Current Market Price of Beef Cwt

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

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

Virtually cattle produced in Georgia come up from cow-calf farms and ranches. With cow-calf operations, as with other farm enterprises, making a profit is the but affair that volition keep you in business. How much profit you lot make depends largely on your power to market your calves.

Selling Versus Marketing

Profitable cattle marketing involves more than just getting the highest price. Information technology involves producing the type of calf the market place desires, marketing that calf through the best outlet and at the best time. Unfortunately, virtually cow-calf producers simply sell their calves. They produce calves that are the easiest to raise, sell at the most convenient market outlet and sell at the about convenient time. As a result, they are cost-takers.

Marketing means making choices well-nigh how or what product to produce, where to market place it and when to price. Equally a result, marketers take some control over the price they receive.

The first step in becoming an effective cattle marketer is to recognize all your alternatives and evaluate each in low-cal of potential price and returns, selecting the almost assisting rather than the virtually user-friendly alternative.

This publication addresses several issues associated with marketing calves -- most notably, cost considerations, market structure, the type of dogie to produce, market outlets and seasonal price considerations.

Know Your Price

The first pace in any successful marketing plan is to know the unit cost of production (UCOP). In fact, for many small or medium-size moo-cow herds, the cost of production is a larger 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 all-time way to brand this determination is to begin with a budget similar to the one shown in Tabular array 1.

Table 1. Example summary budget for a moo-cow-calf enterprise in Georgia.
Particular	$/Cwt.	$/Cow
Variable Cost	$137.xiv	$609.06
Less: Value of cull cows, bulls and heifers	($26.88)	$119.twoscore
NET VARIABLE COST	$110.25	$489.66
Almanac Livestock Fixed Costs	$11.43	$50.76
Annual Buildings & Facilities Fixed Costs	$vii.16	$31.82
Annual Equipment Fixed Costs	$21.02	$93.37
Almanac State Stock-still Costs Excluding Taxes	$0.00	$0.00
Annual Real Estate Taxes	$1.37	$half-dozen.11
TOTAL COSTS	$149.87	$665.61
Source: 2012 UGA beef cow-dogie budgets

Note that while the cost per cow is shown, the emphasis is placed on $/Cwt. The cost per hundredweight sold is used because it captures not only total herd costs but besides calf crop percentage and weaning weights.

In the example budgets shown, there are 2 numbers highlighted -- the get-go ane being variable price in $/Cwt. Variable costs (VC) are also called 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 as well critical to encompass variable costs considering any returns above variable costs (ROVC) go toward paying overhead or stock-still costs.

Returns above total costs (ROTC) is the measure of the long-term economic sustainability of an enterprise. Total costs (TC) include non just VC but besides stock-still costs (FC) such as depreciation, toll of upper-case letter, 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 average in the long run if they want to remain in business.

Knowing the VC and TC per hundredweight allows producers to prepare target prices and evaluate their costs in relation to the market. While weather and input costs can be volatile in the short term, which will impact cost per hundredweight twelvemonth-to-twelvemonth, producers who consistently take suspension-even prices above marketplace prices volition need to find ways to lower their costs in society to stay in the business.

Plan for the Marketplace

The erstwhile saying goes that if you don't know where you lot're going, whatever road will take you in that location. But if marketing your cattle at a profit is where you want to go, then planning for the marketplace will assistance get you in that location. Planning requires information. A good fashion to start becoming a better cattle marketer is being sure you understand the cattle marketing system and how your cattle prices are determined. Then yous demand to recognize all the market alternatives available to you. Finally, you need to know where to get the information to assist you make up one's mind 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 Study, TV_LS145 (various weeks).

In Georgia, equally in the Southeast, feeder calves are produced and sold as feeder calves subsequently weaning. Most 70 percentage of all Southeastern calves are weaned and sold during the autumn. This is the major reason behind the normal seasonal price swings shown in Figure i: prices are normally lower during the fall and higher during the belatedly winter and early spring.

There are effectually 17,000 cattle producers in Georgia with an average herd size of fewer than 50 head. With so 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 usually move into some type of forage-based stockering programs, where another 300 to 400 pounds will be added. As heavyweight feeders, between 600 and 800 pounds, they so will typically move directly into feedlots.

Figure 2. Cattle on feed in yards with more than ane,000 caput (January 1, 2012). Source: Data provided by USDA-NASS, "Cattle" Report. Chart adult by the Livestock Marketing Information Eye (LMIC).

