Definition of Stocker/feeder in Beef Production

Young cattle shortly to be sent to fattening, particularly those intended for sale before finishing

Fat cattle and alfalfa in the Pecos Valley, New Mexico (probably early on 20th century)

"Prize fatty cattle" (probably late 19th century)

The Grand Champion steer at the 13th annual Fatty Cattle Sale and Prove in Quincy, Florida, 1959

Foxhole Martha; 2005 Royal Cornwall Female Breed Champion

Feeder cattle, in some countries or regions chosen store cattle, are young cattle mature plenty either to undergo backgrounding or to be fattened in preparation for slaughter. They may be steers (castrated males) or heifers (females who take not dropped a calf). The term often implicitly reflects an intent to sell to other owners for fattening (finishing). Backgrounding occurs at backgrounding operations, and fattening occurs at a feedlot.^[1] Feeder calves are less than i year onetime; feeder yearlings are between 1 and 2 years old. Both types are oftentimes produced in a cow-calf operation. Afterwards attaining a desirable weight, feeder cattle get finished cattle that are sold to a packer (finished cattle are also chosen fattened cattle, fat cattle, fed cattle, or, when contrasted with carcasses, live cattle). Packers slaughter the cattle and sell the meat in carcass boxed form.^[2]

Feedlots producing live cattle for slaughter volition typically purchase 500–850 pounds (230–390 kg) feeder cattle calves and feed to grow the animals into 850–1,400 pounds (390–640 kg) cattle.^{[3] [2]} Backgrounding operations volition typically purchase 300–600 pounds (140–270 kg) feeder cattle calves and feed to abound the animals into 650–875 pounds (295–397 kg) backgrounded cattle. Backgrounding cattle that achieve weights of 650–700 pounds (290–320 kg) are suitable for sale to grass feeding operations, whereas those achieving weights of 800–825 pounds (363–374 kg) are suitable for sale to feedlot operators.^[4] Buyers of feeder cattle tend to look for high average proceeds (in weight) and low feed-to-proceeds ratio. Depending on circumstances, dissimilar feeder cattle buyers will look for different ranges of animal weight and grade.^[v]

Cattle producers and backgrounding operations residue feeder cattle prices, weights, fourth dimension taken to fatten, expiry rates, and other feeder cattle factors against feed prices, live cattle prices, and other operating factors to profit from their operations.^{[6] [iv]}

Us feeder cattle grades [edit]

The U.s.a. grades feeder cattle that take not reached an age of 36 months on 3 factors: frame size, thickness, and thriftiness.^[seven]

• Frame size evaluates feeder cattle' height and body length as determined by their skeletal size in relation with their historic period; frame size affects the animals' mature size and weight gain composition as they are fed into fed cattle. A large framed feeder cattle of a given age, breed, and a given degree of thickness will proceeds more muscle and bone, and less fat, than a smaller framed animal with the same age, brood, and thickness at a given maturity age. In terms of United states of america Department of Agriculture (USDA) grades for cattle carcasses, at a given weight and thickness, large framed cattle (fed from large framed feeder cattle) will have carcasses with college yield grades, only lower quality grades. If feeder cattle are fed to the aforementioned quality grade, Pick (0.50 inches (xiii mm) fat at the twelfth rib) for case, large framed cattle of a given thickness have to exist fed to heavier weights than smaller framed cattle of the same thickness. Historic period and breed modifies the precise sizes that segment this course.
  • Large frame feeder cattle are tall and long-bodied for their historic period and breed, and steers and heifers of this frame, everything else existence constant, are not expected to produce Us Selection until they are fed to 1,250 pounds (570 kg) and i,150 pounds (520 kg), respectively.
  • Medium frame feeder cattle are slightly tall and slightly long-bodied for their age and breed, and steers and heifers of this frame, everything else being abiding, are not expected to produce United states Choice until they are fed to i,100 to i,250 pounds (500 to 570 kg) and 1,000 to 1,150 pounds (450 to 520 kg), respectively.
  • Small frame feeder cattle are shorter and not as tall for their age and breed compared to medium frame feeder cattle, and steers and heifers of this frame, everything else existence constant, are non expected to produce Usa Selection until they are fed to 1100 pounds and m pounds, respectively.^[7]
• Thickness evaluates feeder cattle' muscle development in relation to skeletal size. Bone structure, muscling, and degree of fatness determines differences in thickness. Thicker cattle take higher ratios of muscle to bone. Thickness affects the animals' yield grade every bit they are fed into fed cattle, and a thick feeder cattle of a given age, breed, and frame size volition produce a higher yield grade carcass, than a less thick animal of the same age, brood, and frame size at a given maturity age. If feeder cattle are fed to the same quality class, Option for example, thicker feeder cattle of a given thickness have to exist fed to heavier weights than less thick feeder cattle of the same thickness. Age and breed modifies the precise sizes that segment this form. Thickness are graded No. 1 to No. 4.
  • No. 1 thickness cattle must be at least moderately thick throughout their bodies, full in the forearm and the gaskin, and showing a rounded advent through the back and the loin with moderate width between their legs.
  • No. ii. thickness cattle must be at least slightly thick throughout their bodies, full in the forearm and the gaskin, and showing a rounded appearance through the back and the loin with a slight width betwixt their legs.
  • No. 3 thickness cattle must be at to the lowest degree sparse through the forequarter and middle part of the rounds, their forearm and gaskin are thin and their backs and loins take a sunken appearance, and their both front end and rear legs are set close together.
  • No. 4 thickness cattle include any cattle with even less thickness than the minimum requirements for No. 3 cattle. No. one thickness cattle typically show generally beef convenance, No. 2 thickness cattle typically testify loftier proportions of beefiness convenance and slight diary breeding, and so on with lower thickness cattle.^[vii]
• Thriftiness evaluates feeder cattle' overall health and expected performance in gaining weight to become a fed cattle. There are no strict guidelines as to grading thrift cattle, rather cattle with credible health problems are graded as unthrifty and other cattle are categorized as thrifty.^[seven]

