Stocker cattle turned out to grass this spring are finding plenty of green grass, says University of Nebraska economist Darrell Mark, Ph.D. Nevertheless, stocker budgets suggest margins will be tight for those cattle as they go to market later this year.

Mark notes that the USDA’s latest reports on pasture and range conditions show 16 percent of U.S. pasture and range rated poor or very poor, compared to 22 percent last year. Fifty-eight percent was rated good to excellent at the end of May, compared to 51 percent   last year. 

Regionally, Mark notes, some of the best pasture and range improvements relative to last year were in the Great Plains region, including Colo., Kan., Mont., Neb., N.D., S.D. and Wyo., where only about 7 percent of the pasture and range is rated poor or very poor. 

Pasture conditions also have improved considerably in the Southeast, with only about 5 percent rated poor to very poor. USDA reports conditions in Northeast and Corn Belt regions similar to those at this time last year.

Poorer-than-average conditions persist in the West and in Oklahoma and Texas, but Mark notes that even in those areas grass conditions have generally improved compared to last year. 

More grass should translate to better gains for many stocker cattle, but Mark notes that profits could be hard to come by. Current budgets for stockers on summer grass in Nebraska, he says, indicate red ink.  Mark outlines an example involving grazing yearlings purchased at 750 pounds from May 1 through September 15, when they would weigh 950 pounds. With 2009 summer grass rental averaging about $31 per cow-calf pair, these yearlings would have a grass cost of about $21 per animal-unit month. Figuring in transportation costs, yardage, death loss, veterinary expenses and interest, along with a price of $103.50 per hundredweight for seven-weight steers on May 1, Mark estimates a breakeven price of $99 per hundredweight. With a projected sale price of $97 per hundredweight, each steer would lose about $18.

Five-weight steers lose even more in Mark’s budgets. With a purchase price of $122 per hundredweight, the breakeven price is nearly $111 per hundredweight -- about $6 per hundredweight and $45 per head higher than the expected sale price.

Based on these projections, Mark suggests that owners should pay close attention to the feeder-cattle market, and forward-contract prices for fall-delivery cattle if good selling opportunities emerge during the summer.

Read more information about stocker cattle profits.