Sale value per head:
Feeder cost per head:
Feed and other costs:
Gross feeding margin per head:
Estimates only. Simplified model - actual rations, conversions, and costs vary widely by operation.
What the cattle crush measures
Cattle feeding is a manufacturing business: you buy a raw input (a feeder calf), add feed (mostly corn), and sell a finished product (a fat steer). The crush measures the margin in that transformation. A feedlot that can sell a 1,350-pound steer at $185 per hundredweight grosses about $2,498 per head. Against that sits the cost of the 750-pound feeder, the corn, and everything else - yardage, veterinary, interest, and death loss.
Because live cattle, feeder cattle, and corn all trade as futures, the whole margin can be tracked - and hedged - in the futures market. That is what makes the cattle crush more than a feedlot accounting exercise.
Reading the feeding margin
A positive gross margin does not mean profit until every cost is covered, and the other-costs line is where optimism usually hides. Feed conversions vary by genetics, weather, and ration; a pen of cattle gaining well in cool weather eats far less corn per pound of gain than the same pen in August heat or February mud. Use your own records for bushels fed and other costs, not rules of thumb.
The margin also moves constantly. Corn rallies, feeders rally, fats break - each input has its own market and its own season. Producers who watch the crush weekly tend to spot hedging opportunities that annual planners miss.
Using futures to manage feeding risk
A feedlot placing calves can sell live cattle futures against the expected sale month and buy corn futures against the feed needs, locking in a version of the crush months in advance. Basis - the difference between local cash prices and futures - still moves, so the hedge fixes the margin only approximately. Futures trading involves substantial risk of loss and is not suitable for all investors. Our brokers work through this arithmetic with cattle clients regularly; if you want a second set of eyes on a hedge structure before you place it, that is a normal conversation for us.