Intro to Livestock Marketing Annie s Project. Tim Petry Livestock Economist 2018

Transcription

1 Intro to Livestock Marketing Annie s Project Tim Petry Livestock Economist ANNIES Feb2018

2 Always excuses NOT to market! Marketing takes time and planning Look for excuses TO market! Get $10/cwt. more for every calf, regardless of price level 5.50 cwt. X $10 = $55

3 Identify Your Market Most calves, cull cows and bulls, and sheep and lambs are sold at livestock auctions Most fed cattle and hogs sold directly to packers Specialty livestock such as goats, poultry, organic, grass fed, etc. require you to find and develop markets

4 Need to know your cost of production Cost-Return Projection -- Beef Cow-Calf Enterprise (Per Cow), N.D. Your Avg. Numbers VARIABLE COST PER COW: 1.Summer Pasture $ $ 2.Hay--silage Other feed Protein and Mineral Hired Labor, Custom Hire Veterinary, Drugs, and Supplies Utilities, Fuel, and Oil Facilities and Equipment Repairs Breeding Charge Marketing Miscellaneous Interest A.TOTAL VARIABLE COSTS $ $ 0.00 FIXED COSTS PER COW 13.Depreciation $ $ 14.Interest Insurance Cow interest, death loss B. TOTAL FIXED COSTS $ $ 0.00 C. TOTAL COSTS PER COW (A + B) $ $ 0.00 Your Numbers RETURNS PER COW 2 % x Weight x Price 17.Steers:.45 x 590 x 1.60 x x $ $ Heifers:.26 x 570 x 1.35 x x Cull cows;.14 x 1300 x 0.65 x x Cull heifers:.05 x 900 x 1.15 x x D. GROSS RETURNS PER COW $ $ 0.00 E. RETURN OVER VARIABLE COSTS (D - A) $ $ 0.00 F. RETURN OVER TOTAL COSTS (D - C) 3 $ $ Information in this budget is based on the North Dakota Farm and Ranch Business Management Annual Report, Returns are based on a 90 percent weaning rate, 45 steers sold, 26 heifers sold, 19 heifers kept for replacement, 14 cull cows sold, and 5 cull heifers sold. Prices are projected for fall. 3 Return over total costs is return to unpaid family labor, management, and equity.

5 Average Net Return to Labor and Management Per Beef Cow N.D. Farm Business Mgmt., Excluding Red River Valley Average Projected High 20% Low 20%

6 PRICE CYCLES Use for long run planning SEASONAL PRICE PATTERNS Most important marketing tool Reason for forward contracting, futures, options, LRP BOTH CAN BE AFFECTED BY CATASTROPHIC EVENTS 9/11/01 BSE Drought High feed cost Economic crisis

7 Cattle Price Cycle AVERAGE ANNUAL CATTLE PRICES 275 $ Per Cwt lb Steer Calves lb Feeder Steers Fed Steers Data Source: USDA AMS, Compiled and Forecasts by LMIC Livestock Marketing Information Center C-P-06 02/08/18

8 Seasonal Price Patterns Livestock Marketing Information Center: Data Source: USDA-AMS, Compiled & Analysis by LMIC

9 SF_LS796 Sioux Falls, SD Fri Feb 9, 2018 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Feb 10, 2018 Receipts: 10,726 Last Week: 11,842 Last Year: 9057 Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Fancy

10 Wide range in prices for same weight and grade of calves at same market Important to move to top end Low: 5.5 cwt. x $181 = $995 Ave = $1048 (+ $53) High 200 = $1100 (+ $105) Fancy = $1151 (+ $156) Check with your market to see how to reach top of range

11 Premiums likely (but not consistent) for: Verified shots (ND VIP) Natural (no antibiotics or implants) Source/age verified Weaned Bovine Viral Diarrhea persistently infected (BVD PI) tested negative Beef Quality Assurance (BQA) Replacement quality heifers *Check with your market before selling

12 SF_LS796 Sioux Falls, SD Fri Feb 9, 2018 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Feb 10, 2018 Receipts: 10,726 Last Week: 11,842 Last Year: 9057 Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Replacement

13 Volatile Prices Will Continue $ Per Cwt SLAUGHTER LAMB PRICES Wooled, lbs, Sioux Falls, Weekly 100 JAN APR JUL OCT Avg

14 Price Risk Management Tools Cash forward contract Video and internet auctions CME futures CME options Livestock Risk Protection (LRP) Which one or combination fits your marketing plan?

15 LRP Advantages Sold by livestock (crop) insurance agents 600 lb. & 600 lb. steers AND heifers, fed steers and heifers, hogs, lambs You pick market weight Any number (1 head minimum) Premium subsidized 13%, beginning farmer 23% Receive higher prices in up market Good way to learn for beginners www3.rma.usda.gov/apps/livestock_reports/main.aspx

16 Calf Marketing Plan 100 Cow Spring Calving Herd lb. steer calves lb. heifer calves Expected Market Date Nov. 15 Goal: Preprice 50 % of production Best Strategy: LRP Current Price: Steer $180/cwt. Heifer $160/cwt. Strategy # of Head Price Objective Time Deadline LRP 26 wk. LRP 13 wk. Market 12 steers 7 heifers 11 steers 6 heifers 46 steers 26 heifers $190 $170 $200 $185 May 15 Aug. 15 Nov. 15

17 Questions