The above three factors and their segmented categories combine to form individual grades. For examples, for thrifty cattle, the frame and thickness factors combine to form 12 dissimilar grades of thrifty cattle: No. 1; Large Frame, No. 2; Large Frame, No. 3; Large Frame, No. iv; Medium Frame, No. 1; Medium Frame, No. 2; Medium Frame, No. 3; Medium Frame, No. 4; Pocket-size Frame, No. 1; Pocket-sized Frame, No. 2; Small Frame, No. 3; and finally Small Frame, No. four.^[7]

Cash marketplace factors [edit]

Price to pay for feeder steers in guild to receive average returns for labor, overhead and profit with assumed prices for fat cattle and feed, with typical feeding programs; U.S. Department of Agronomics

Health status, and visual indicators of health, can requite feeder cattle premiums or discounts when sold in auctions. Feeder cattle with dead hair and mud are often sold at a disbelieve, and those that are classified equally "stale" are sold at a disbelieve. Feeder cattle with other obvious physical indicators that would imply sickness are heavily discounted.

The primary sickness encountered in feeder cattle is respiratory sickness. Discounts on ill feeder cattle compensate for their increased risk of decease, and lower performance in weight gain even if they recover. Cattle that await visually "sparse" or "fleshy" are generally given discounts or premiums distinct from sickness discounts, as these visual traits do not necessarily signal sickness and could be advantageous in particular feeding scenarios.^[8]

Some feeder cattle are sold with some pre-existing wellness maintenance programs. These programs may include weaning 21 to 45 days before auction, vaccinating for respiratory and digestive diseases, de-horning, castrating, implanting growth implants, treating for external and internal parasites, and starting to switch the feeder cattle to grain-based feed.^[9]

Lot size, or the number of feeder cattle for sale in a group, in relation to transportation available, weight, and auction location impact feeder cattle prices heavily. Cost per weight increase with lot size and attain a maximum when lot sizes approaches truck-load sizes. As lot sizes exceed truck-load sizes, prices level off and eventually decrease. This represents fewer buyers and available transportation for larger lots of feeder cattle.^{[10] [viii]}

Futures market trading [edit]

Feeder cattle futures contracts, traded on the Chicago Mercantile Exchange (CME), can exist used to hedge and to speculate on the price of feeder cattle. Cattle producers can hedge future buying and selling prices for feeder cattle through trading feeder cattle futures, and such trading is a common role of a producer'south run a risk management programme.^[11] Product and marketing contracts for delivering feeder cattle in cash markets could also include feeder cattle futures prices as part of a reference price formula.^[12]

The contracts are for l,000 pounds (23,000 kg) of feeder cattle, and call for cash settlement based on the CME Feeder Cattle Index.^[13] The minimum tick size for the contract is $0.00025 per pound ($12.50 per contract). Trading on the contract are subject to price limits of $0.045 per pound to a higher place or below the previous day's contract settlement price. If both of the outset two listed contract months settle at limit, the daily toll limits for all contract months shall expand to $0.0675 per pound on the adjacent concern twenty-four hours. If neither of the first ii listed futures contract months settle at the expanded limit the next business organization solar day, daily price limits for all contract months shall revert to $0.045 per pound on the following business day.^[14] Feeder cattle futures are likewise traded on the CME Globex Exchange, below is the contract specifications for feeder cattle on the Globex exchange.

