What are they worth? This question has been asked for as long as there have been buyers and sellers of cattle. I know it was a question 126 years ago because it led to the establishment of Drovers (then Drovers Journal). Cattle were being bought and sold through a haggling process in the alleys of the new Chicago International Stockyards. No one knew what the market really did yesterday, or what it might do tomorrow. Drovers began filling that void by gathering today's prices this afternoon and putting them on the streets tomorrow morning.

The worth of cattle was pretty much a matter of perception in Chicago in 1873. There was no value system. The cattle were headed for a packinghouse and buyers might bid a little extra if they thought they'd do well in the beef trade. But things have changed a lot since those days. Or have they?

The article by Tom Brink of the American Gelbvieh Association in the March issue of Drovers should be a real eye opener for most of us. Mr. Brink reported that feedyard closeout records on over 55,000 cattle tracked through the Gelbvieh Alliance show that cattle grading less than 40 percent Choice were the most profitable and cattle grading better than 70 percent Choice were the least profitable.

Yes, this is an eye opener. But before you jump to conclusions, consider something else Mr. Brink said: ".higher grading cattle are often over-priced in the feeder cattle market, making them much less profitable in the feedlot." And doesn't this take us right back to 1873 and the question what are they worth?

Here is a hypothetical example of Mr. Brink's point (see table).

It is mid-April and a group of fancy, 590-pound feeder heifers catches the eye of a guy named Norm. Norm snaps the heifers up at 78 cents per pound, a market-topping price. Woe is Norm; he's become a victim of Mr. Brink's data bank.

Had Norm really checked the numbers on his deal, he would have seen his risk clearly. If the heifers performed on the average (60 percent Choice, 3.2 pounds average daily gain, 61.5 percent dressout, 8.0 feed conversion ratio), his breakeven in mid-September might be $114.30 per hundredweight in the beef and $68.60 per hundredweight on the hoof. That's a bunch, considering the live cattle contract indicated a September price of only $63 on the hoof. If that's where the cash market is then Norm will lose $56.94 per head.

But Norm saw more than average performance in the heifers. The heifers were from a breed known for marbling and a herd known for muscular, good-doing cattle. Norm visualized this performance: 3.4 pounds average daily gain, 10 percent Prime, 70 percent Choice (no Standards or outs), 63 percent dressout and 7.2 feed conversion. Norm also visualized some help from grid pricing.

The reality is if the heifers had performed in the feedyard as he thought they might, Norm could have made a 10 percent return on his investment if he had bought the heifers for 74 cents per pound. This assumes that Norm's heifers would sell on a 64.4-cent market in September ($103.63 in the beef), and that he would have earned $17.39 more on the grid.

The messages here should be clear. Muscle and marbling are still the M&Ms of the cattle business, whether you breed cattle or feed cattle. It makes no difference whether you breed seedstock or commercial cattle. Well-bred cattle will perform well all the way through the feedyard and on the consumer's plate.

And, the situation today is the same as in 1873; it's a question of what they're worth. This can be worked out with a stubby pencil or with a little computer spreadsheet, as I have done. Good genetics are worth a lot, but not beyond a point.

To contact Fred Knop, write Drovers or send e-mail to: fredlyn@aol.com