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CME: Feedlots Improving Feed Efficiency Compared with 2015

07 April 2016

US - Kansas State University’s “Focus on Feedlots” report released February data this week, write CME analysts Steve Meyer and Len Steiner.

This report summarises closeout data from various Kansas feedlots regarding average values for days on feed, average daily gain, slaughter weight, dry matter feed conversion, cost of gain, and death loss. Current and past reports are available here.

Feeding cattle is an intricate and detailed combination of science, technology, and having an “eye” for it.

On the science and technology side, some factors that impact cattle feeding decisions and performance include: cattle genetics, weather, diet formulation, and growth promotants.

On the management side, there is nothing that can be substituted for that eye for feeding cattle, developed from hard work and experience. Here, we will review cattle feeding data from Kansas, as it relates to current market dynamics.

February numbers reinforce the knowledge that we are still feeding cattle longer to heavier weights. There are several reasons for this, but some of the most influential reasons are cost of gain is relatively cheap and fat cattle prices versus feeder cattle prices are still incentivising cattle feeders to put more weight on the animals in the yard.

For days on feed, the report says steers were on feed an average of 169 days during February of 2016, 2 days longer than February of 2015 and 15 days longer than the previous five year average.

This translated to steers that weighed 1431 pounds (live) in February when they were sent from the feedlot to the packing plant. This was 41 pounds heavier than the same time last year, and 74 pounds heavier than the five year average.

While steers are on feed longer, and fed to heavier weights, an important aspect in the feeding world is productivity. Terms used to discuss this productivity are average daily gain (ADG) and pounds of feed per pound of gain.

First, ADG is calculated by the difference of in weight upon arrival at the feedlot and out weight when shipped to the packer, divided by the days the steer was fed in the feedlot.

At the risk of oversimplifying, it becomes less efficient to put more weight on a steer the longer the animal is on feed. Pounds of feed (on a dry basis) per pound of gain gives the conversion (efficiency) of feed to weight added to the animal.

The general rule for cattle is 6:1 or 6 pounds of feed are required for the steer to gain 1 pound. Again, this conversion usually becomes less efficient (i.e. more pounds of feed required per pound of gain) for an animal after it surpasses a certain weight level and time on feed.

February numbers for steers show an ADG of 3.61 pounds. This is up from 3.52 pounds per day a year ago and combined with steers being on feed an average of 5 days longer compared to last year, their gain was more productive year-to-year.

Pounds of feed (dry matter) per pound of gain for steers during February was 6.19 pounds. This is down from 6.32 pounds in 2015, and also indicates feedlots being more feed efficient as less feed was required per pound of gain, year-over-year.

The increase in days on feed, combined with a higher ADG and less feed required per pound of gain, all helps feedlot margins.

There are many factors affecting how these dynamics play out, one we can point to is February was fairly mild from a weather standpoint, favourable for weight gain when feeding cattle.

These relationships all combine with the cost of feed and value of the fed animal when sold to the packer, to determine feedlot margins.

Cost of gain for steers in February was at $81.06 per cwt. compared to $89.29 per cwt. a year ago. This is rooted in lower corn prices, which although are forecast to stay low through the year, could be upended by weather events.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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