One method of estimating expected returns is to use the live cattle futures price for the contract month nearest to the expected finish date. In this example, costs and return are calculated on a per head basis. Feed costs and efficiency are much easier to calculate if you have your own production and financial records from previous groups of cattle. These rations, along with current feed prices and expected feeding efficiency allow feed costs to be estimated. Other costs need to be included.
Some feedlots charge yardage, others mark up feed.
Death loss, health costs, processing costs, interest and transportation to the feedlot need to be calculated. If calves are fed on the farm, different cost items must be determined. Instead of yardage, you would have machinery and feed preparation costs, utilities, repairs, maintenance, insurance, etc. If the numbers are close and you decide to feed, consider protecting some of the risks. Selling price can be hedged by selling futures or buying put options.