Ordinarily, 70 to 75 percentage of all U.S. beef comes from cattle fed in feedlots. Feedlots have become fewer but larger in size. The top three feedlot states (Texas, Nebraska and Kansas) at present market almost threescore per centum of the cattle fed in the United States. Figure 2 illustrates the concentration of the cattle feeding industry in the United States as of January 1, 2012.

While there are definite segments to the beef product system, the important point to remember is that the consumer somewhen makes the concluding pricing decision. The retailer wants a certain type of product considering the consumer wants information technology. This is relayed dorsum 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 price. Unfortunately, considering of all the messengers in the market, the signals sometimes get mixed or muted. However, if we pay shut enough attention, nosotros tin recognize them. By understanding how the beefiness cattle markets work, feeder cattle producers will be better able to recognize changes that may make a higher profit.

Feeder cattle prices are derived from their next market. The calves' value is based on what they are expected to be sold for, either out of the feedlot or out of a backgrounding performance, less the toll of gain. As the expected price of finished animals goes up or the cost of gain goes down, feeder calf prices will increase. The weight to be added is factored in with the expected cost of finished cattle. A ane,200-pound finished steer weighs 2.40 times as much as a 500-pound feeder calf and i.60 times equally much as a 750-pound yearling. Therefore, a $1-per-hundredweight increment 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 for a 750-pound steer.

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

A feeder buying a 500-pound calf and finishing it to one,200 pounds is putting on 700 pounds of gain, or 1.forty 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 toll of proceeds will raise or lower the price finishers can pay by $1.40 for a 500-pound calf and $0.64 for a 750-pound feeder. Table 2 shows the intermission-even purchase prices that could be paid for a 550-pound steer given alternative fed-cattle prices and cost of gain. Of class, feeder calves produced in Georgia are probable to be transported to the feedlot states. Thus, a feedlot will as well have to disbelieve the feeder price in Georgia by the cost of transporting the calves to the feedlot.

Table 2. Prices that can be paid for a 550-pound feeder steer at culling fed-cattle selling prices and cost of gain.
	Sales Price of Finished Cattle ($/Cwt.)
Cost of Gain ($/Cwt.)	$ 105.00	$ 115.00	$ 125.00	$ 135.00
$ lxx.00	$ 149.55	$ 172.27	$ 195.00	$ 217.73
$ fourscore.00	$ 136.82	$ 159.55	$ 182.27	$ 205.00
$ 90.00	$ 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 live cattle (as well called slaughter or fat cattle) were marketed on a pen-average basis. That is, feed yards were paid one price for all of the cattle in the pen. All the same, over fourth dimension that has changed. At present close to lx% of all slaughter cattle are sold on a carcass basis where each carcass is individually weighed and graded for quality (marbling) and yield (per centum of retail meat). Since there are different prices for different yield and quality grades, each carcass ends up with an private or customized toll. The net effect is that price transmissions from the packer back to the cow-calf producer are much clearer now than in the past.

Figure 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. Figure 3 illustrates the factors that affect fed-cattle prices. Information technology is important to note that in that location are many things that impact the price of cattle and beefiness that cow-calf producers cannot control. However, by being aware of these factors, cattlemen tin have some thought of expected prices and programme accordingly.

The variables are shown past different size squares depicting the relative importance of each. For case, fed steer and heifer slaughter contributes the most to beef supplies, followed by commercial moo-cow slaughter, non-fed steer and heifer slaughter, beef imports and exports, and bull and stag slaughter.

On the demand side, per capita disposable income, full population and competing meats (poultry and pork) are all important factors. Other factors, such as the value of by-products and the cost of slaughter, processing and marketing (subcontract-to-retail margin), will besides affect subcontract prices.

Feeder Calf Marketing Alternatives

Webster?s Dictionary defines "marketing" as the process or technique of promoting, selling and distributing a production or service. Information technology is important to keep in heed what your product is. Ultimately, a feeder calf producer's product is beef. Georgia feeder calf producers have three major marketing decisions: what to produce, where to market their product and when to toll their calves. While some or maybe all of these decisions are set up for the producer, alternatives well-nigh likely be. The selection of these alternatives will accept a dramatic impact on the profitability of the cattle operation.

