# Bred Heifers – Figuring a Fair Price

12/28/15

With the drastic down turn in the Fed cattle market, the prices for other classes of cattle have decreased.   While some short term rebound in prices may occur, long term outlook is for increased supply and prices trending lower.

Auction market prices for bred heifers indicate there is strong optimism in the cattle industry.  However, prices have fallen as compared to peak prices in 2014-2015 bred heifer sales.

To figure what is affordable requires some estimation on future costs and prices.  At the recent Central Dakota Ag Day, three methods for calculating bred heifer prices were shown.  These calculations resulted in similar values for bred heifers.  One approach to bred heifer pricing used the following assumptions:

1)      Costs to maintain a cow per year:

• Pasture (\$252.00) + Winter Feed (\$270.00) + Yardage (\$90.00) = \$612 per cow yearly based on actual costs determined by North Dakota Farm Business Management (http://www.ndfarmmanagement.com/)

2)      Cow Longevity:

• 15.16% replacement rate;  5.7 year average cow age based on ‘CHAPS’  Cow herd Appraisal Performance Software by the  North Dakota Beef Cattle Improvement Association (http://www.chaps2000.com/)

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Cow Longevity Example

*15% replacement rate per year

After 1 year                        85 head left

Average age for cow leaving herd:   5.2 years

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3)      Cull cow income:

• 1300 lb. cull cow at \$70/cwt =  \$910.00/head

4)      Calf income:

• Average weight calves sold = 594 lbs. (2014 ND Farm Business Management)
• On 12-15-2015   CME  Feeder Futures Nov 2016   \$142.85
• On 12-23-2015   CME  Feeder Futures Nov 2016   \$154.15
• Estimated price for 600 lbs. feeder calves =  \$162.00/cwt   or \$972.00/ head

• Number of calf crops/cow
• 4.7        (5.7-1 = 4.7; heifer doesn’t calf until 2 years of age)
• 4.7   calf crops  at  \$972.00/calf = \$4568.40
• Cull  cow
• 1300 lbs. at \$0.70 = \$910.00
• Total
• \$5478.40
• Adjust for death loss (3%)
• \$5314.05

• Pasture
• \$252.00*4.7 = \$1184.40
• Feed
• \$270.00*4.7 = \$1269.00
• Yardage (includes breeding and vet)
• \$90.00*4.7 = \$423.00
• Total
• \$2876.40

7)      Value of a bred heifer:

• Income = \$5314.05
• Expenses = \$2876.40
• Net = \$2437.65  (value of a bred heifer)

8)      Do you want to budget in profit required?

• Yearly profit needed