Livestock Marketing AGEC 244 (part 1) Tim Petry Livestock Economist www.ndsu.edu/livestockeconomics Feb. 2018 AGEC244 Feb2018.pptx
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
Differences in Livestock vs. Crop Marketing CYCLES: production and price Livestock Risk Protection (LRP) Price Discovery Storage Basis
Cost-Return Projection -- Beef Cow-Calf Enterprise (Per Cow), 2018 1 Cost of Production N.D. Your Avg. Numbers VARIABLE COST PER COW: 1.Summer Pasture $ 140.00 $ 2.Hay--silage 170.00 3.Other feed 25.00 4.Protein and Mineral 25.00 5.Hired Labor, Custom Hire 25.00 6.Veterinary, Drugs, and Supplies 25.00 7.Utilities, Fuel, and Oil 30.00 8.Facilities and Equipment Repairs 40.00 9.Breeding Charge 10.00 10.Marketing 15.00 11.Miscellaneous 20.00 12.Interest 14.00 A.TOTAL VARIABLE COSTS $ 539.00 $ 0.00 FIXED COSTS PER COW 13.Depreciation $ 30.00 $ 14.Interest 10.00 15.Insurance 10.00 16.Cow interest, death loss 65.00 B. TOTAL FIXED COSTS $ 115.00 $ 0.00 C. TOTAL COSTS PER COW (A + B) $ 654.00 $ 0.00 Your Numbers RETURNS PER COW 2 % x Weight x Price 17.Steers:.45 x 590 x 1.60 x x $ 424.80 $ 0.00 18.Heifers:.26 x 570 x 1.35 x x 200.07 0.00 19.Cull cows;.14 x 1300 x 0.65 x x 118.30 0.00 20.Cull heifers:.05 x 900 x 1.15 x x 51.75 0.00 D. GROSS RETURNS PER COW $ 794.92 $ 0.00 E. RETURN OVER VARIABLE COSTS (D - A) $ 255.92 $ 0.00 F. RETURN OVER TOTAL COSTS (D - C) 3 $ 140.92 $ 0.00 1 Information in this budget is based on the North Dakota Farm and Ranch Business Management Annual Report, 2017. 2 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.
Average Net Return to Labor and Management Per Beef Cow N.D. Farm Business Mgmt., Excluding Red River Valley 1000 800 600 400 200 0-200 888990919293949596979899000102030405060708091011121314151617 Average Projected High 20% Low 20%
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
Cattle Price Cycle AVERAGE ANNUAL CATTLE PRICES 275 $ Per Cwt 250 225 200 175 150 125 100 75 50 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 500 600lb Steer Calves 700 800lb Feeder Steers Fed Steers Data Source: USDA AMS, Compiled and Forecasts by LMIC Livestock Marketing Information Center C-P-06 02/08/18
Seasonal Price Patterns Livestock Marketing Information Center: Data Source: USDA-AMS, Compiled & Analysis by LMIC
Cattle Situation and Outlook Tim Petry, Livestock Economist www.ndsu.edu/livestockeconomics Feb. 22, 2018 Outlook 2-22-2018.pptx
?