Which Cattle to Produce

The cow-dogie producer influences the marketability of his cattle the day he selects his convenance stock. While information technology is true that almost any type of cattle can be sold at a price, the Georgia cattle producer should exist raising the almost profitable cattle. In that location are many factors that determine the value of a feeder calf. Some of these factors can be influenced through an functioning?s breeding and genetics program and others through practiced management practices. These factors include:

• Breed
• Color
• Frame
• Muscling
• Condition/Flesh
• Weight
• Sex activity
• Groundwork
• Horns
• Fill
• Personal Preference
• Vaccinations

Brood

The breed of the calf tin influence prices contained of grade. Certain breeds or breed-types bring a college price because of perceptions by the order heir-apparent as to how these breeds volition perform in the feedlot. While these perceptions may or may not be correct, they do exist. 1 mode to go around breed perceptions is to take advantage of breed association-sponsored marketing programs. Crossbred calves have traditionally been in higher demand than purebred calves considering of the reward of hybrid vigor. However, in recent years, that trend has been challenged. Calves with a high pct of dairy or Brahman influence are typically discounted through the sale barn.

Color

Calf colour can also impact the determination of value considering it can be a clue into the calf's breeding. According to a study done in Arkansas in 2005, in that location was a $13.07/Cwt. spread between selling prices of calves of various colors.

Table 3. Price adjustments for various breeds.
Calf Color	Boilerplate Selling Price (Value/Cwt.)	Deviation From Overall Boilerplate (Value/Cwt.)
yellow-white face	$120.44	$two.34
yellow	$120.29	$2.19
black-white face	$120.03	$1.93
black	$119.24	$one.14
gray	$117.66	-$0.44
gray-white face up	$116.79	-$ane.31
white	$116.01	-$2.09
red-white face	$114.58	-$3.52
scarlet	$113.92	-$4.xviii
spotted or striped	$107.37	-$10.73
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Frame

The U.s. Department of Agriculture has official grades for feeder cattle based on frame size, thickness and thriftiness (overall wellness). Frame size refers to the creature's skeletal size ? its height and body length ? in relation to its historic period. Frame size is related to the weight at which, under normal feeding and management, an beast volition produce a carcass of a given grade. Large-frame animals crave a longer time in the feedlot to reach a given grade and volition weigh more than than a small-frame animal would weigh at the same grade. Animals are assigned to 3 frame sizes - Large, Medium and Modest. Table iv describes the expected minimum live weights at which these calves would produce U.S. Choice carcasses.

Tabular array 4. Correlation between frame size and finished slaughter weight.
Frame Size	Steers	Heifers
Large	1250	1150
Medium	1100-1250	thousand-1150
Pocket-size	< 1100	< 1000
Source: USDA Agricultural Marketing Service, Livestock and Seed Plan. United States Grades of Feeder Cattle. Effective date October 1, 2000.

Muscling

Muscling is evaluated by looking at the thickness of the animal. Thickness in feeder cattle refers to evolution of the musculus organization in relation to skeletal size and is the corporeality of muscling present in proportion to bone and fat. Thicker-muscled animals will have more than lean meat. The iv thickness or muscling grades are No. 1, No. 2, No. 3 and No. 4.

Muscling No. one

No. 1. Feeder cattle that possess minimum qualifications for this class commonly display predominate beef breeding. They must be thrifty and moderately thick throughout. They are moderately thick and full in the forearm and gaskin, showing a rounded appearance through the dorsum and loin with moderate width between the legs, both front and rear. Cattle bear witness this thickness with a slightly thin covering of fat; yet, cattle eligible for this form may carry varying degrees of fat.

Muscling No. 2

No. ii. Feeder cattle that possess minimum qualifications for this grade usually show a loftier proportion for beefiness breeding and slight dairy breeding may be detected. They must be thrifty and tend to be slightly thick throughout. They tend to be slightly thick and full in the forearm and gaskin, showing a rounded advent through the back and loin with slight width between the legs, both front and rear. Cattle prove this thickness with a slightly sparse covering of fatty; withal, cattle eligible for this grade may acquit varying degrees of fat.

Muscling No. iii

No. 3. Feeder cattle that possess minimum qualifications for this grade are thrifty and thin through the forequarter and the middle role of the rounds. The forearm and gaskin are thin and the back and loin accept a sunken appearance. The legs are gear up close together, both front and rear. Cattle show this narrowness with a lightly sparse roofing of fat; however, cattle eligible for this course may carry varying degrees of fat.

No. four. Feeder cattle included in this form are thrifty animals that have less thickness than the minimum requirements specified for the No. three grade.

