That's the message cattle feedlot operators got this week at a series of meetings across the Midwest. In a tour stop at Carroll, Iowa, they were told that higher feed costs may give a competitive advantage to Midwest feedlots, will reduce the time cattle spend in feedlots, and may widen the price spread between cattle that reach the Choice grade, and those that don't. It may even impact your choice of feeding steers or heifers.

Where's the cheapest place to feed cattle? The Midwest usually has an advantage with the cheapest corn prices in the country. That's still true, and the advantage may be greater in this new price plateau. Justin Sindt, a consultant for VetLife, shared information from his company's Benchmark database, which combines production records from 280 feed yards.

In December of 2006, the average feedlot ration cost was about $190 a ton for the complete feed in the central Plains states (Kansas south through the Texas panhandle). The average cost in the Midwest (Iowa and surrounding states) was $150 a ton, or 21% lower than the Plains. In the northern Plains (Nebraska and the Dakotas) it was $163.

Cost of gain was also cheapest in the Midwest in December, at $53 per hundredweight of gain, compared to $62 in Plains area feed yards. The reason is simple: the run up in corn prices is felt more acutely the farther you get from the central Corn Belt. With cash corn now over $3.50 a bushel in Iowa and Nebraska, it is close to $5 in Texas.

Sindt also pointed out to producers that with high feed costs, it becomes more important that they concentrate on improving feed conversion of feedlot cattle. His numbers show that when the cost of a complete feedlot ration is under $165 a ton, feed conversion accounts for about 66% of the variation in the total cost of gain on the cattle. But when feed goes over $165 a ton, the cost of the feed overwhelms the impact of the other yardage costs. At that price level, feed conversion accounts for 88% of the variation in total cost of gain.

Which is better, put the cattle on grass, or in the feed yard? For the past several years with relatively cheap corn, this was a no brainer: Put the cattle in the yard, and pour the grain to them. The longer they were on feed, the more money they made. An increase in the number of light calves going straight to the feed yard, and steadily increasing slaughter weights have resulted from cheap corn for the past several years.

Source: Agriculture Online