WASDE U.S. Meat Production and Prices 2014 2015 Change from 2014 2016 Change from 2015 2017 Estimate Change from 2016 2018 Forecast Change from 2017 Production Billion Pounds Percent Pounds Percent Pounds Percent Pounds Percent Beef 24.25 23.70 2.3 25.22 6.4 26.17 3.8 27.73 6.1 Pork 22.84 24.50 7.3 24.94 1.8 25.18 2.16 26.89 5.1 Broilers 38.55 40.05 3.9 40.7 1.6 41.66 2.14 42.60 2.3 Turkey 5.76 5.63 2.3 5.98 6.2 5.98 0 5.97 0 Total meat 92.17 94.63 2.7 97.6 3.1 100.15 2.6 103.94 3.8 Prices Dollars/cwt Dollars/cwt Steers 154.56 148.12 4.2 120.86 18.4 121.52.5 119.25 1.9 Hogs 76.03 50.23 33.19 46.16 8.1 50.48 9.4 48 4.9 Cents/lb Cents/lb Broilers 104.9 90.5 13.7 84.3 7.0 93.5 10.9 90.8 2.9 Turkey 107.6 116.2 8.0 117.1.8 96.1 18 91.3 5.0 Feb. 8, 2018
55 22 2 1 3 CHANGE IN BEEF COWS 2016 TO 2017 (1000 Head) 1 0 50 20 1 1-3 -6 20 0 1 10 12 68 25 15-1 -0 4-9 DC 0 13 33 14 82 6 150 0 2 14 23 7 0 4 50 172 21-5 -24 20-8 -24 170 0 to to 6 0 6 23 6 to to 23 173 3 1 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 510 02/01/18
-3.7 %
Thou. Head 70 BEEF COW SLAUGHTER Federally Inspected, Weekly 65 60 55 50 45 40 35 JAN APR JUL OCT Avg. 2011 15 2016 2017 2018 Data Source: USDA AMS & USDA NASS Livestock Marketing Information Center C-S-34 01/11/18
150 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly 140 130 120 110 100 90 JAN APR JUL OCT 2016 2017 2018 2018 Fut
I-N-16 02/07/18
U.S. Ranking in World Production Exports Beef 1 4,3,1 Pork 2 1 Chicken 1 2 Turkey 1 1 Eggs 2 2
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
MED. FRAME #1 STEER CALF PRICES 550 600 Pounds, N.D., Weekly 220 200 180 160 140 120 100 JAN APR JUL OCT 2018 2017 2016 2009 2013 Ave
44 42 40 38 36 34 32 30 28 Mil. Head CALF CROP U.S., Annual 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Data Source: USDA NASS Livestock Marketing Information Center
Data Source: USDA ERS & USDA FAS Livestock Marketing Information Center
MED. & LRG. #1 FEEDER STEER PRICES 750 800 Pounds, N.D., Weekly 170 160 150 140 130 120 110 100 JAN APR JUL OCT 2018 Futures 2018 2017 2016 2009 2013 Ave
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 13 379-399 387 217.00-221.00 218.59 88 455-499 474 182.50-215.00 206.38 87 501-549 524 189.00-208.50 200.44 214 550-597 578 175.25-190.00 182.79 530 600-647 631 167.00-183.50 174.76 14 622 622 185.25 185.25 Thin Fleshed 516 650-695 671 153.00-175.00 165.32 772 700-745 730 143.50-161.50 156.52 914 750-798 768 145.00-160.00 153.08 26 768-791 786 140.75-142.50 141.14 Fleshy 717 801-846 818 139.50-149.50 146.56 574 855-899 878 137.75-148.00 143.76 284 904-948 930 136.50-142.00 140.05 376 950-992 969 136.75-140.25 138.65
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 10 398 398 190.00 190.00 20 410-447 427 183.00-184.00 183.53 81 451-496 470 157.00-183.50 168.95 269 500-549 528 162.00-179.00 169.25 375 552-596 578 154.00-170.50 162.34 537 600-649 627 149.00-163.00 156.34 663 650-696 677 138.00-158.00 148.50 505 701-749 724 133.00-147.50 140.97 348 750-799 775 131.00-142.00 139.26 40 759-778 767 147.00-150.00 148.95 Replacement 298 800-848 830 132.00-137.50 134.52 26 809-829 817 131.50-156.00 146.43 Replacement 21 914 914 128.25-128.50 128.32
$ Per Cwt. 90 SLAUGHTER COW PRICES 85 90% Lean, Weekly 80 70 60 50 JAN APR JUL OCT 2016 2017 2018 Data Source: USDA AMS Livestock Marketing Information Center
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?
2018: Weather, Corn Prices and Beef Exports? Questions!
H-P-22 02/12/18 H-P-09 02/12/18 Data Source: USDA AMS, Compiled by LMIC Livestock Marketing Information Center
S-P-06 02/18/18 S-P-05 02/18/18 Data Source: USDA AMS, Compiled by LMIC Livestock Marketing Information Center