Current Price Fro Black Beef Bull Calves in Midwest

R. Brusk Lacy, Extension Economist-Livestock
Carole Hicks Knight, UGA Cooperative Extension
John C. Mckissick, Professor Emeritus-Livestock Economics & Marketing

• Selling Versus Marketing
• Know Your Price
• Plan for the Market
• Feeder Calf Marketing Alternatives
• Which Cattle to Produce
• Where to Market
• Cull the Right Marketing Method
• When to Market
• Keeping Up with the Marketplace
• References

Most cattle produced in Georgia come from moo-cow-calf farms and ranches. With cow-dogie operations, every bit with other farm enterprises, making a profit is the merely matter that will keep y'all in business organization. How much profit you make depends largely on your ability to market your calves.

Selling Versus Marketing

Profitable cattle marketing involves more than just getting the highest price. It involves producing the type of calf the market place desires, marketing that calf through the all-time outlet and at the best time. Unfortunately, near cow-calf producers simply sell their calves. They produce calves that are the easiest to heighten, sell at the most convenient market outlet and sell at the nigh convenient time. Equally a upshot, they are price-takers.

Marketing ways making choices about how or what product to produce, where to market it and when to price. As a event, marketers have some command over the price they receive.

The first footstep in becoming an constructive cattle marketer is to recognize all your alternatives and evaluate each in low-cal of potential toll and returns, selecting the most profitable rather than the nigh user-friendly alternative.

This publication addresses several problems associated with marketing calves -- nigh notably, cost considerations, market construction, the type of calf to produce, market place outlets and seasonal cost considerations.

Know Your Cost

The commencement step in any successful marketing programme is to know the unit cost of production (UCOP). In fact, for many small-scale or medium-size cow herds, the toll of production is a larger turn a profit determinant than the marketing method. Regardless of the size of the herd, for cow-calf producers this means knowing the cost per pound of calf sold. The best way to make this determination is to begin with a budget similar to the one shown in Table one.

Table 1. Case summary budget for a moo-cow-calf enterprise in Georgia.
Item	$/Cwt.	$/Cow
Variable Price	$137.14	$609.06
Less: Value of cull cows, bulls and heifers	($26.88)	$119.40
Net VARIABLE COST	$110.25	$489.66
Annual Livestock Fixed Costs	$xi.43	$fifty.76
Annual Buildings & Facilities Stock-still Costs	$7.16	$31.82
Annual Equipment Fixed Costs	$21.02	$93.37
Almanac Land Fixed Costs Excluding Taxes	$0.00	$0.00
Annual Real Estate Taxes	$1.37	$6.xi
TOTAL COSTS	$149.87	$665.61
Source: 2012 UGA beef cow-calf budgets

Notation that while the cost per moo-cow is shown, the accent is placed on $/Cwt. The cost per hundredweight sold is used considering it captures non only total herd costs only also calf crop percentage and weaning weights.

In the case budgets shown, there are 2 numbers highlighted -- the first one beingness variable cost in $/Cwt. Variable costs (VC) are also chosen Straight, "Out of Pocket" or Operating Costs and include items such as feed, seed fertilizer, fuel and labor. These are the costs that must be covered each year because they are the measure of profitability. It is also critical to cover variable costs considering whatsoever returns in a higher place variable costs (ROVC) become toward paying overhead or fixed costs.

Returns above total costs (ROTC) is the measure out of the long-term economical sustainability of an enterprise. Total costs (TC) include not only VC merely also fixed costs (FC) such equally depreciation, cost of capital, management, taxes, etc. FC are those costs that occur regardless of the number of head produced. Some people as well refer to FC as overhead or indirect costs. Regardless of the terms used, the total cost (TC) per hundredweight is the price a cow-calf producer must boilerplate in the long run if they desire to remain in business.

Knowing the VC and TC per hundredweight allows producers to set target prices and evaluate their costs in relation to the market place. While weather and input costs tin can exist volatile in the curt term, which volition impact cost per hundredweight year-to-twelvemonth, producers who consistently have interruption-fifty-fifty prices above market place prices will need to observe means to lower their costs in gild to stay in the concern.

