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Frequently Asked Questions (FAQs)
What does it cost to buy
cattle?
Cattle are purchased by the pound.
Different weight classes are priced according to their gender,
market demand, location, type, and seasonality. Adjustments are
also made in the market based on variables that will increase or
decrease the profitability of the cattle purchased. In a
nutshell, if an average quality steer weighs 650 pounds with a
market price of $1.10 per pound, that animal will cost you $715.00. U.S.D.A
market reports are available for you to research the current market
price of feeder cattle.
What are cattle fed?
Cattle delivered to commercial cattle feeding
facilities are fed all vegetable diets consisting of grains
(corn, barley), alfalfa, mineral and vitamin supplements.
Consulting Nutritionists advise each custom feedyard with ration
management. There are no harmful animal byproducts fed to
cattle in the United States.
Are cattle force fed?
Absolutely not. Livestock rations are carefully monitored and adjusted for
proper feed intake based on the fed cattle's "comfort zone."
Yes, money is made with fast/efficient weight gains but forcing
an animal to eat more than what is healthy causes problems with
performance and meat quality. Responsible commercial feedyards
enlist top notch animal
husbandry practices.
What does it cost to feed cattle?
When calculating what it will cost you to feed
the cattle purchased for beef consumption a simple Cost of Gain
(COG) projection will be given by the custom feedyard manager
which will be provided with all our cattle listings. COG is a
price per pound of feed and services provided. If a 650 pound
steer is delivered to the yard is projected to be sold to the
packer at 1250 pounds and the projected COG is $0.70 per pound,
subtract 650 from 1250 then multiply the remainder by $0 .70. Your
projected total cost to feed that animal to finish would be
$420.00.
What is the total cost of my fed cattle
enterprise?
For simple math a breakeven is calculated as
in this example:
Cattle (650 @ 1.10 lb steer)
715.00
COG (400 pounds @ .70)
420.00
Total projected cost
$1,135.00
Your projected Breakeven (B/E) would
be $90/cwt
These costs for feed and cattle will vary with
market conditions, season, and location the cattle are fed. The
Cost of Gain (COG) is the sum total of all custom services,
feed, interest etc. Feed will vary depending on the value of the
corn during the feeding cycle and is an assumption on the value
of present with potential ups or downs in the market. Death loss
and sick cattle costs against your cattle feeding enterprise are
factored in as an average cost of 1 to 2 percent depending on
the incoming health and age of the animal.
So how do I make money
feeding cattle?
With any industry or enterprise, money is
made when costs do not exceed revenue. In the example above, the
projected breakeven is $90.00 per hundredweight. If these cattle
are slated for harvest in July of 2007 with the August board (CME
live cattle) closing at 94.00. Figure in a basis (Board minus
assumed cash price difference) of .50 back, so the projected
revenue (cash price) would be 93.50/cwt. subtract your projected
cost of 90.00 from project revenue of 93.50 with a difference of
$3.50 per cwt or a projected potential profit of approximately
$40 to $44 per head. This could change however so Risk
Management (price protection) is highly advised and mandated
when financed through this program.
How long does it take to feed cattle to
market?
The Days on Feed (DOF) for cattle will
average 90 to 275 days depending on the incoming weight, gender,
and season the cattle are placed. Please view our COG discussion
page.
What is the average return on equity?
The average return on equity for this
industry in the last 20 years is approximately 9 percent
annually. Although, protecting yourself with an adequate Risk
Management program can increase this return to approximately 15
to 30 percent while diminishing your potential for unrecoverable
loss.
What do you mean by Risk
Management
Since the cattle market is commodity geared
as well as the feed (corn) consumed; there is quite a few ups
and downs in the market arena. It is always good business to
know your breakeven. Once you know your breakeven and/or assumed
profitability in your cattle venture, it is wise to work with a
commodity broker to protect your potential profits or to
diminish you chances for loss. Cattle Fortune is not a commodity
brokerage but we work with some of the best in the industry. Quite
honestly, it is the Company's view that you cannot have cattle
without utilizing the Futures nor can the CME transfer paper
without the cattle.
How do I get started?
There are several approaches. Cattle
Fortune is designed to allow the Customer to purchase and feed
cattle in all of our affiliated Custom Cattle Feeding
Facilities. Our program works by setting up all of the
documentation needed for financing your venture then you may
purchase cattle on our site and feed your property in the chosen
Custom feedyard or you may purchase cattle that are already in
the facility. $27,000 will leverage 180 (average lot size) head of
feeder cattle which is an initial upfront equity of $150.00 per head.
Since the profit margins tend to average $8 to $15 per head, it
is better to leverage for a higher return on upfront money.
Otherwise, 180 head would cost you out of pocket close to
$200,000 from start to finish.
You may also choose to finance your own
enterprise at your chosen bank while purchasing the cattle
outright and paying the feed bill as it comes due on our site.
We work with progressive cattle feeding financial institutes
here in the U.S. It is always best to go with a
financial institute that understands the cattle business.
If a producer already has cow/calf pairs
and the calves are ready for market, the rancher may sell the
cattle to the Feedyard and keep $150.00 equity in the cattle
placed on feed. This is called Retained Ownership. There are
many ways to get into the cattle feeding business depending on
your situation. Either way, we will walk you through
the process.
Is the cattle industry regulated?
Yes, heavily. The Packers and Stockers (P&S)
regulate cattle marketing and movement. The Department of
Environmental Quality regulates waste, environmental hazards and
cattle concentration. In the near future, mandatory animal
identification will be established. Cattle Fortune and it's
affiliates currently mandate individual tag numbers for
livestock within our system. When cattle are purchased through
us, you own specific and identified cattle with a titled
ownership much like buying a truck with a VIN number.
If you have any questions regarding cattle
purchases and their care please contact us at 970-218-1851
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