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Virginia Cooperative Extension -
 Knowledge for the CommonWealth

The Cattle Business: Retained Ownership Consignment

Livestock Update, November 1996

Bill McKinnon, Animal and Poultry sciences

The last chance to consign cattle to the Virginia Retained Ownership Program during 1996 will be this November. A shipment of cattle to the Hitch II lot near Garden City, Kansas is scheduled for Tuesday, December 3. The shipment is primarily designed for spring calving cow/calf operators, but is open to any producer. Consignment is open to both steers and heifers. Consignment deadline is November 15. The minimum consignment is five head.

Virginia's ROP program is designed to help cow/calf producers get some feedback on the type of feeder cattle they are producing. The program provides participants with information on feedlot performance, slaughter weights and detailed carcass data including both quality and yield grades. Historically, Virginia's cow/calf producers received only weaning information with which to make breeding decisions. As the industry moves in the direction of various production alliances, it will be important to have credible data as to the ultimate feedlot and carcass performance of a producer's cattle. This information can be an important marketing tool in conventional selling programs. On the whole, if the cow/calf sector receives input on the feedlot and carcass performance of the cattle it produces, perhaps we can make real improvement on having beef become a more consistent meat alternative.

Another objective of the Retained Ownership Program is to teach the basics of custom feeding one's cattle. It certainly makes many feel more comfortable learning the ropes of custom feeding with 5 to 20 head instead of a whole pot load. The objective is to help producers learn how to use custom feeding as a viable marketing option. The situation this fall of dramatically low feeder prices offers an example of when this might be feasible. When one looks at the fundamentals of the cattle and corn situation as compared to the fall of 1995, he would think that feeder cattle should not be cheaper than last fall. The substantial losses suffered by cattle feeders on calves purchased last fall, have them aiming their sights lower in a attempt to recover those losses.

This will be the first fall that heifers can be consigned to the Retained Ownership Program. Given the current market for local feeder heifers, custom feeding may be a viable option. Several potential consignors have already expressed interest in consigning heifers. The enclosed spreadsheet for retaining ownership in heifers projects a substantial return as compared to steers. In regards to the steers, it is not surprising to note that the steer projection shows only a break-even return. In the feeder cattle market all the serious buyers have access to the same information ( i.e. cost of gain, projected finished price, etc.). It is normal for the market to bid the feeder cattle up to the point of break-even. Some buyers either plan on beating the averages for performance or are simply "betting on the come" in regards to finished price.

Before being sent to the feedlot, it is highly recommended that calves be put through a backgrounding program. During this period appropriate vaccinations can be given and the cattle weaned and started on feed. Specific guidelines for such a program are available through the local Extension office. Consignors pay only the initial consignment fee up front and then shortly after shipment, a prorated haul bill. Feedlot costs are financed and deducted from the sale of the finished cattle. Consignments can be made on the enclosed consignment form. Any questions about the program can be answered by contacting Jim Johnson at the Virginia Cattlemen's Association (540/992-1009) or Bill McKinnon (540/231-9160).

                      START DATE:    03-Dec-96

EXPECTED FINISHED SALE WEIGHT         A  1075      __________
CURRENT WEIGHT                        B  600       __________
SHIPPING SHRINK %                     C  7%        __________
STARTING FEEDLOT WEIGHT               D  558       __________
EXPECTED GAIN(A-D)                    E  517       __________
EXPECTED A.D.G.                       F  2.80      __________
DAYS ON FEED(C/D)                     G  185       __________
EXPECTED SALE DATE                    H  05-JUN-97 __________
NEARBY FUTURES PRICE                  I  $63.00    __________
BASIS                                 J  $0.00     __________
EXPECTED SALE PRICE                   k  $63.00    __________
GROSS SALE PRICE(I*A/100)             L  $677.25   __________
CURRENT FEEDER VALUE, $/CWT.(NET)     M  $45.00    __________
CURRENT FEEDER VALUE, $/hd.(b*m/100)  n  $270.00   __________
TRUCKING COST/HD.                     o  $35.00    __________
FEEDER INTEREST RATE                  p  9.00%     __________
FEEDER INTEREST[(n*p)/365*g)]         q  $12.29    __________
ESTIMATED OTHER COST/LB OF GAIN       r  $0.60     __________
COST OF TOTAL GAIN(e*r)               s  $310.20   __________
TOTAL EXPENSES(n+o+q+s)               t  $627.49   __________

NET INCOME PER HEAD(l-t)              u  $49.76    __________

BREAK-EVEN SALE PRICE/Cwt.(t/a*100)   v  $58.37    __________

BREAK-EVEN VALUE OF FEEDER/Cwt.       w  $53.29    __________
                         START DATE:    03-Dec-96

EXPECTED FINISHED SALE WEIGHT         a  1250      __________
CURRENT WEIGHT                        b  725       __________
SHIPPING SHRINK %                     c  7%        __________
STARTING FEEDLOT WEIGHT               d  674       __________
EXPECTED GAIN(a-d)                    e  576       __________
EXPECTED A.D.G.                       f  3.20      __________
DAYS ON FEED(c/d)                     g  180       __________
EXPECTED SALE DATE                    h  31-May-97 __________
NEARBY FUTURES PRICE                  i  $63.00    __________
BASIS                                 j  $0.00     __________
EXPECTED SALE PRICE                   k  $63.00    __________
GROSS SALE PRICE(i*a/100)             l  $787.50   __________
CURRENT FEEDER VALUE, $/Cwt.(net)     m  $56.00    __________
CURRENT FEEDER VALUE, $/hd.(b*m/100)  n  $406.00   __________
TRUCKING COST/HD.                     o  $35.00    __________
FEEDER INTEREST RATE                  p  9.00%     __________
FEEDER INTEREST[(n*p)/365*g)]         q  $18.01    __________
ESTIMATED OTHER COST/LB OF GAIN       r  $0.57     __________
COST OF TOTAL GAIN(e*r)               s  $328.18   __________
TOTAL EXPENSES(n+o+q+s)               t  $787.19   __________

NET INCOME PER HEAD(l-t)              u  $0.31     __________

BREAK-EVEN SALE PRICE/Cwt.(t/a*100    v  $62.98    __________

BREAK-EVEN VALUE OF FEEDER/Cwt.       w  $56.04    __________



     Shipment locations will be designated to match consignments.

                   STEERS               HEIFERS
             Calves       Yearlings     Calves
Target wt:   700 lbs.     850 lbs.      600 lbs.
Accepted wt: 575-800 lbs. 750-950 lbs.  500- 700 lbs.

                Steers                         Heifers
My consignment: _________ No. Head             ________
                _________ Expected Average Wt. ________
                _________ Weight Range         ________

Preferred shipment location: __________________________

Name:     ______________________________
Address:  ______________________________
Phone:    _____________(day)_____________(night)

Return with $10 per head consignment fee by November 15 to:
           Virginia Cattle Feeders Association
           P.O. Box  176
           Daleville, Va.  24083
           Phone:  540/992-1009

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