Plan for the Marketplace

The old maxim goes that if you lot don't know where you're going, any road volition take you in that location. But if marketing your cattle at a profit is where you want to become, and so planning for the market will help go yous there. Planning requires data. A good style to start becoming a meliorate cattle marketer is being sure you sympathise the cattle marketing organization and how your cattle prices are determined. Then you demand to recognize all the marketplace alternatives available to y'all. Finally, you need to know where to get the information to help yous decide on a marketing plan.

The Georgia Feeder Cattle Market

Figure 1. Seasonal prices of feeder steers and bulls in Georgia auction markets. 2007-2011. Information source: USDA-AMS, Weekly Auction Report, TV_LS145 (various weeks).

In Georgia, as in the Southeast, feeder calves are produced and sold as feeder calves after weaning. About seventy percent of all Southeastern calves are weaned and sold during the fall. This is the major reason behind the normal seasonal price swings shown in Figure one: prices are normally lower during the fall and higher during the late wintertime and early spring.

In that location are around 17,000 cattle producers in Georgia with an boilerplate herd size of fewer than 50 head. With then many small producers, it is natural that most Georgia feeder calves are sold through local auction markets.

Calves weighing betwixt 300 and 500 pounds will normally move into some type of forage-based stockering programs, where another 300 to 400 pounds volition exist added. Every bit heavyweight feeders, between 600 and 800 pounds, they then will typically move directly into feedlots.

Figure two. Cattle on feed in yards with more than 1,000 head (January 1, 2012). Source: Information provided by USDA-NASS, "Cattle" Report. Chart developed by the Livestock Marketing Data Eye (LMIC).

Ordinarily, 70 to 75 percent of all U.S. beef comes from cattle fed in feedlots. Feedlots take become fewer but larger in size. The top three feedlot states (Texas, Nebraska and Kansas) now market place near threescore percentage of the cattle fed in the United States. Figure 2 illustrates the concentration of the cattle feeding industry in the United States equally of January 1, 2012.

While there are definite segments to the beef production system, the of import point to recollect is that the consumer eventually makes the final pricing conclusion. The retailer wants a certain type of product because the consumer wants it. This is relayed back to the packer, who relays it to the feedlot, who relays information technology to the feeder cattle producer. The "relay" for all these messages is the cost. Unfortunately, considering of all the messengers in the market, the signals sometimes get mixed or muted. However, if we pay close enough attention, we can recognize them. By agreement how the beef cattle markets work, feeder cattle producers will be improve able to recognize changes that may make a higher profit.

Feeder cattle prices are derived from their side by side market place. The calves' value is based on what they are expected to be sold for, either out of the feedlot or out of a backgrounding operation, less the cost of gain. Equally the expected toll of finished animals goes up or the price of gain goes down, feeder calf prices will increment. The weight to exist added is factored in with the expected price of finished cattle. A ane,200-pound finished steer weighs 2.40 times as much as a 500-pound feeder dogie and 1.threescore times as much as a 750-pound yearling. Therefore, a $ane-per-hundredweight increase in the expected selling price of a finished steer would cause a buyer to bid $ii.40 per hundredweight more for a 500-pound feeder calf or $1.60 more than for a 750-pound steer.

The cost of finishing the dogie will also affect the price of the feeder. The cost of putting a pound of proceeds on a calf depends on feed cost, non-feed costs such as involvement, and the efficiency of the calf itself.

A feeder buying a 500-pound dogie and finishing it to i,200 pounds is putting on 700 pounds of gain, or 1.xl times the original weight. Finishers buying 750-pound yearlings and finishing to one,200 pounds are putting on 0.64 times the original weight. Each $1 change in the cost of gain will raise or lower the price finishers can pay by $1.forty for a 500-pound dogie and $0.64 for a 750-pound feeder. Table 2 shows the suspension-even buy prices that could be paid for a 550-pound steer given alternative fed-cattle prices and cost of gain. Of course, feeder calves produced in Georgia are likely to be transported to the feedlot states. Thus, a feedlot will also have to disbelieve the feeder price in Georgia past the toll of transporting the calves to the feedlot.

