1. Annie’s Project February 6, 2007 Coweta Oklahoma
Livestock Marketing
Annie’s Project
February 6, 2007
Coweta Oklahoma

2. What is Marketing? Definition:
A term used to cover those activities of firms associated with the sales and distribution of product(s). MIT Dictionary of Modern Economics
The process of producers monitoring input and output market conditions, managing market risk and controlling the movement of products into the market

3. Livestock Marketing W's
Every operation should develop a marketing plan.
To develop a marketing plan, producers must answer the 3 W’s
What?
Where?
When?
W's

4. What? What product is being produced?
Market animals
Size, weight, sex, breed
Replacement animals
Age, open or bred, breed, sex
Niche markets
All natural, organic, etc.
Knowing what product is going to be sold helps determine an operations market potential.

5. Where? Off of the farm Auction Barn Cooperatives
No commission or transportation costs
Need to know current market situation
Weight?
Auction Barn
Easiest
No problems collecting money
May not receive complete worth of livestock
Cooperatives
Able to group like kind and weight
Usually receive higher prices
Must of right kind and type to participate

6. Livestock Marketing Channels
Regional Market
Local Market
Producer
Processors
Trader/
Middleman
Purveyors
Cooperatives
Retail
Food Service
Consumer

7. When? Most livestock prices have a seasonal pattern.
Prices are higher and lower than average for certain types and weight groups during certain times of the year.
These changes are generally caused by:
Increased demand
Holidays
Summer BBQ season
Decreased supply
Production cycles

15. Oklahoma Cattle Seasonal Price Chart

16. Oklahoma Goat Seasonal Price Chart

17. Basis, What is it?
Basis is the difference between the local cash price and the Chicago Mercantile Price.
OKC Steer Price
MINUS
CME Feeder Cattle Price
EQUALS
Basis

18. CME Feeder Cattle Futures Price January 31, 2007
OPEN HIGH LOW LAST SETT CHGE
MAR
APR
MAY
AUG A
SEP B
OCT B A B
NOV
JAN B B

19. OKC 5-Year Average Basis# # # #
January
25.89
13.27
3.82
0.20
February
31.01
19.76
8.17
2.67
March
33.22
21.87
10.96
2.13
April
32.30
21.55
12.24
3.75
May
26.11
18.73
10.39
2.60
June
24.48
15.88
9.53
3.41
July
24.37
14.66
9.12
3.62
August
22.07
12.26
7.39
2.73
September
18.38
8.98
6.87
1.97
October
18.59
5.62
3.92
1.35
November
22.94
11.89
5.13
2.92
December
28.48
14.58
6.23
3.79

20. Risk Management
The use of different management techniques in order to reduce the amount of risk.
Types of Risk
Production
The uncertainty of weather, disease, insects, weeds and infertile breeding stock.
Price
Fluctuations in price due to unforeseen events.
Financial
Uncertainty of operations ability to pay off debts, future interest rates, future borrowing ability and needs, and etc.

21. Risk Management Tools Production Risk Price Risk Financial Risk
Keep up to date on the latest production practices and never be afraid to seek more information
Advanced input pricing (Booking ahead)
Price Risk
Futures contracts and options
Forward pricing contracts
Financial Risk
Keep good records
Keep up to date on all financial statements and reports

22. Value Added Opportunities
Preconditioning
Cooperative marketing/purchasing
Retained ownership through custom feeding
Strategic alliances
Niche Markets
Organic
Natural

23. Summary Every livestock operation needs to develop a marketing plan.
Remember the 3 W’s
What
Where
When
There are risk management tools available.
Be sure to investigate value added opportunities.