1. Fall Feeder Cattle Marketing Options ANR Update October 10, 2013 Kevin Laurent UK Animal Sciences

2. Market Fundamentals Small cow-herd, getting smaller Domestic demand has improved –Exports still very strong Calf/feeder markets adjusting to feed prices

3. Livestock Marketing Information Center Data Source: USDA/NASS

6. 2013 Cattle Markets Driven early by pessimism… –High grain prices –Wet spring –Softening exports Then a more pleasant reality… –Tight feeder supplies –Increasing corn supplies

7. CMEGroup© October Feeder Cattle Futures

9. Market Expectations Calves –Supplies very tight –Cheaper feed on the way –Strong spring feeder cattle market –Likely a counter seasonal market Heavier feeders –Fall: 7wts and 8wts well in the $140’s & $150’s –Much of the carry is gone –Likely a late fall peak in feeder cattle market

10. A few programs for this fall

11. Key Assumptions 1.Calf prices at weaning time 2.Sale prices at sale time 3.Feed prices Changing from week to week!!

12. 60 Day Backgrounding (Drylot) Value 550# steers in October at @ $1.60 2.5% BW 50 / 50 @ $200 per ton Fill out with hay 2.5 lbs gain per day 0.25 mineral per day @ $20 per bag Futures based sales price for 700# steer –($7) basis, +$2 slide adjustment

13. 60 Day Drylot Budget

14. 120 Day Backgrounding (Drylot) Value 550# steers at @ $1.60 2.5% BW 50 / 50 @ $200 per ton Fill out with hay 2.5 lbs gain per day 0.25 mineral per day @ $20 per bag Futures based sales price for 850# steer –$1 lower futures price, $6 additional slide

15. 120 Day Drylot Budget

16. Alternative Systems Stocker/Backgrounders May need to be more forage oriented May need to grow them slower-longer Examples: –90 day precondition feed on fall pasture –Green corn grazing –Fall bought calves on stockpiled grass for summer sale

17. CPH Case Study – Fall 2012 55 calves – 86 days – fed on 25 acres past. 10-12 lbs 75:25 soyhull:gluten 12 rolls hay Start wt. – 548 End pay wt. – 762 ADG – 2.49

18. CPH Case Study – Fall 2012 Ending value 981.24 Starting value 732.91 Gross added value248.33 Expenses176.76 Net returns/head $71.57 Total net returns $3936.35

19. Green Corn Grazing 57 head Start wt. 720 lbs End wt. 826 Grazed 47 days on 7.25 acres Supplemented at 2 lbs day DDGS Gained 2.25 lbs /day Corn costs $224/acre DDGS $300/ton

20. Grazed July 29 – Sept 14

21. Corn and feed costs/lb gain $0.42

22. Estimated at 170 bushel corn

23. Aftermath

24. Cows grazing aftermath

25. Example System Winter/Summer Pasture – 250 days Buy light calves in November when historically cheapest Graze until August and market when heavy feeders are historically highest Winter on stockpiled fescue and minimal supplement Feed hay only at receiving and snow/ice events

26. Strip grazing Stockpiled fescue (Feb. 2011)

27. Example System - Schedule Winter/Summer Pasture – 250 days 450 lb steers ADG of 1.6 lbs. November 20 to December 20 –5 lbs of 67:33 soy hulls:corn gluten –2 lbs ddgs –Stockpiled pasture December 20 to April 10 –4 lbs of DDGS fed every other day –Stockpiled pasture (strip grazed-2 day supply) April 10 to end of July –Fescue/clover pasture no supplement

28. Example System - Schedule Winter/Summer Pasture 250 days with cattle 100-120 days without cattle Aug through Nov the farm rests and stockpiles forage for the next group Much less hay or hay equipment

29. Fed 1 lb DDGS + mineral

30. Owned 238 days

31. Sold August 8, 2013

32. 62 Head averaged 801 lbs

33. Winter/Summer Pasture -450# steers @ $1.85 $832.50 -Hulls / Gluten @ $220 / ton$16.50 -DDGs @ $250 / ton$27.75 -Pasture Maint.(0.75 acre/head)$89.92 -Mineral$25.00 -Vet/med$25.00 -Interest (6%)$31.44 -Death Loss (3%)$22.95 Total Cost $1071.06 850# steer break even (BE)$126.01 / cwt.

34. Winter/Summer Pasture BE around $126 per cwt. August 2014 futures $165 Price expectation low $150’s per cwt. At 153.00 cwt gives a $229.44/head profit $13,537 per load on about 50 acres $271/acre

35. Alternative Systems Cow-Calf Fall Calving –Better conception rates and lower mortality –Better markets (calves and cull cows) Spring calving - Strategic Winter Grazing –Wean in Sept - drylot cows - feed hay –Stockpile the whole farm –Start grazing in Jan through the calving season until new spring grass

36. Balancing Rations – Fall 2013 Corn vs Soy Hulls –Use soyhulls until corn is $20/ton cheaper DDGS vs Corn Gluten –DDGS is the better choice for 4 and 5 wt calves, after that calculate the price Hay Quality and Silage Quality –Hay has been variable, silage has been very good