Table 2. Prices that can be paid for a 550-pound feeder steer at alternative fed-cattle selling prices and cost of gain.
	Sales Cost of Finished Cattle ($/Cwt.)
Cost of Gain ($/Cwt.)	$ 105.00	$ 115.00	$ 125.00	$ 135.00
$ 70.00	$ 149.55	$ 172.27	$ 195.00	$ 217.73
$ 80.00	$ 136.82	$ 159.55	$ 182.27	$ 205.00
$ ninety.00	$ 124.09	$ 146.82	$ 169.55	$ 192.27
$ 100.00	$ 111.36	$ 134.09	$ 156.82	$ 179.55
$ 110.00	$ 98.64	$ 121.36	$ 144.09	$ 166.82
$ 120.00	$ 85.91	$ 108.64	$ 131.36	$ 154.09

CHANGES IN Beef AND Live CATTLE MARKETING
For years most alive cattle (also chosen slaughter or fatty cattle) were marketed on a pen-average basis. That is, feed yards were paid one price for all of the cattle in the pen. However, over time that has inverse. Now shut to 60% of all slaughter cattle are sold on a carcass basis where each carcass is individually weighed and graded for quality (marbling) and yield (percentage of retail meat). Since there are different prices for unlike yield and quality grades, each carcass ends up with an individual or customized price. The net effect is that price transmissions from the packer dorsum to the cow-calf producer are much clearer now than in the past.

Effigy 3. Factors that affect feeder cattle prices.

While it is the cost and render from finished cattle that give feeders their value, it is the overall supply and demand for beef that determines fed-cattle prices. Effigy 3 illustrates the factors that affect fed-cattle prices. It is important to annotation that at that place are many things that affect the price of cattle and beef that cow-calf producers cannot control. Notwithstanding, by being aware of these factors, cattlemen can have some thought of expected prices and plan accordingly.

The variables are shown past unlike size squares depicting the relative importance of each. For example, fed steer and heifer slaughter contributes the nigh to beef supplies, followed past commercial cow slaughter, non-fed steer and heifer slaughter, beefiness imports and exports, and bull and stag slaughter.

On the need side, per capita dispensable income, total population and competing meats (poultry and pork) are all important factors. Other factors, such equally the value of past-products and the cost of slaughter, processing and marketing (farm-to-retail margin), will also affect farm prices.

Feeder Calf Marketing Alternatives

Webster?south Dictionary defines "marketing" as the process or technique of promoting, selling and distributing a production or service. It is important to keep in mind what your product is. Ultimately, a feeder calf producer'southward product is beefiness. Georgia feeder calf producers accept three major marketing decisions: what to produce, where to market their production and when to cost their calves. While some or mayhap all of these decisions are set for the producer, alternatives most likely exist. The choice of these alternatives volition have a dramatic impact on the profitability of the cattle performance.

Which Cattle to Produce

The cow-dogie producer influences the marketability of his cattle the day he selects his breeding stock. While information technology is true that virtually whatsoever type of cattle can be sold at a cost, the Georgia cattle producer should be raising the well-nigh profitable cattle. There are many factors that make up one's mind the value of a feeder calf. Some of these factors can exist influenced through an operation?southward breeding and genetics program and others through good management practices. These factors include:

• Breed
• Color
• Frame
• Muscling
• Condition/Flesh
• Weight
• Sex
• Groundwork
• Horns
• Make full
• Personal Preference
• Vaccinations

Breed

The breed of the calf can influence prices independent of grade. Certain breeds or breed-types bring a higher toll considering of perceptions by the society buyer equally to how these breeds will perform in the feedlot. While these perceptions may or may not be correct, they do exist. One fashion to get effectually breed perceptions is to take advantage of breed association-sponsored marketing programs. Crossbred calves have traditionally been in higher need than purebred calves because of the advantage of hybrid vigor. Even so, in contempo years, that trend has been challenged. Calves with a high percentage of dairy or Brahman influence are typically discounted through the sale befouled.

Color

Calf color can also touch the conclusion of value because information technology can be a inkling into the calf's breeding. Co-ordinate to a report done in Arkansas in 2005, there was a $13.07/Cwt. spread between selling prices of calves of various colors.

