# Feed lot profitability



## chippy778 (Jun 22, 2016)

I’ve been offered a opportunity of using a cattle feed lot for pretty cheap. The owner said it could fit 30 beef calves. I think I would start smaller, maybe 20. My question is what would my net profit approximately be? I know there’s tons of variables. I would be buying my feed and hay. I’m not sure if I would buy bottle calves or maybe 400 lbs? Does anyone have the rough numbers of profit per beef calf?? Thanks in advance


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## M5farm (Jan 14, 2014)

Like you said , to many variables . What kind of calves? Beef? Dairy? How far will you take them 700? 900? Fats? What's your experience?? Will you hire labor? I don't run stockers yet. But on cow calf I'm around 200 profit per calf after they pay all the bills and the cost of their dam to graze all year.


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## chippy778 (Jun 22, 2016)

M5farm said:


> Like you said , to many variables . What kind of calves? Beef? Dairy? How far will you take them 700? 900? Fats? What's your experience?? Will you hire labor? I don't run stockers yet. But on cow calf I'm around 200 profit per calf after they pay all the bills and the cost of their dam to graze all year.


Beef and fatten them out. I would not hire any body. He has a self feeder set up and auto water. My dad raises beef cows on pasture and fattens out the calves, so I’ve been around cows my whole life. Just never paid attention to the profit margin.


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## Ziptie (May 16, 2013)

All I know is I just paid $300 for two 2 1/2 month jersey calves. The year before last they were $150 each. Market ave looks like full grown are going for $31.00-54.00 per hundred weight. The dairy we buy the calves from are fully integrated. They raise all feed for the dairy cows and sell unwanted boys as a finished product. It might work just make sure when you run the numbers look at the worst case not just the best. 
Here where I am in Iowa hay is expensive for the low quality hay I keep getting. I am on my 7th hay guy and we have lived here for 6 years. This last year I have found a hay broker, the hay was still a little moldy but I did get it a bit late in the season. Hopefully he will work out.


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## haypoint (Oct 4, 2006)

The math is simple, but the difficulty is what numbers to use.
Starting weight/ cost, add feed costs, using 3 or 4 pounds of feet per pound of gain, subtract the selling price of your butcher cattle. The end number is your profit.
Buy thin calves. If you could buy a futures contract for your beef or otherwise lock in your end price, you would know how much you can afford to pay for calves. Lock in a price on several tons of corn ahead of time. Get your hay as it is harvested to buy at the lowest price.

You'd have a better profit if you'd do the hard work of selling each steer to four people, steer share. Then the butcher divides each carcass into four. But that takes a lot of salesmanship. 
You are entering a business that is filled with people that know way more than most on which calves to buy and at what price. Perhaps compete with growers that have their own corn and hay. Then depend on the market being strong when the cattle are ready to sell.

Right now, you'll buy calves for $1.10, at about 500 pounds and then sell them when they hit 1200 pounds for $1.20 per pound. The 700 pound gain will take a ton of corn and hay.
$550, plus $150 for feed = $700 your cost (not counting wormers, vaccinations, utilities or deaths). The 1200 pound butcher cattle sell at $1400. each.


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## chippy778 (Jun 22, 2016)

Thanks haypoint. If I could profit 700 per calf, or even above $500, I think it would definitely be worth it. And if I buy at 500lbs, sell at 1200lbs, how long would that take? Roughly 7 or 8 months? I guess my main variable is how much feed and hay to fatten out a calf. Those are the hard numbers to figure.


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## CIW (Oct 2, 2007)

Chippy,
Have you spoke with your father about what your thinking about doing? He likely has specific information that would be of help.
If you can find a group of calves that are slender with big bodies you might come out on that small number of animals. Flesh is less expensive to put on calves than body structure.Their bodies only grow so fast. But flesh can be put on them at any stage of their life.
Right now there are calves coming off the winter wheat, that will be slender and weigh about 750 - 850 lb. Those calves are ready to finish.
The less time you keep a calf the less chance you have of loosing money if you are having to buy feed.


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## Ziptie (May 16, 2013)

I guess it depend where your at. If you look at one Iowa auction. Black beef steers calves ran around $225-$125.00 per hundred last auction and the practical top for feed out steers was $127.25 per hundred last auction.


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## chippy778 (Jun 22, 2016)

I mentioned it to my dad, didn’t get in to deep conversation. I wanted to figure out some more stats first. And his operation is different then what I’m looking at. He has 10 stock cows and a bull, then fattens the calves out and sells mostly to friends and family in 1/4s or 1/2s. He also bales his own hay and grinds his own feed. I would also grind my own feed but would have to buy corn from him and buy my hay and calves. So he doesn’t have much out of pocket expense, where I will have a lot


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## hiddensprings (Aug 6, 2009)

You might also consider just doing custom feeding. I have a friend that others take their calves to and he grows them out. Basically he weighs them when they come in and weighs them when they leave. He is paid on their gain. He never buys any calves.


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## haypoint (Oct 4, 2006)

chippy778 said:


> Thanks haypoint. If I could profit 700 per calf, or even above $500, I think it would definitely be worth it. And if I buy at 500lbs, sell at 1200lbs, how long would that take? Roughly 7 or 8 months? I guess my main variable is how much feed and hay to fatten out a calf. Those are the hard numbers to figure.


In real life, there are endless added expenses. I didn't tally up any Vet costs, mineral blocks, vaccines, wormers. There is no control over what market price will be for your cattle at butcher time. A drop to 78 cents a pound is possible. Creating a place to safely store a 20 tons of corn and hay. could be costly. Having a few tons of corn get wet and mold would be costly.
A good, fast growing steer will gain 3 pounds a day, while eating 9 pounds of corn, plus hay.


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## chippy778 (Jun 22, 2016)

Thanks for the reply’s. This won’t be available til next spring. I was just looking for data. I think I probably will take him up on it.


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## chippy778 (Jun 22, 2016)

Is there rough number of how much grain and hay it would take to finish a 500 lb calf?


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## chippy778 (Jun 22, 2016)

I did find something that said fifty bushels of feed on average. Any thoughts on that number?


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