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Purchase or Not Weaned Calves or Stocker/Feeder Analysis
4/27/2004
Decision Description Purchase weaned calf
Date of Analysis 30-Aug-10
Weaner or Stocker Purchase Weaned steer purchase
At Best Buy Option - Describe Direct Purchase
Date Purchased 01-Oct-04
No. of Cattle Purchased Head 100
Purchased Weight Lb. 450
Added Shrink If Included % 0.00
Net Payweight 450
Gross Payweight Cost - See Margin & Slide $/Cwt. $107.00
Other Purchase or Costs - Commissions % - $/Head 0.0 $0.00
Purchase Costs - Per Head Charges $/Head $10.00
Net Payweight Purchase Cost Per Head $/Head $491.50 Transfer
Net Payweight Purchase Cost Per Cwt. $/Cwt. $109.22 Price
Total Purchase Cost $ $49,150 $109.22
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Description of Retained Ownership Alternative Take to native grazing
Date Marketed Out Wt. Calc. Day Input Days 19-Apr-05
Additional Days Held 800 200 0 200
Average Daily Gain Lb./Day 1.75 Gross Gain & ADG
Weight Before Shrink Lb. 800 34,200 1.73
Shrink When Sold % 3.0 Gain / Hd. 345.5
Net Payweight Lb./Head 776
Net Payweight Gain and Average Daily Gain Lb./Head & Day 326
Gross Payweight Price - See Margin & Slide $/Cwt. $88.72
Marketing Costs - Commissions % - $/Head 3.0 $20.65
Marketing Costs - Per Head Charges $/Head $1.00 Net Gain (Deads In)
ADG
Number Marketed (Net of Death Loss) % Loss - Hd 1.0 99 31,824 1.59
Net Payweight Sales Revenue Per Head $/Head $666.81
Net Payweight Sales Revenue Value Per Cwt. $/Cwt. $85.93
Total Sales Value (Based on Head Marketed) $ $66,015 Gain / Hd. 318.24
Financial Economic*
Total Difference in Gross Revenue (Marginal Revenue) $16,865 $16,865
Total Projected Expenses Rate of Interest
Borrowed or Opportunity Cost of Equity Capital % Borrowed 30 % Rate 7.00 %
Opportunity Cost of Equity Capital If Invested $ Total $2,124
Cash Interest Cost $/Hd. $6.37 $637
Cost of Nutrition, Health and Other Costs Units/Hd $/Unit
Cost Based on Net Gain - not including interest Lb. Of Gain 318 $0.35 $11,138 $11,138
Cost Based on Days Fed and/or Grazed Days 200 $0.00 $0 $0
Processing and Health $/Hd. 1 $8.00 $800 $800
Other $/Hd. 1 $0.00 $0 $0
General and Administrative $/Hd. 1 $5.00 $500 $500
Management Cost or Return % of Gross 5 $18.27 $1,827 $1,827
Target Net Margin Per Head Objective $/Hd. 1 $10.00 $1,000 $1,000
Total Specified Added Costs (Marginal Cost) $15,902 $17,389
Cost Per Head $/Hd. $160.63 $175.65
Cost of Net Payweight Gain $/Cwt. $49.97 $54.64
Financial and Economic Advantage of Retained Ownership & Margins** Financial Economic
Total Advantage (Added Revenue - Added Cost) $ $962 ($525)
Marketing Margin $/Head ($105.88)
Grazing or Feeding Margin $/Head $115.59
Net Margin Based on Number of Head Out $/Head $9.72 ($5.30)
-------------------------------------------------------------------------- --------------- ------------------ -----------------
Price Necessary to Achieve Target Net Margin Objective $/Cwt. $87.43 $89.42
Target
Annualized Return on Assets - ROA - (Including Net Margin Objective) % 8.35 9.9
Annualized Return on Equity - ROE - (Including Net Margin Objective) % 9.01
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*Economic costs include an opportunity cost for capital invested in cattle on feed and other cost of gain adjusted for the time
on feed. Ensure costs are full costs (don't include interest to prevent double counting; do include business overhead).