Table three. Price adjustments for various breeds.
Calf Color	Average Selling Price (Value/Cwt.)	Difference From Overall Average (Value/Cwt.)
xanthous-white face	$120.44	$ii.34
yellow	$120.29	$two.19
black-white face	$120.03	$1.93
black	$119.24	$1.14
gray	$117.66	-$0.44
grayness-white confront	$116.79	-$1.31
white	$116.01	-$two.09
crimson-white face up	$114.58	-$iii.52
red	$113.92	-$4.18
spotted or striped	$107.37	-$10.73
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Frame

The United States Department of Agriculture has official grades for feeder cattle based on frame size, thickness and thriftiness (overall wellness). Frame size refers to the animal's skeletal size ? its height and trunk length ? in relation to its age. Frame size is related to the weight at which, nether normal feeding and management, an animal will produce a carcass of a given grade. Large-frame animals require a longer time in the feedlot to reach a given grade and will weigh more than than a small-frame animal would weigh at the same grade. Animals are assigned to three frame sizes - Large, Medium and Small. Table four describes the expected minimum live weights at which these calves would produce U.South. Pick carcasses.

Table 4. Correlation betwixt frame size and finished slaughter weight.
Frame Size	Steers	Heifers
Big	1250	1150
Medium	1100-1250	1000-1150
Pocket-sized	< 1100	< one thousand
Source: USDA Agricultural Marketing Service, Livestock and Seed Program. United States Grades of Feeder Cattle. Constructive appointment October 1, 2000.

Muscling

Muscling is evaluated by looking at the thickness of the animal. Thickness in feeder cattle refers to evolution of the muscle system in relation to skeletal size and is the amount of muscling nowadays in proportion to bone and fatty. Thicker-muscled animals will have more lean meat. The 4 thickness or muscling grades are No. 1, No. 2, No. 3 and No. four.

Muscling No. one

No. 1. Feeder cattle that possess minimum qualifications for this grade usually display predominate beef convenance. They must be thrifty and moderately thick throughout. They are moderately thick and total in the forearm and gaskin, showing a rounded advent through the dorsum and loin with moderate width between the legs, both front and rear. Cattle show this thickness with a slightly thin covering of fatty; notwithstanding, cattle eligible for this grade may behave varying degrees of fat.

Muscling No. 2

No. 2. Feeder cattle that possess minimum qualifications for this form commonly prove a high proportion for beef breeding and slight dairy convenance may be detected. They must be thrifty and tend to be slightly thick throughout. They tend to be slightly thick and total in the forearm and gaskin, showing a rounded appearance through the back and loin with slight width between the legs, both front end and rear. Cattle show this thickness with a slightly thin roofing of fat; however, cattle eligible for this grade may carry varying degrees of fat.

Muscling No. iii

No. iii. Feeder cattle that possess minimum qualifications for this grade are thrifty and thin through the forequarter and the middle office of the rounds. The forearm and gaskin are sparse and the dorsum and loin accept a sunken advent. The legs are set up close together, both forepart and rear. Cattle show this narrowness with a lightly thin roofing of fat; however, cattle eligible for this grade may deport varying degrees of fat.

No. 4. Feeder cattle included in this grade are thrifty animals that take less thickness than the minimum requirements specified for the No. 3 grade.

Inferior. This class includes those feeder cattle that are not expected to perform normally in their present state and those that are "double-muscled." Cattle in this grade may have any combination of thickness and frame size.

Thriftiness refers to the apparent health of an fauna and its power to abound and fatten normally. In these standards, unthrifty animals are those that are non expected to perform normally in their nowadays country due to such factors as disease, parasitism, severe emaciation or any condition that must exist corrected before they could be expected to perform normally. Unthrifty feeder cattle may have any combination of thickness and frame size.

Several market studies have been conducted in the mid-Southward and Plains regions since 2000. While the exact numbers for each of these studies varies, the clear message is that that smaller-frame, lighter muscled calves are discounted compared to medium-large frame, heavily muscled animals. An example from a report conducted in Arkansas is shown below in Tabular array v.

Table 5. Impacts of selected feeder cattle traits on sales price in Arkansas, 2010.
Trait	Discount ($/Cwt.)
No. one Muscling	Base
No. 2 Muscling	-$8.94
No. 3 Muscling	-$32.41
No. 4 Muscling	-$57.xviii
Big Frame	Base
Medium Frame	0.14
Pocket-sized Frame	-$22.10
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Preconditioning

Preconditioning programs involve a series of management practices on the farm to improve the health and nutrition of calves. Preconditioning adds value to calves for buyers. When preconditioned calves are marketed in a system that recognizes the value that has been added, moo-cow-calf producers benefit from the higher prices.

