Presentation on theme: "Factors Affecting Feeder Cattle Prices"— Presentation transcript:
1 Factors Affecting Feeder Cattle Prices (understanding the link between genetics, management, marketing, and prices)ECON 337 Agricultural Marketing: 2:10 – 4:00; March 11, 2014Lee Schulz – –Department of EconomicsIowa State University
2 What exactly does “right” mean? Marketability: Buy and sell them “right”…What exactly does “right” mean?Buy low – sell high make lots of money!As a seller, know what your buyers are looking for and strive to deliver it to themAs a buyer, recognize how the various traits and characteristics are valued and buy what best fits your program (i.e., your comparative advantage)(of course this doesn’t work for everybody as some are buying from those selling)
4 Breed impacts price… Some things have changed over time… BASEOther things have been more constant…
5 Sex and breed impacts price… Source: Holton Livestock Exchange, Inc. (Northeast Kansas)-- Discount on heifers (vs. steers) fairly constant across sales ($5.50-$8.93)-- Black/BWF consistently brought higher prices than other breeds/colors
6 Breed impacts price…Source: CAB “Where’s the Premium” study,-- Target 500 pound calves in the fall and 700 pound feeders in the spring-- Consistent premium on Angus-influence calves and premium has generally been trending up over this time period6
7 Weight impacts price…Source: Holton Livestock Exchange, Inc. (Northeast Kansas)
14 What about preconditioning calves… Premiums of +$6/cwt when calves are vaccinated and weanedPremiums tend to be higher for steers than heifersSource: Factors Influencing the Price of Value-Added Calves at Superior Livestock Auctions (Lance Zimmerman MS thesis, KSU.So does it pay to precondition calves?
15 What about age and source verification programs… Premium of around $1.50-$2.00/cwt pretty consistently over last several yearsSource: Factors Influencing the Price of Value-Added Calves at Superior Livestock Auctions (Lance Zimmerman MS thesis, KSU.Will premium disappear as Age & Source Verification becomes more common?
23 What do premiums/discounts indicate… Lot size and uniformity are very importantBreed/color impact priceTime of sale important (probably hard to manage)Dehorn and castrate earlyMarket healthy cattleStay away from extremes (frame, condition, fill)Results written up in paper on (and (embedded in decision tool)
25 These three buttons take the user to tabs showing hedonic model results (i.e., tables we have already looked at).These four buttons are linked to tabs that allow the user to examine how changing cattle traits impacts price. Partial budget tab also allows user to bring in costs in a simplified way.
38 Value of gain projections… Beginning DateEndingDateBeginning Weight, lbsEnding Weight, lbsWeight Gain, lbs/headADG, lbsValue of Gain, $/cwt01/11/1402/24/145506501002.27$126.1103/09/141.75$130.7304/09/14750200$121.0505/05/14$127.3805/11/148503002.50$117.4006/10/142.00$120.81Note: Projections derived for the Dunlap, IA market using BeefBasis.comRelated information available at BeefBasis.com