Ty Groshans
Association Perspective
Breakeven analysis
March is here, which brings to mind that many producers are right in the middle of calving. While the focus is on the current calf crop, several producers still have calves on the ranch from the previous year. The downward trend in the market last fall resulted in placements being down and calves being retained.
Keeping a close eye on the market and your technical support team on speed dial will help secure — even with a volatile market — opportunity with profitable results. Utilizing a breakeven analysis will determine the current state of the market and allow the producer to make an educated decision whether or not to buy or sell feeder calves.
The volatility in the market today can create opportunity for producers who know the operating costs of the ranch. In Table 1, from the Alberta Feedlot Management Guide, a feeder-cattle breakeven analysis to help decide when to sell or buy feeder cattle has many advantages. This is only an example and is not indicative of current market conditions. Although the calculations are simple, the information going into the equation may be difficult to quantify. Therefore, calculating several different breakevens may be necessary to allow for possible price changes.