Preconditioning is not a new idea, but has received considerable attending in recent years with interest in value-added programs for cow-dogie producers, beef quality balls programs and strategic alliances in the beef industry. There are diverse preconditioning programs with unlike names and management requirements. Most programs crave a 45-day mail-weaning phase with a audio nutritional program, specified animal health procedures, dehorning, castration of bull calves and bunk feeding. The purpose of preconditioning programs is to reduce stress from aircraft calves at weaning, meliorate the immune system, and boost performance in postweaning production phases (i.e., stocker production and cattle feeding) and in carcass performance (i.east., higher grading carcasses with fewer defects).

One common question is whether or non preconditioning programs add sufficient value to feeder calves to offset the added cost. Common preconditioning programs toll cow-dogie owners about $threescore/head, depending on the cost of the ration, health of calves and length of the preconditioning program. As a result, cattlemen will demand to receive in excess of $threescore (or their toll) per head to make pre-conditioning pay. It is important to remember that the boosted acquirement can come from reduced compress and/or a higher price. The main point is that those producers considering preconditioning should non focus just on receiving a college cost.

No matter the blazon of cattle produced, dehorned, well-managed, clean, good for you-looking calves will ever bring acme-dollar prices. A Kansas State Academy study of more than than 140,000 head of feeder calves sold at auctions showed that cattle that were non in adept health, had physical impairments or were muddy received large discounts. Muddied calves or calves with dead hair typically were discounted ii percent, stale animals vii to 9 percent and sick animals more than 25 percent. Castrated calves may not bring premiums at auction markets since buyers don't accept fourth dimension to confirm each calf every bit he comes through the band, but they will bring premiums through other market methods that allow for seller identification. Specific wellness practices may also bring premium prices when the market allows for the recognition of such practices.

The addition of these management practices to a producer'due south operation means there is a need for adequate facilities to perform them. The ability to safely and efficiently pen and restrain calves to perform preconditioning tasks is vital to achieving their maximum value.

Where to Market

Effigy 4. Effect of lot size on sales price. Source: "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State University Extension 2010.

Georgia cattle producers have several market outlets. No ane arrangement fits every producer?s needs, so at that place will continue to exist many alternatives. The market outlets available to you will depend on the number and uniformity of cattle you lot have to sell at in one case. This mostly is the key ingredient in gaining higher prices through different marketing methods. Effigy 4 shows the cost premiums that larger uniform groups of similar cattle could exist expected to bring. This chart is based on survey information collected from Kansas sale markets.

The right way to translate this chart would exist to compare the values reflected by the line to a base toll for a single-head sale. For instance, if a single-head lot were expected to bring $125/Cwt., a semi-trailer load would be expected to bring v percentage, or $vi.25, more than. Every bit the number of caput in the lot increases to more than 100 head, the increase begins to pass up, only information technology is even so larger than the base.

Essentially, the ability to form truckload lots (around 48,000 pounds) of uniform cattle will by and large consequence in even higher prices and open up marketing methods beyond the single-head sale.

No matter your size herd, you tin can capture some of these benefits by having a divers, short breeding flavour and then your calves will be uniform in weight. Uniformity in cattle color and grade will exist a production of your convenance herd. Lack of uniformity in cattle color can go a problem if not properly planned in the crossbreeding system.

Choose the Right Marketing Method

Some of Georgia's cattle market place alternatives, along with their advantages and disadvantages, are described in this section.

Auction Markets

Auctions are the traditional way of selling livestock. Near auction markets hold their sales on a particular twenty-four hour period of the week.

Sale Market Advantages:

• The auction market tin provide competitive bidding.
• Almost markets are open 48-50 weeks out of the year.
• It is user-friendly.
• It is open to all sellers and buyers.
• There is prompt cash payment.
• All types of livestock tin be marketed.
• Information technology provides a place where cattle prices are determined and known to all.
• It is supervised by the federal regime.
• It requires absolutely no market noesis past the producer.
• It requires no minimum number of cattle.

