Identifying and Managing Economic Risk in Cattle Feeding

Closeout data from two western Kansas commercial feedlots are examined to determine how cattle prices, feed costs, and animal performance impact the variability of cattle feeding profits. The relative impacts of these factors are studied across sex, placement weight, and placement month. Fed and feeder cattle prices have the largest impact on profitability. Corn prices, interest rates, and animal performance have smaller, yet relevant effects on profits. Generally, all these factors influence steer profits more than heifer profits. As placement weight increases, feeder cattle prices impact profitability more while corn prices, interest rates, and animal performance influence profitability less. Feeder cattle prices impact profitability greater for spring and fall placements. Animal performance affects cattle feeding profits greater for winter placements. Results suggest that fed cattle and feeder cattle prices should be emphasized in managing the overall risk in cattle feeding because they are the largest contributors to profit variability.