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

Thriftiness refers to the credible health of an animal and its ability to grow and fatten normally. In these standards, unthrifty animals are those that are not expected to perform normally in their present state 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 accept any combination of thickness and frame size.

Several market studies take been conducted in the mid-S and Plains regions since 2000. While the verbal numbers for each of these studies varies, the clear bulletin is that that smaller-frame, lighter muscled calves are discounted compared to medium-large frame, heavily muscled animals. An example from a study conducted in Arkansas is shown below in Table 5.

Table 5. Impacts of selected feeder cattle traits on sales price in Arkansas, 2010.
Trait	Discount ($/Cwt.)
No. 1 Muscling	Base
No. 2 Muscling	-$8.94
No. 3 Muscling	-$32.41
No. iv Muscling	-$57.xviii
Large Frame	Base
Medium Frame	0.14
Small 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 organization that recognizes the value that has been added, cow-calf producers benefit from the higher prices.

Preconditioning is not a new idea, merely has received considerable attention in recent years with involvement in value-added programs for cow-calf producers, beef quality assurance programs and strategic alliances in the beef industry. There are diverse preconditioning programs with dissimilar names and direction requirements. Near programs require a 45-24-hour interval post-weaning stage with a sound nutritional programme, specified animal wellness procedures, dehorning, castration of balderdash calves and bunk feeding. The purpose of preconditioning programs is to reduce stress from shipping calves at weaning, improve the immune arrangement, and heave functioning in postweaning production phases (i.e., stocker production and cattle feeding) and in carcass functioning (i.e., college grading carcasses with fewer defects).

One common question is whether or not preconditioning programs add sufficient value to feeder calves to offset the added toll. Common preconditioning programs toll cow-calf owners about $lx/head, depending on the cost of the ration, health of calves and length of the preconditioning program. As a result, cattlemen will need to receive in excess of $threescore (or their price) per head to make pre-conditioning pay. It is important to remember that the additional acquirement can come from reduced shrink and/or a higher price. The primary indicate is that those producers considering preconditioning should not focus merely on receiving a higher price.

No thing the blazon of cattle produced, dehorned, well-managed, clean, healthy-looking calves volition always bring top-dollar prices. A Kansas State University study of more than than 140,000 head of feeder calves sold at auctions showed that cattle that were not in practiced wellness, had physical impairments or were muddied received large discounts. Dingy calves or calves with dead hair typically were discounted ii per centum, dried animals 7 to ix percentage and sick animals more than 25 percent. Castrated calves may not bring premiums at auction markets since buyers don't have time to ostend each calf as he comes through the ring, but they will bring premiums through other market methods that permit for seller identification. Specific health 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'south functioning means at that place 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

Figure 4. Effect of lot size on sales toll. Source: "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State Academy Extension 2010.

Georgia cattle producers have several market outlets. No i organization fits every producer?s needs, so there will go along to be many alternatives. The marketplace outlets available to you will depend on the number and uniformity of cattle you lot take to sell at in one case. This mostly is the key ingredient in gaining higher prices through different marketing methods. Figure 4 shows the price premiums that larger compatible groups of like cattle could be expected to bring. This nautical chart is based on survey information collected from Kansas auction markets.

The correct way to interpret this chart would exist to compare the values reflected by the line to a base of operations 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 5 percent, or $6.25, more than. As the number of head in the lot increases to more than 100 head, the increase begins to decline, merely it is even so larger than the base.

Essentially, the ability to course truckload lots (around 48,000 pounds) of compatible cattle will generally event in even college prices and open up up marketing methods across the single-head sale.

No thing your size herd, yous tin capture some of these benefits by having a divers, short breeding season and so your calves will be compatible in weight. Uniformity in cattle color and grade volition exist a production of your breeding herd. Lack of uniformity in cattle color can go a trouble if non properly planned in the crossbreeding system.

Choose the Right Marketing Method

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

Auction Markets

Auctions are the traditional way of selling livestock. Most auction markets hold their sales on a detail day of the week.

Auction Market Advantages:

• The auction market place tin can provide competitive bidding.
• Most 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 can be marketed.
• It provides a place where cattle prices are determined and known to all.
• It is supervised by the federal government.
• It requires absolutely no marketplace cognition by the producer.
• Information technology requires no minimum number of cattle.