Sale Market Disadvantages:

• The seller has piffling command of prices.
• It encourages multi-treatment, speculative-blazon trading.
• Overhead cost is high.
• Excessive stress and shrinkage of livestock may occur.
• There is a lack of volume and uniformity of animals at many markets.
• No permanent organization exists for identifying livestock and producers afterward a sale.
• Producers may observe it hard to establish a reputation for selling high-quality, well-performing livestock.
• The grade and price information can exist difficult to interpret.
• Prices are uncertain.
• Disease spread is more probable.
• The number of buyers may be small-scale, reducing competitiveness of bidding.

Fifty-fifty when marketing through auctions, prices for cattle are not compatible. Even so, you can take some influence on the toll you lot get by communicating with your auction operator. Find out before you deliver your cattle what the operator expects in buyers and cattle numbers to be sold during various marketing times. Let the operator know ahead of time what yous will be bringing to market. If y'all have a grouping of uniform calves to sell, ask about the possibility of selling as a group.

Graded and Pooled Sales

Graded and pooled selling is the combination of pocket-size lots of livestock into larger, uniform lots of animals. This tin be washed informally by people "pooling" their animals before selling or through more formal arrangements. For instance, area livestock producers may organize to develop a graded and pooled sale.

Pooled Sale Advantages:

• Tin can put large, economical lots of livestock together.
• Cost savings for buyers are passed along to sellers.
• Large numbers of livestock attract more ownership competition.

Pooled Auction Disadvantages:

• Grading, sorting, weighing and penning before sale can be time-consuming and expensive.
• Individual producers lose their identity.
• Many marketing facilities may not be designed for efficient processing for this organization.
• Information technology's hard to become a large number of producers to agree on all terms of auction.

Tele-Auctions

A tele-auction is the use of a phone briefing call to allow separation of livestock, buyers and the sale procedure. Producers with truckload lots of cattle can be sold directly from the farm. Producers with fractional truckloads tin can be matched with other producers "on paper" and sold together. The tele-auction could also be used with a pooled arrangement for smaller producers.

Georgia producers have a long history of using feeder cattle tele-auctions. In fact, Georgia cattlemen have been using tele-auctions since 1977. Since that time, advances in technology have made it possible to utilise videos in the marketing of cattle. Even and then, many marketing agencies still use the telephone when taking bids for cattle.

Tele-Auction Advantages:

• Potentially increases contest.
• Direct heir-apparent-to-seller transportation reduces stress, shrinkage and death loss.
• Reduces buyer and marketing price.

Tele-Sale Disadvantages:

• Requires prior producer commitment.
• Reduces marketing flexibility.
• Requires partial or full truckload lots.

Video Auctions

Video auctions are very similar to tele-auctions except that videos of the cattle are made for advance viewing or for viewing by satellite telecast while the cattle are sold. Other than that point, many of the considerations for tele-auctions besides use to video auctions.

Digital recordings are frequently used in combination with tele-auctions. Video auctions were once exclusively sponsored by national companies; however, in recent years many local auction markets besides every bit some regional marketing agencies have gone to marketing load-lots of cattle using video auctions. Regardless of the size of the marketing agency, video or tele-auctions allow buyers to select from hundreds or thousands of cattle coming from a wide geographic area in a short period of time, which reduces transportation costs and health risks.

Video Auction Advantages:

• Largest number of potential buyers of all market methods.
• Potential for reduced heir-apparent cost passed along to seller.
• Directly buyer-to-seller transportation.
• Commitment schedules are very flexible. For instance, cattle can be sold in July for delivery in October.

Video Sale Disadvantages:

• Marketing toll can be generally college than tele-auction.
• Requires producer to have on-subcontract truckload (and preferably more) of uniform cattle.

Private Treaty

Straight SELLING TO CONSUMERS:
Many producers await to improve their bottom line by marketing
directly to consumers. Direct-marketing can be a way to add together
value and increase profits. Information technology too involves additional production
risk, expense and management.

While a full give-and-take of direct marketing is beyond the scope of
this publication, producers interested in this possibility should
consider not just the current value of the animals, only likewise
the additional production costs and chances for death loss. They
should also have a very good handle on their target market place
and know what this market will pay and compare that cost to
the overall breakeven price.