Contract Specs^[15]

Feeder cattle (FCA)
Exchange:	Globex
Sector:	Meat
Tick size:	0.025
Tick value:	5 USD
BPV:	200
Denomination:	USD
Decimal place:	3

Terminal settlement based on CME Feeder Cattle Index [edit]

Feeder cattle futures contracts are greenbacks settled based on the CME Feeder Cattle Index. The Index inputs are seven-solar day feeder cattle auction, direct trade, video sale, and Internet sale transaction prices for qualified steers publicly reported from the post-obit twelve feeder cattle producing states: Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, S Dakota, Texas and Wyoming. Qualified steers must be between 700 and 899 pounds (318 and 408 kg), and be in either the Medium and Large Frame #one or Medium and Large Frame #ane–ii feeder cattle grades. Additionally, qualifying steers must non exhibit predominantly dairy, exotic, or Brahman breed characteristics, and must not accept an origin outside of the US.^[13]

The CME Feeder Cattle Index is calculated using prices reported by USDA'south Agricultural Marketing Service (AMS). AMS reports number of cattle sold, average price of sale, and average weight of cattle sold for daily feeder cattle transactions for every US state in 50 pounds (23 kg) segments for each grade segment. For instance, separate average prices and boilerplate weight data are reported for the Medium and Large Frame #1 700–749 pound category, and for the Medium and Large Frame #i 750–799 pound category. The CME Feeder Cattle has eight qualifying reporting segment derived from its qualifying weight and grade standards: Medium & Large #one steers weightinf 700–749 pounds, Medium & Big #1 steers weighting 750–799 pounds, Medium & Large #1 steers weighting 800–849 pounds, Medium & Large #ane steers weighting 849–899 pounds, Medium & Large #1–#ii steers weighting 700–749 pounds, Medium & Large #1–#ii steers weighting 750–799 pounds, Medium & Big #ane–#2 steers weighting 800–849 pounds, and Medium & Large #1–#2 steers weighting 849–899 pounds.^[16]

The CME Feeder Cattle Index is calculated through the following steps:

1. The number of cattle sold is multiplied past the average weight of feeder cattle sold within each qualifying 50 pound form category to produce "Total Pounds Sold" for that category
2. The number of cattle sold is multiplied past the average weight and the average price of feeder cattle sold to produce the "Total Dollars Sold" for that category
3. "Full Pounds Sold" are added together from the eight qualifying reporting categories of each study, and then reports from all 12 states for the last seven days are added together to produce an aggregated figure
4. "Full Dollars Sold" are added together from the viii qualifying reporting categories of each written report, and then reports from all 12 states for the last 7 days are added together to produce an aggregated figure
5. The aggregated "Full Dollars Sold" is divided by the "Total Pounds Sold" to produce an boilerplate dollar paid per pound price, which and so becomes the CME Feeder Cattle Index figure

Qualifying cattle sold with certain small notes are also included in the CME Feeder Cattle Index.^{[thirteen] [sixteen]}

[edit]

Derivatives on futures and derivatives on packages of futures contracts, such every bit options, calendar spread contracts, Trade-at-Settlement (TAS) contracts are likewise available for feeder cattle futures contracts.^[17]

Feeder cattle futures prices are a function of the Due south&P GSCI commodity index, which is a benchmark index widely followed in financial markets past traders and institutional investors. Its weighting in S&P GSCI give feeder cattle futures prices non-fiddling influence on returns on a broad range of investment funds and portfolios.^[18] Conversely, traders and investors take become non-trivial participants in the market for feeder cattle futures.^[xi] The CME offers a South&P GSCI Commodity Index futures contract for trading.^[nineteen]

Feeder cattle futures contracts are oftentimes grouped together with live cattle and lean hogs futures contracts as livestock futures contracts. These commodities share many central demand and supply risks, such long feeding periods, atmospheric condition, feed prices, and consumer sentiment, which makes group them together useful for commercial discussions about both the commodities and their futures contracts.^[20] Article indices have followed this practice and grouped these futures contracts together in livestock futures contracts categories.^[18]

Gross Margin Financial Instruments [edit]

Cattle producers purchase feeder cattle to feed into live cattle or fed cattle for sale to slaughterhouses. Depending on the operation, producers buy corn, soybean repast, and other commodities equally feed. The difference between the selling price for live cattle and the costs of purchasing feeder cattle and feed (usually assumed to be corn, regardless of actual mix of feed used) is referred to as livestock gross margin (LGM), feeding margin, or cattle crush (as opposed to production margin, which as well includes other product costs).^[21] Cattle producers can utilise existing futures contracts for feeder cattle and corn to gear up those production cost components into the time to come. Traders tin can purchase those futures and the alive cattle futures contract in particular ratios to turn a profit from the difference of selling finished live cattle against the cost of buying the feeder cattle and feeding the cattle.^[3]

