Cattle Feeding Profit and Cost of Gain Variability Determinants

Volatile prices and cattle performance contribute to variability in cattle feeding profit and cost of gain. This study investigated the relative impacts of prices and animal performance on variability in cost of gain and profit for three placement weight categories using closeout data on 6,696 pens of steers placed on feed from January 1980 to May 1991 in two western Kansas feedyards. Fed cattle price and feeder steer price explained 70 to 80% of steer feeding profit risk. Corn price accounted for 6 to 16% of profit variability and animal performance explained 5 to 10%. Corn price explained 58 to 67% of cost of gain variance, feed conversion accounted for 23 to 33%, and average daily gain was responsible for approximately 3% of the variability in cost of gain. Results indicate that cattle feeders should consider these factors when developing budgets, calculating break-evens, or considering placing cattle on feed.