September 8, 2009

Wet distillers grains may bolster cattle producers' bottom line

In a recent cattle market update, Dr. Darrell R. Mark of the University of Nebraska noted that wet distillers grains may add significantly to the bottom line of cattle producers. (Distillers grains are produced by corn-based ethanol plants.)

While acknowledging that every operation is different, Mark, an associate professor in the Department of Agricultural Economics, said steer calves weighing 550 pounds placed on feed, and finishing in mid-April, could see a profit of $40 per head with with a conventional corn-only ration. For a wet distillers grains ration (with cheaper feedstuff prices and improved performance projections), profit jumps to $112/head.

Mark used average feeding performance in the estimate, and used feed prices and feeder cattle prices found in a table in the report. (Access the full report here [.pdf])

While heavier weight placements don’t pencil out as well, wet distillers grains makes an importance difference.

Mark noted that a 750 pound yearling steer going on feed now and finishing in late January has a projected loss of $5/head for a conventional corn-only diet, but switching to a ration containing 40 percent wet distillers grains (dry matter basis) results in a $47/head profit.

He concluded:

While these costs and performance expectations will differ for all feeders, it does suggest that many feeders can be profitable and lock in a positive margin for current placements, an opportunity badly needed after 2+ years of mostly negative closeouts.

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