In add-on to exchange-traded products, cattle producers can purchase livestock gross margin insurance policy contracts (LGM-Cattle) sponsored by the USDA Risk Management Agency from authorized ingather insurance agents. These insurance policy contracts are bundles of exchange-traded options on futures contracts, and prices for these policy contracts refer to exchange-traded futures prices.^{[22] [21]}

References [edit]

1. ^ "Backgrounding Feeder Cattle Diet". Agriculture Knowledge Heart. Authorities of Saskatchewan. Retrieved 2020-05-10 .
2. ^ ^{a b} Petricca, Frank (2017-x-xvi). "Fats vs feeders, off to a decent first". AgUpdate. Retrieved 2020-05-07 .
3. ^ ^{a b} CME Group. "An Introduction to Cattle Feeding Spreads" (PDF) . Retrieved 2020-05-06 .
4. ^ ^{a b} "Backgrounding Feeder Cattle Diet". Agriculture Knowledge Middle. Authorities of Saskatchewan. Retrieved 2020-05-07 .
5. ^ Lewandowski, Rory. "What Do Feedyards Look for In Feeder Cattle?". Beef Magazine. Retrieved 2020-05-11 .
6. ^ "Understanding the Cattle Market Sliding Scale". Government of Alberta. Retrieved 2020-05-07 .
7. ^ ^{a b c d due east} "United States Standards for Grades of Feeder Cattle" (PDF). United states Department of Agriculture. This article incorporates text from this source, which is in the public domain .
8. ^ ^{a b} Mintert, James. "The Value Of Feeder Cattle Traits". Beef Mag. Retrieved 2020-06-05 .
9. ^ Comerford, John Due west.; Kime, Lynn F.; Harper, Jayson Grand. "Feeding Beefiness Cattle". PennState Extension. Retrieved 2020-06-05 .
10. ^ Schulz, Lee; Dhuyvetter, Kevin; Harborth, Karl; Waggoner, Justin. "Factors Affecting Feeder Cattle Prices in Kansas and Missouri" (PDF). Kansas Country University. Retrieved 2020-06-05 .
11. ^ ^{a b} Radke, Amanda (2018-08-01). "Cattle Futures 101: Fundamentals of Industry Marketing Tool Explained". Tri-Country Livestock News . Retrieved 2020-05-06 .
12. ^ "Forwards Contracting of Cattle". Authorities of Alberta. Retrieved 2020-05-06 .
13. ^ ^{a b c} "CME Rule Book, Affiliate 102: Feeder Cattle Futures" (PDF) . Retrieved 2020-05-06 .
14. ^ "CME Feeder Cattle contract specifications". CME Group. Retrieved 2020-05-06 .
15. ^ "Historical Feeder Cattle Intraday Data (FCA)". PortaraCQG . Retrieved 2022-03-22 .
16. ^ ^{a b} "Understanding The CME Feeder Cattle Alphabetize®" (PDF). CME Group. Retrieved 2020-06-11 .
17. ^ CME Group. "Trading at Settlement (TAS) for Agricultural Futures" (PDF) . Retrieved 2020-05-06 .
18. ^ ^{a b} Mattos, Fabio (2016-02-10). "Commodity Indices and Futures Markets". Cornhusker Economics . Retrieved 2020-05-06 .
19. ^ CME Group. "S&P-GSCI Commodity Alphabetize Futures Contract Specs". Retrieved 2020-06-11 .
20. ^ Purcell, Wayne D.; Hudson, Michael A. (1985), "The Economic Roles and Implications of Trade in Livestock Futures" (PDF), in Peck, Anne East. (ed.), Futures Markets: Regulatory Problems, Washington D.C.: American Enterprise Establish for Public Policy Inquiry, pp. 329–376
21. ^ ^{a b} Diersen, Matthew A. "Assessing Livestock Gross Margin for Cattle". SDSU Extension Fact Sheets. Retrieved 2020-05-fifteen .
22. ^ "Livestock Gross Margin - Cattle". United States Department of Agriculture Take a chance Management Agency. Retrieved 2020-05-xv .

 This article incorporates public domain material from the Congressional Research Service certificate: Jasper Womach. "Report for Congress: Agronomics: A Glossary of Terms, Programs, and Laws, 2005 Edition" (PDF).

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Source: https://en.wikipedia.org/wiki/Feeder_cattle

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