Private treaty selling of livestock was widely used in the early 1920s when many country buyers operated throughout the state. Every bit auctions became more than prevalent, producers shifted to auction selling. Private treaty selling is a airtight-auction method; information technology is a individual negotiation between seller and buyer. The price and terms of sale are normally known only by the seller and buyer.

Sellers and producers of breeding stock have used this method for centuries and continue to use it. Producers with large herds often use this method. Private treaty selling of cattle is increasing because many buyers prefer to have their calves conditioned to their specifications and prefer to buy from sellers whose production practices meet their needs and demands.

Private Treaty Advantages:

• Seller controls the marketing process.
• Costs less than other marketing methods.
• Producer can establish a reputation.
• Animals are farm fresh with no stress.
• Disease spread is minimal.
• Producer tin condition animals to buyer specifications.

Private Treaty Disadvantages:

• Requires excellent marketing knowledge past seller.
• There is no supervision past the federal regime.
• Producer assumes gamble of payment collection.
• May be trivial or no heir-apparent competition.

Retained Ownership

Retained ownership involves property cattle longer than would commonly be the case or to the next 1 or two stages of product. In other words, if yous are a cow-calf producer, yous retain ownership of your cattle through the stocker phase, and if y'all are a stocker operator, y'all retain buying in the feedlot phase of production. In that location is also the choice to retain ownership all the way from birth to harvest. There are many factors that should exist considered earlier retaining buying of calves. Each cistron should exist evaluated by each producer for each situation. Calculation of pause-even costs under different retained ownership alternatives volition help the producer estimate profit potential.

Retained Buying Advantages:

• Receive a return for value-added management and use of superior genetics.
• Receive information (carcass and feeding operation) back to be utilized.

Retained Ownership Disadvantages:

• Increased risk associated with market conditions, cattle performance and production.
• Postponement of acquirement.
• Boosted fourth dimension, labor and interest costs.
• Requires some knowledge of performance capabilities of calves.

Branded Beef Programs

Branded beef programs guarantee a consumer a set of standards (due east.g., lean, natural, organic, brood-specific, grain-fed, grass-fed, tender, etc.). In general, branded beefiness programs can be broken into 3 categories: breed-specific branded programs choose cattle from a specific breed or breed blazon; visitor-specific programs choose beefiness from all breeds simply include other criteria in terms of grade, marbling, size, types of feed used and/or restrictions on the use of pesticides, antibiotics and hormones; and store-branded beef, which is exactly every bit the proper noun describes. Some grocery store bondage are now branding their own beef products. Well-nigh programs can be further classified into one of three groups: light/lean beef, organic and/or natural beef, and high-palatability beef.

Branded Beefiness Advantages:

• Branded beef companies will pay premium for specific cattle.
• Producers are rewarded for management practices and/or herd genetics.
• Increased ability for the producer to found a reputation.

Branded Beef Disadvantages:

• Requires producer to switch from "selling" to "marketing" cattle.
• Good record keeping arrangement must be established.
• May require additional input costs to meet program requirements.
• Potential performance and morbidity (losses from health problems) from producing natural/organic cattle.

When to Market place

In add-on to providing the right product at the correct place, profitable marketers also market at the right time. Prices for cattle are influenced by supply and demand, which fluctuate throughout the year. These fluctuations are commonly somewhat predictable; therefore, acute stockmen can utilize these tendencies to develop a profitable marketing program.

Figure 5. Seasonal price indices for steers and bulls in Georgia auction markets.

Figure 5 shows the relative prices for 500-600 and 700-800 pound steers and bulls in Georgia auction markets. The lines on the chart reflect price indices or relative prices throughout the yr. By using 100 percent as the average for the yr, interested cattlemen can make some inferences about the way prices typically behave. For instance, from 2007-2011, prices for 500-600 pound steers and bulls sold in March were 6 pct higher than the yearly average. On the other hand, prices for the aforementioned calves in November were viii percent below the almanac average.

It is important to notation that the indices change for dissimilar weight classes. For instance, prices for 500-600 pound calves tend to peak in the spring then decline the remainder of the year. Conversely, prices for 700-800 pound feeders tend to gradually increase throughout the year and peak in July and August. In both instances, prices tend to be lowest in the autumn.