Sale Market Disadvantages:

• The seller has little control of prices.
• Information technology encourages multi-handling, speculative-type trading.
• Overhead cost is high.
• Excessive stress and shrinkage of livestock may occur.
• At that place is a lack of volume and uniformity of animals at many markets.
• No permanent system exists for identifying livestock and producers after a sale.
• Producers may find it hard to establish a reputation for selling loftier-quality, well-performing livestock.
• The grade and price information can be hard to interpret.
• Prices are uncertain.
• Disease spread is more likely.
• The number of buyers may exist small, reducing competitiveness of bidding.

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

Graded and Pooled Sales

Graded and pooled selling is the combination of minor lots of livestock into larger, compatible lots of animals. This can exist done informally by people "pooling" their animals earlier selling or through more formal arrangements. For instance, area livestock producers may organize to develop a graded and pooled sale.

Pooled Sale Advantages:

• Can put big, economical lots of livestock together.
• Cost savings for buyers are passed forth to sellers.
• Large numbers of livestock attract more buying competition.

Pooled Sale Disadvantages:

• Grading, sorting, weighing and penning before sale can be time-consuming and expensive.
• Individual producers lose their identity.
• Many marketing facilities may non exist designed for efficient processing for this organisation.
• It's difficult to get a large number of producers to concord on all terms of auction.

Tele-Auctions

A tele-auction is the utilise of a phone conference phone call to allow separation of livestock, buyers and the auction process. Producers with truckload lots of cattle tin can be sold directly from the subcontract. Producers with partial truckloads tin can be matched with other producers "on paper" and sold together. The tele-auction could also be used with a pooled system for smaller producers.

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

Tele-Auction Advantages:

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

Tele-Auction Disadvantages:

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

Video Auctions

Video auctions are very similar to tele-auctions except that videos of the cattle are made for accelerate viewing or for viewing past satellite telecast while the cattle are sold. Other than that betoken, many of the considerations for tele-auctions also utilise to video auctions.

Digital recordings are ofttimes used in combination with tele-auctions. Video auctions were once exclusively sponsored by national companies; nonetheless, in recent years many local auction markets likewise equally 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 broad geographic surface area in a short menstruum of time, which reduces transportation costs and health risks.

Video Auction Advantages:

• Largest number of potential buyers of all market place methods.
• Potential for reduced buyer toll passed along to seller.
• Direct buyer-to-seller transportation.
• Delivery schedules are very flexible. For instance, cattle can be sold in July for delivery in October.

Video Auction Disadvantages:

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

Private Treaty

DIRECT SELLING TO CONSUMERS:
Many producers look to improve their bottom line by marketing
direct to consumers. Straight-marketing can be a mode to add
value and increment profits. It likewise involves boosted production
run a risk, expense and management.

While a full word of directly marketing is beyond the scope of
this publication, producers interested in this possibility should
consider non only the current value of the animals, but also
the additional production costs and chances for expiry loss. They
should also have a very good handle on their target market
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 state buyers operated throughout the state. As auctions became more prevalent, producers shifted to auction selling. Private treaty selling is a closed-auction method; it is a individual negotiation betwixt seller and buyer. The cost and terms of sale are usually known only by the seller and buyer.

Sellers and producers of breeding stock have used this method for centuries and proceed to apply it. Producers with large herds often utilize 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 come across their needs and demands.

Private Treaty Advantages:

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

Individual Treaty Disadvantages:

• Requires fantabulous marketing cognition by seller.
• There is no supervision past the federal regime.
• Producer assumes take chances of payment collection.
• May be piddling or no heir-apparent contest.

Retained Ownership

Retained ownership involves holding cattle longer than would ordinarily be the case or to the next one or two stages of production. In other words, if yous are a cow-calf producer, you retain ownership of your cattle through the stocker phase, and if y'all are a stocker operator, you retain ownership in the feedlot phase of production. There is too the selection to retain ownership all the way from birth to harvest. In that location are many factors that should be considered before retaining ownership of calves. Each factor should be evaluated by each producer for each state of affairs. Adding of pause-even costs nether dissimilar retained buying alternatives will assistance the producer estimate profit potential.

Retained Ownership Advantages:

• Receive a return for value-added direction and use of superior genetics.
• Receive information (carcass and feeding performance) dorsum to exist utilized.

Retained Ownership Disadvantages:

• Increased take a chance associated with market conditions, cattle operation and production.
• Postponement of acquirement.
• Additional time, labor and interest costs.
• Requires some knowledge of functioning capabilities of calves.

