Livestock Marketing AGEC 244 (part 1)

Transcription

1 Livestock Marketing AGEC 244 (part 1) Tim Petry Livestock Economist Feb AGEC244 Feb2018.pptx

2 Always excuses NOT to market! I have real work to do and don t have time to market Prices are so volatile, nobody can predict and market correctly My grandfather marketed xxx, my father marketed xxx, and they were successful so I will market xxx Look for excuses TO market! Get $10/cwt. more for every calf, regardless of price level 5.50 cwt. X $10 = $55

3 Differences in Livestock vs. Crop Marketing CYCLES: production and price Livestock Risk Protection (LRP) Price Discovery Storage Basis

4 Cost-Return Projection -- Beef Cow-Calf Enterprise (Per Cow), Cost of Production 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 Cattle Situation and Outlook Tim Petry, Livestock Economist Feb. 22, 2018 Outlook pptx

10 ?

11 WASDE U.S. Meat Production and Prices Change from Change from Estimate Change from Forecast Change from 2017 Production Billion Pounds Percent Pounds Percent Pounds Percent Pounds Percent Beef Pork Broilers Turkey Total meat Prices Dollars/cwt Dollars/cwt Steers Hogs Cents/lb Cents/lb Broilers Turkey Feb. 8, 2018

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13 CHANGE IN BEEF COWS 2016 TO 2017 (1000 Head) DC to to to to US Total 1044 CHANGE IN BEEF COWS 2017 TO 2018 (1000 Head) 03/20/17 Livestock Marketing Information Center Data Source: USDA-NASS US Total /01/18

14 -3.7 %

15 Thou. Head 70 BEEF COW SLAUGHTER Federally Inspected, Weekly JAN APR JUL OCT Avg Data Source: USDA AMS & USDA NASS Livestock Marketing Information Center C-S-34 01/11/18

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18 150 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly JAN APR JUL OCT Fut

19 I-N-16 02/07/18

20 U.S. Ranking in World Production Exports Beef 1 4,3,1 Pork 2 1 Chicken 1 2 Turkey 1 1 Eggs 2 2

21 Major U.S. Meat Export Customers BEEF PORK CHICKEN Japan Mexico Mexico Mexico Japan Canada Korea Canada Cuba Canada China Hong Kong Hong Kong Korea Taiwan China? Australia China Ø

22 MED. FRAME #1 STEER CALF PRICES Pounds, N.D., Weekly JAN APR JUL OCT Ave

23 Mil. Head CALF CROP U.S., Annual Data Source: USDA NASS Livestock Marketing Information Center

24 Data Source: USDA ERS & USDA FAS Livestock Marketing Information Center

25 MED. & LRG. #1 FEEDER STEER PRICES Pounds, N.D., Weekly JAN APR JUL OCT 2018 Futures Ave

26 SF_LS796 Sioux Falls, SD Fri Feb 16, 2018 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Feb 17, 2018 Receipts: 10,511 Last Week: 10,726 Last Year: 10,996 Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Thin Fleshed Fleshy

27 SF_LS796 Sioux Falls, SD Fri Feb 16, 2018 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Feb 17, 2018 Receipts: 10,511 Last Week: 10,726 Last Year: 10,996 Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Replacement Replacement

28 $ Per Cwt. 90 SLAUGHTER COW PRICES 85 90% Lean, Weekly JAN APR JUL OCT Data Source: USDA AMS Livestock Marketing Information Center

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

30 2018: Weather, Corn Prices and Beef Exports? Questions!

31 H-P-22 02/12/18 H-P-09 02/12/18 Data Source: USDA AMS, Compiled by LMIC Livestock Marketing Information Center

32 S-P-06 02/18/18 S-P-05 02/18/18 Data Source: USDA AMS, Compiled by LMIC Livestock Marketing Information Center