Consider non simply the highest (or lowest) prices, but besides the cost of production. For instance, even though 500- 600 pound dogie prices peak in the spring, it may be more cost effective to really sell the calves later in the summer. The implication is that cattlemen should do their homework on non only when prices are the highest and everyman, but also on what the associated cost of production is.

The actual price received by near calf producers for their calves will be adamant when they sell their cattle at a specific market. This need not exist the case for producers who have well-nigh-truckload lots of cattle to sell at ane time. These producers can set up a price before they will really sell their cattle by using the feeder cattle futures market place. By using the feeder cattle options marketplace, producers also tin fix a minimum price they will take for their cattle earlier the actual sell appointment. Both the feeder cattle futures and option contracts are traded on the Chicago Mercantile exchange. Past trading a 50,000-pound contract, a cattle producer in Georgia tin can set the cost for as much as a year in advance of the fourth dimension he or she actually sells cattle.

Producers who volition be selling close to the 50,000-pound contract size at one time may want to investigate these pricing alternatives if they demand to reduce the risk of unfavorable cost changes. Producers keeping cattle through stockering, and specially those feeding cattle, are encouraged to consider forwards pricing alternatives every bit they are most susceptible to short-term toll changes.

Feeder Cattle Marketplace Alternatives Summary

About Georgia cattle producers have several alternatives for when, where and how they market their cattle. Consider each of these alternatives separately in lite of its advantages and disadvantages.

No one combination of alternatives tin be considered a superior cattle marketing plan for all farms. What works for one producer may not necessarily work for another. Notwithstanding, there tin can exist no doubt that proper attention to a marketing plan can pay great dividends.

Keeping Up with the Market

Successfully implementing a cattle marketing program will require the producer to proceed tabs on the marketplace, particularly when a market decision is at manus.

The following is a list of price and important supply reports that may be useful.

Cost Reports by Phone

Georgia and national cattle marketplace prices, updated daily, Federal State Market News, Thomasville, Ga. 229-226-1641.

Published Price Reports

Most cost reports are now bachelor online or via e-mail subscription. However, the Georgia Department of Agriculture's Livestock Market News role in Thomasville, Ga., all the same delivers the daily and weekly auction reports via a recorded message. This information is available past calling 229-226-1641.

Many reports tin be accessed through the Southeast Cattle Advisor website at world wide web.secattleadvisor.com. Specific marketplace reports can exist obtained via electronic mail subscription through USDA's Agronomics Marketplace News at http://usda.mannlib.cornell.edu/MannUsda/homepage.do

Weekly, monthly or annual product data such equally cattle inventory numbers, cattle slaughter and beefiness production tin be obtained at the USDA National Agricultural Statistics Service (NASS) website at www.nass.usda.gov

References

Schulz, Lee, D. Dhuyvetter, M. Harborth, and Waggoneer. "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State Academy Department of Agricultural Economics, 2010. Available online at www.agmanager.info.

Troxel, Tom, et al. "Improving the Value of Feeder Cattle." Arkansas Cooperative Extension, FSA 3056 (2011). University of Georgia. "2012 Beefiness Cow-calf Budgets." Agricultural and Applied Economics Department. Available online at www.secattleadvisor.com.

U.S. Section of Agronomics-Agronomical Market Service (AMS). "Georgia Weekly Sale Report, TV_ LS145" (various weeks).

U.South. Section of Agriculture, Livestock and Seed Programme. "United states Grades of Feeder Cattle." Constructive date October 1, 2000.

U.S. Department of Agriculture, National Agricultural Statistics Service (USDA-NASS). "Cattle Study 2012." Washington DC, January 2012.

For more than data on beef cattle marketing and economics, visit the Southeast Cattle Advisor website at www.secattleadvisor.com

---

Status and Revision History
Published on Jun 01, 2001
In Review for Major Revisions on May 15, 2009
Published on Dec 08, 2010
Published with Major Revisions on Jul 30, 2012
Published with Full Review on January xxx, 2017

knightpaorat.blogspot.com

Source: https://extension.uga.edu/publications/detail.html?number=B1078&title=Profitable%20Cattle%20Marketing%20for%20the%20Cow-Calf%20Producer

Share this post