that the value of the animal will increase because of weight gain and the potential improvement in grade.  In addition, price appreciation from the fall through the winter can add to the animal’s value.  However, this doesn’t automatically imply a profit can be made.  The cost of the feeding program must also be considered.  The feeding program is similar to a stocker calf-feeding program.  It could range from a winter-feeding regime based on small grain grazing to one of hay/dormant pasture and supplemental grain.  Generally, cows do not need the quality of feed used in a calf-stockering program.  The objective is to return the cow to its “nor­mal condition” and not grow bone and muscle like in a calf-stockering program.

It is likely in the Carolinas that stockering cull cows can be achieved by focusing a feeding pro­gram on limited quality forages, poultry litter, and/or cottonseed.  The cow does not need to be fed like a steer in a feedlot and the cost of gain is much lower.  Let’s look at an example situation.

After studying the market you buy fifty cows from your local auction facility in October.  The weight is 750 pounds per animal.  They are thin but appear to be healthy.  Most of the cows would grade lean or breaker (65-75).  You average $43 per cwt.  Average total cost of the animal is $322.50.  Boner grade cow prices ranged between $43 to $50 per cwt.

Your goal is to average 1.5 pounds per day gain on these animals over a 180-day stockering period.  You anticipate selling them in March.  You feed these cows through the winter on stockpiled fescue pasture and quality hay, supplementing nutritional needs with cottonseed.  Cost of gain is projected at $30 per cwt.

In March, you take these animals to market and they average 1020 pounds.  This is a net gain of 270 pounds per head—right on your projected target.  Slaughter cow prices have also increased seasonally.  The actual price of slaughter increased about $4 per cwt. from the fall to the spring and the price differential between boner and breaker grades also increased about $4 per cwt.  Not only have you obtained an increase in the weight of the cows, but the animals have moved up in grade.  The average sales value of these stocker cows is now $489.60.  The cost of gain turned out to be $32 per cwt. or $86.40 per head (1.5 lbs./day x 180 days x 0.32 per lb. of gain).  Your return per head is $80.70 ($489.6-$322.5-$86.40).

What would happen to producer returns if the cost of feed had been different than $32 per cwt?  Stockering cows is very much like stockering steer or heifer calves.  The cost of gain is the most critical factor under the cattlemen’s control.  The higher the cost of the feeding program, the lower the net returns to the producer.  Table 1 shows what happens to producer returns with changes in the cost of gain and sales price.

1. Stocker cow purchase value is $322.50 (750 lbs x $.43/lb).
2. 4.5 lbs./day for 180 days = 270 lbs.

Stocker cows are a viable option that Carolina cattlemen should evaluate this year.  Cattle producers, who do not have the land to grow small grain forages in the winter time, the facilities to work or the time to manage stocker calves will find stocker cows to be a good alternative.  Stockering particularly fits the management style of many cow-calf producers, who feel more comfortable raising cows than calves.

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Clemson University Cooperating with U.S. Department of Agriculture, South Carolina Counties, Extension Service, Clemson, South Carolina. Issued in Furtherance of Cooperative Extension Work in Agriculture and Home Economics, Acts of May 8 and June 30, 1914.

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