Branded Beefiness Programs

Branded beef programs guarantee a consumer a gear up of standards (e.one thousand., lean, natural, organic, breed-specific, grain-fed, grass-fed, tender, etc.). In general, branded beef programs can be broken into iii categories: breed-specific branded programs choose cattle from a specific breed or breed type; company-specific programs choose beef from all breeds simply include other criteria in terms of grade, marbling, size, types of feed used and/or restrictions on the apply of pesticides, antibiotics and hormones; and store-branded beef, which is exactly as the name describes. Some grocery shop bondage are at present branding their own beef products. Most programs can exist further classified into ane of iii groups: light/lean beef, organic and/or natural beef, and high-palatability beef.

Branded Beef Advantages:

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

Branded Beef Disadvantages:

• Requires producer to switch from "selling" to "marketing" cattle.
• Proficient record keeping arrangement must be established.
• May require boosted input costs to encounter plan requirements.
• Potential functioning and morbidity (losses from health problems) from producing natural/organic cattle.

When to Market

In addition to providing the right product at the right place, profitable marketers also market at the correct fourth dimension. Prices for cattle are influenced by supply and need, which fluctuate throughout the twelvemonth. These fluctuations are usually somewhat anticipated; therefore, astute stockmen can use these tendencies to develop a profitable marketing plan.

Figure 5. Seasonal price indices for steers and bulls in Georgia sale 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 cost indices or relative prices throughout the year. By using 100 percent as the average for the year, interested cattlemen tin make some inferences about the way prices typically carry. For instance, from 2007-2011, prices for 500-600 pound steers and bulls sold in March were 6 percent higher than the yearly average. On the other hand, prices for the same calves in November were 8 percent below the almanac boilerplate.

It is important to note that the indices alter for different weight classes. For case, prices for 500-600 pound calves tend to tiptop in the jump and so reject the residue of the twelvemonth. 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 fall.

Consider not only the highest (or everyman) prices, only too the cost of production. For instance, even though 500- 600 pound calf prices meridian in the spring, it may be more than cost effective to actually sell the calves later in the summer. The implication is that cattlemen should practice their homework on not merely when prices are the highest and lowest, but also on what the associated cost of production is.

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

Producers who volition be selling close to the 50,000-pound contract size at one time may desire to investigate these pricing alternatives if they need to reduce the chance of unfavorable toll changes. Producers keeping cattle through stockering, and especially those feeding cattle, are encouraged to consider forward pricing alternatives every bit they are well-nigh susceptible to curt-term price changes.

Feeder Cattle Market Alternatives Summary

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

No 1 combination of alternatives can be considered a superior cattle marketing program for all farms. What works for one producer may not necessarily piece of work for another. Nevertheless, there tin be no uncertainty that proper attention to a marketing program can pay corking dividends.

Keeping Up with the Market

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

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

Price Reports by Telephone

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

Published Cost Reports

Most price reports are now available online or via e-mail subscription. However, the Georgia Department of Agriculture'due south Livestock Marketplace News office in Thomasville, Ga., notwithstanding delivers the daily and weekly auction reports via a recorded message. This information is available by calling 229-226-1641.

Many reports tin can be accessed through the Southeast Cattle Advisor website at www.secattleadvisor.com. Specific market place reports tin exist obtained via e-mail subscription through USDA'southward Agriculture Market News at http://usda.mannlib.cornell.edu/MannUsda/homepage.do

Weekly, monthly or annual product information such every bit cattle inventory numbers, cattle slaughter and beef product can exist obtained at the USDA National Agronomical Statistics Service (NASS) website at www.nass.usda.gov

References

Schulz, Lee, D. Dhuyvetter, 1000. Harborth, and Waggoneer. "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State University Department of Agricultural Economics, 2010. Bachelor 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 Beef Cow-calf Budgets." Agricultural and Applied Economic science Section. Bachelor online at www.secattleadvisor.com.

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

U.S. Department of Agronomics, Livestock and Seed Program. "United States Grades of Feeder Cattle." Effective date October 1, 2000.

U.South. Section of Agriculture, National Agronomical Statistics Service (USDA-NASS). "Cattle Report 2012." Washington DC, January 2012.

For more information on beefiness cattle marketing and economic science, visit the Southeast Cattle Advisor website at www.secattleadvisor.com

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

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Source: https://extension.uga.edu/publications/detail.html?number=B1078

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