Buying cattle for winter finishing is a gamble as there is no indication of how the market will perform next spring.

Therefore, to try to maximise the return on store cattle, farmers need to control the buying price and finishing costs as best as they can.

Completing a finishing budget before buying cattle will give a guide as to whether or not there is a margin to be made from cattle this winter.

For the budget to be effective, you have to use a realistic beef price, carcase weight and feed inputs.

Do not base your sums on a handful of animals that have the highest performance as this will skew the figures to make finishing look more profitable.

Considerations

Once completed, use the budget to decide on what type of cattle to buy. If the margins are tight, you may need to consider buying plainer cattle for finishing.

While they will achieve a lower conformation grade, and therefore a lower beef price, they are most likely cheaper to acquire compared with U-grade animals.

Next, consider what weight range and the type of cattle to buy. This will depend on your finishing system, along with the availability of housing and feed.

For farmers looking to turn cattle quickly, heifers suit best. They can be intensively finished in a period of 50 to 60 days, sold and then replaced with another group for finishing in a similar time period.

Steers will require an intensive feeding period of 50 to 100 days, depending on how heavy the animal is when the finishing period starts.

With intensive finishing, you will need cattle that are 50kg to 100kg from their final slaughter weight. The downside to buying this type of animal is that you will be competing with large-scale specialist finishers in the mart.

These finishers tend to have an agreement with their processor based on a regular supply, and usually receive a higher beef price in return, making them strong buyers.

The alternative is to buy lighter store cattle weighing 400kg to 500kg, over-winter them and target a finishing date from March to June, or put them back to grass before finishing next autumn.

These animals will benefit most from completing a budget as the finishing period is so far away. The different options for marketing these cattle are outlined in Table 1.

All assumptions are based on a 450kg steer purchased on 1 November at £1,000. Silage is costed at £25/t and concentrates are priced at £200/t.

Option one

Option one is based on a 450kg steer bought in November and sold again on 1 April. The example assumes that a herd is not under movement restriction and therefore able to sell cattle through the live trade.

The reason for selling in spring may be due to a shortage of silage to carry the animal through to finish in late June, as well as not having the option to put the animal back to grass.

At a purchase price of £2.20/kg, the animal is assumed to be a good-quality Continental steer capable of high levels of weight gain.

Weight gain over the 150 days is taken at 0.6kg/day, giving a total of weight gain of 90kg during the winter period. This leaves the animal at a sale weight of 540kg on 1 April.

Feed costs are £183 for the 150-day period based on an average intake of 25kg silage costing £93 and 450kg of concentrate at £90. This gives the animal a breakeven sale price of £1,183 (£2.19/kg) on 1 April.

The mart trade is usually strong at this time of year with buyers looking to restock houses as well as purchasing cattle for grazing.

Option two

Option two assumes the animal is taken through to slaughter on 30 June after a 90-day intensive finishing period.

Rather than selling on 1 April, the animal is built up to higher levels of concentrate feeding. Across the 90-day period, this is averaged at 7kg/day. Due to the high concentrate diet, the kill-out is taken as 57%.

The additional feeding period increases the break-even cost to £1,343, and assuming the animal gains 100kg during the finishing period, the carcase weight would be approximately 365kg.

This converts to a break-even beef price of £3.67/kg.

Option three

In the final option, the animal is returned to grass on 1 April and grazed over the summer before finishing on 1 September.

The grazing costs amount to £75, plus £24 to cover a short six-week period of feeding barley to increase fat cover.

Assuming a weight gain of 0.9kg/day from turnout to slaughter, the animal will have gained 135kg over the grazing season.

A lower kill-out of 55% is used for the grass-finished steer, giving a carcase weight of 371kg. On a breakeven price of £1,282, this converts to a beef price of £3.45/kg.

Summary

The three options outlined are based on the basic inputs involved in beef finishing. There is no profit margin included in the options, nor is any cost on animal health, housing and labour.

There is also no allowance made for higher levels of performance that could be achieved when feeding good-quality silage. On silage with an ME approaching 12, a 450kg steer being fed 3kg of concentrate per day, should achieve weight gains close to 0.9kg per day, rather than the 0.6kg assumed in the example. Over 150 days, that is an additional 45kg.

The point of completing a simple budget in advance of selling cattle is to try to gauge the best market route for the cattle you purchased this autumn.

Make the decision based on the costs involved and what price you could realistically achieve at sale time.