**Based on net purchase weight and cost versus feeder sale.
Filename: 5be1b8aa-72cd-4960-b945-2ccc3ef10d3e.xls 8/30/2010, 2:22 PM Page 1 of 3
Summary Margin Analysis
Purchase weaned calf
$/Head
Marketing Margin ($105.88)
Grazing or Feeding Margin $115.59
Net Margin $9.72
Price Slide & Other Premium or Discount Calculator
Dates 1-Oct-04 19-Apr-05
Actual Weight Used In Slide Calculation Lb./Head 450 776
Cattle Price Slide Calculator-------------------
Base Price Before Adjusting for Weight Slide $/Cwt. $105.00 $88.00
Base Weight for Calculating Slide Lb./Head 450 800
Tolerance Above Base Weight Lb./Head 0 10
Tolerance Below Base Weight Lb./Head 0 10
Price Slide $/Cwt. $0.00 $3.00
Price Slide Discount (-) or Premium (+) $/Cwt. $0.00 $0.72
Market Basis Adjustment If Applicable $/Cwt. $0.00 $0.00
Quality Discounts (-), Premiums (+)
Muscling $/Cwt. $0.00 $0.00
Frame $/Cwt. $0.00 $0.00
Fill $/Cwt. $0.00 $0.00
Breed $/Cwt. $0.00 $0.00
Feed Yard or Market Premium $/Cwt. $0.00 $0.00
Total Quality Discounts (-), Premiums (+) $/Cwt. $0.00 $0.00
Gross Cattle Price After Discount or Premium $/Cwt. $105.00 $88.72
Summary of Prices Net Price Weight Net Value
$/Cwt. Lb./ Head $/Head
Weaning Weight 450
Net Mkt. Wt.
At Purchase
Net Payweight Cost $109.22 450 $492
After Keeping Based on Head Out
Net Payweight Sales - Includes Market Cost Adjustments $85.93 776 $667
----------------------------------------- $/Head
Price Necessary to Achieve Target Per Head of $10.00
Financial Target Net Margin Objective $87.43 776 $678
Economic Target Net Margin Objective $89.42 776 $694
Filename: 5be1b8aa-72cd-4960-b945-2ccc3ef10d3e.xls 8/30/2010, 2:22 PM Page 2 of 3
Cattle In-Price and Cost Sensitivity Analysis
Cost of Gain, In-Price of Cattle and Sales Price Necessary to Reach Targeted Net Margin
Target Net Margin Per Head Objective $/Head $10.00
Starting Pay Weight (Lb/Head) 450
Projected Net Market Weight (Lb/Head) 776
Projected Net Gain (Lb/Head) 318
Sales Price Necessary For Cattle Per Cwt. For
Interval of Change For Analysis Table Different In-Price, Cost of Gain and Cattle Out-Prices*
Dol./Cwt.
Total Cost of Gain 2.00 Change and Associated Calculated Values
Cattle In-Price 5.00 --------------- --------------- --------------- --------------- ---------------
Decrease Input Increase
Non-Cattle Costs With Cash Interest $/Head $161.63
Change in Cost of Gain Dol./Cwt. ($4.00) ($2.00) $2.00 $4.00
Calculated Cost of Gain Dol./Cwt. $45.97 $47.97 $49.97 $51.97 $53.97
Necessary Sales Price per Cwt. for Cattle Out
Price --------------- --------------- --------------- --------------- ---------------
$99.22 $79.61 $80.47 $81.32 $82.17 $83.03
$104.22 $82.67 $83.52 $84.37 $85.23 $86.08
Cattle In-Price (Dol./Cwt)* ------------> $109.22 $85.72 $86.57 $87.43 $88.28 $89.14
$114.22 $88.77 $89.63 $90.48 $91.34 $92.19
$119.22 $91.83 $92.68 $93.54 $94.39 $95.25
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*Price necessary to achieve targeted net margin objective
Filename: 5be1b8aa-72cd-4960-b945-2ccc3ef10d3e.xls 8/30/2010, 2:22 PM Page 3 of 3
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