Tips for Profitably Managing Stockers

Stocker cattle can undoubtedly be a profitable enterprise, however there are several considerations that must be accounted for before buying a set of calves. Doug Ferguson, utilizes sell-buy marketing strategies in his business to maximize profit.  

“Sell-buy is the marketing method a lot of the old timers talk about where you capture your profit on the buy,” says Ferguson. “The short definition is it's a real-time cash flow reckoning. We see those relationships as they exist in the present, so there isn't going to be any projected break-evens. We're dealing with real-time real numbers.” 

In the case of stocker cattle, there are a variety of ways to capture that profit. 

“You can buy a three weight and sell him at five, take him to eight or finish him out,” says Ferguson. “Most of the time, the value of gain is good, so it’s a weight gain business.” 

However, adding weight is only one method of adding value to stockers.  

“I have a list of probably 20 ways to add monetary gain to stocker cattle that I share in my sell-buy marketing school,” explains Ferguson. “You want to look for value and that can look like a lot of different things from weight gain to value-added lots to picking up high-risk calves or feeder bulls if you know how to handle them.” 

Breeding open heifers and selling them as breds is also an opportunity to consider.  

Ferguson also places high emphasis on his own health program after buying any set of cattle.  

He explains, “Being a stocker operator, I know that other stocker operations or feed yards are my customer. So, my reputation is built on that health program.” 

Reputation of the rancher also must be considered.  

“As a buyer, reputation matters. Does the rancher have a good or poor reputation in the sale barn?” asks Ferguson. “If seasoned buyers show no interest in a group of cattle, that’s a red flag.” 

For first timers running stockers using a sell-buy approach, Ferguson offers a few additional tips.  

He says, “Don’t sell an animal unless you have a replacement animal identified. For example, if I have eight weights but see undervalued four weights, I can make a prosperous trade.” 

Understand value of gain too.  

“The first thing to learn is value of gain,” says Ferguson. “Value of gain tells us two things. 1. Will it pay me to put weight on these cattle? 2. What cattle can I add the most value to the quickest?” 

After that, you need to know what resources you have available your own skillset with running different groups of cattle. 

“You’ve got to buy something you can handle. Animals from different geographical regions have different health needs,” says Ferguson. “Additionally, if you are buying bawling three weights, you need the facilities to hold them.” 

Getting comfortable in the barn setting is also important if you don’t plan to buy privately. 

“Know how to calculate a return on gain and build a barn card so you know exactly how much to spend on your replacement animals and still hit your profit target.” 

Finally, know how to leverage volatile markets.  

“When markets crash, keep trading because stocker cattle don’t go up and down at the same rate. Those relationships will widen and narrow,” says Ferguson. “When everyone else is panicking and sitting on their hands, you can make some good trades.” 

Listen to the full conversation on the Casual Cattle Conversations podcast.