How is the value of beef calves determined?


Quick Answer

The value of beef calves is determined by subtracting the cost of feeding and caring for the animals from the price they are likely to fetch at auction after reaching a salable weight of 1,000 pounds. After they reach about 600 pounds at pasture, most steer calves are sent to a feedlot to gain more weight. They may remain on the lot for three to four months, during which veterinary and feed costs accrue.

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How is the value of beef calves determined?
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Full Answer

As with other commodities, feeder calf prices are subject to market supply and demand, which fluctuates in cycles. When calf prices are high, more farmers turn to cattle-raising, which increases the market supply of the animals. World beef demand, while generally high, also remains mostly stable; therefore, an increased supply drives prices down. Raising grass-fed beef increases the cost of raising the animals because pasturage is generally more expensive than the cheap corn and agricultural by-products fed to cows on feedlots. However, high demand can also increase the price of grass-fed beef, so producers must be aware of market demands to realize a profit.

To determine the value of a heifer calf, first estimate the income the animal can generate over the course of its lifetime. For example, a heifer bred over four or five years may produce over $4,000 worth of calves. When she is beyond breeding age and is culled from the herd, a cow may fetch around $900, bringing her total income generation to near $5,000. As with steer calves, balance the income a heifer generates against the expenses required to maintain it. Some of these include pasturage, winter feed, breeding and veterinary costs. If the expenses amount to around $2,500 over the lifetime of the animal, the net worth equates to about $2,500.

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