As feeder cattle prices have rebounded, we're seeing some price spreads in the marketplace that could offer profit to stocker operators and backgrounders.

A look at the accompanying chart of Oklahoma City feeder cattle prices from Oct. 16 shows the potential that feedlots are willing to pay a premium for backgrounders willing to take mid-weight cattle up to heavier weights. These are for medium- and large-frame No. 1 steers.

In looking at our chart, you'll see many of these "premiums" for value of gain are obvious around the green boxes on the right side. Some of the highest rewards the look possible right now are under the beginning weight of 550 and 600 at the top on the right, and moving cattle up to 650 to 800 pounds.

In fact, you may have noticed cattle from 550 to 750 pounds are worth virtually the same price per pound -- no roll-back in pricing right now.

For those sell-buy marketers, this suggests opportunities to sell heavier calves, which could be considered overvalued, and to buy back middle-weight and lighter-weight cattle, which could be considered undervalued.

For example, cattle weighing 650 pounds are worth $166 more than cattle weighing 550 pounds, while those cattle at 550 pounds are only worth $71 more than cattle weighing 450 pounds. This implies a stocker operator with 650-pound calves might sell them and buy back 550-pound calves for a profit, or certainly a producer with 750-pound calves could make such a profitable sell-buy trade.

Derrell Peel, livestock marketing specialist for Oklahoma State University, noted this week, "Big feeder cattle (over 700 pounds) have not only failed to decline seasonally but have increased so far this fall."

"Current prices for heavy feeders are about 8% above August levels," he continued. "Strong feedlot demand for bigger yearlings is more than offsetting increased feeder cattle supplies this fall."

Peel also noted Oklahoma stocker and feeder prices typically drop about 4% between August and October, but as of mid-October this year, calf and stocker prices are down only about 2%, indicating strong stocker demand despite larger calf supplies.

He said Oklahoma auction volume has been 11% higher, year over year, for the past six weeks.

This chart of feeder steer prices from October 16 in Oklahoma City shows some real rewards for stocker operators and backgrounders willing to grow cattle from mid-weight up to heavier weight classes.