Market Beef Angus Steer Market Beef Diagram

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
• Programme for the Marketplace
• Feeder Calf Marketing Alternatives
• Which Cattle to Produce
• Where to Market place
• Cull the Right Marketing Method
• When to Market
• Keeping Up with the Market
• References

Most cattle produced in Georgia come from cow-dogie farms and ranches. With cow-calf operations, equally with other farm enterprises, making a profit is the only thing that will keep you lot in business. How much profit yous make depends largely on your power to market your calves.

Selling Versus Marketing

Assisting cattle marketing involves more than just getting the highest price. It involves producing the type of calf the market desires, marketing that calf through the best outlet and at the best time. Unfortunately, near cow-calf producers simply sell their calves. They produce calves that are the easiest to raise, sell at the most user-friendly marketplace outlet and sell at the nearly convenient time. As a outcome, they are price-takers.

Marketing means making choices about how or what product to produce, where to market it and when to price. Equally a consequence, marketers have some control over the price they receive.

The first step in becoming an constructive cattle marketer is to recognize all your alternatives and evaluate each in light of potential cost and returns, selecting the nearly assisting rather than the most convenient alternative.

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

Know Your Cost

The kickoff step in any successful marketing plan is to know the unit of measurement cost of production (UCOP). In fact, for many small-scale or medium-size 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 ways knowing the cost per pound of dogie sold. The best way to brand this determination is to brainstorm with a upkeep similar to the one shown in Table 1.

Tabular array 1. Case summary budget for a moo-cow-calf enterprise in Georgia.
ITEM	$/Cwt.	$/Moo-cow
Variable Cost	$137.fourteen	$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	$11.43	$fifty.76
Annual Buildings & Facilities Fixed Costs	$7.16	$31.82
Annual Equipment Fixed Costs	$21.02	$93.37
Annual Land Fixed Costs Excluding Taxes	$0.00	$0.00
Annual Real Estate Taxes	$ane.37	$6.11
Full COSTS	$149.87	$665.61
Source: 2012 UGA beefiness cow-calf budgets

Note that while the cost per cow is shown, the accent is placed on $/Cwt. The cost per hundredweight sold is used because information technology captures not only full herd costs simply also calf crop percentage and weaning weights.

In the example budgets shown, there are two numbers highlighted -- the commencement one being variable cost in $/Cwt. Variable costs (VC) are also called Direct, "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 considering they are the mensurate of profitability. It is also critical to encompass variable costs because whatsoever returns in a higher place 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 not only VC merely also fixed costs (FC) such as depreciation, cost of capital, management, taxes, etc. FC are those costs that occur regardless of the number of head produced. Some people also refer to FC as overhead or indirect costs. Regardless of the terms used, the full cost (TC) per hundredweight is the cost a moo-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 set target prices and evaluate their costs in relation to the marketplace. While atmospheric condition and input costs tin can be volatile in the short term, which volition impact cost per hundredweight year-to-year, producers who consistently have interruption-even prices above marketplace prices volition need to find ways to lower their costs in order to stay in the business concern.

Plan for the Market

The old saying goes that if you don't know where you're going, any road will accept you lot at that place. Merely if marketing your cattle at a profit is where you desire to go, and then planning for the market place volition help go you there. Planning requires information. A good fashion to showtime becoming a improve cattle marketer is being sure you lot understand the cattle marketing arrangement and how your cattle prices are determined. So you lot need to recognize all the market place alternatives available to you lot. Finally, you need to know where to become the information to assistance you decide on a marketing plan.

The Georgia Feeder Cattle Market

Effigy i. Seasonal prices of feeder steers and bulls in Georgia auction markets. 2007-2011. Data source: USDA-AMS, Weekly Sale Report, TV_LS145 (various weeks).

In Georgia, equally in the Southeast, feeder calves are produced and sold as feeder calves subsequently weaning. About 70 pct of all Southeastern calves are weaned and sold during the fall. This is the major reason backside the normal seasonal cost swings shown in Figure 1: prices are unremarkably lower during the fall and higher during the late winter and early spring.

At that place are around 17,000 cattle producers in Georgia with an average herd size of fewer than 50 caput. With so many pocket-size producers, information technology is natural that almost 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 will be added. Every bit heavyweight feeders, between 600 and 800 pounds, they and so will typically move directly into feedlots.

Figure 2. Cattle on feed in yards with more than ane,000 head (January i, 2012). Source: Data provided by USDA-NASS, "Cattle" Report. Nautical chart developed by the Livestock Marketing Information Center (LMIC).

Commonly, 70 to 75 percent 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) now market near 60 percent of the cattle fed in the United states. Effigy 2 illustrates the concentration of the cattle feeding industry in the United States as of January one, 2012.

While there are definite segments to the beef production system, the important point to remember is that the consumer eventually makes the final pricing determination. The retailer wants a certain type of product because the consumer wants it. This is relayed dorsum to the packer, who relays it to the feedlot, who relays it to the feeder cattle producer. The "relay" for all these letters is the price. Unfortunately, because of all the messengers in the market, the signals sometimes get mixed or muted. All the same, if we pay close enough attention, nosotros can recognize them. Past agreement how the beef cattle markets work, feeder cattle producers will be meliorate able to recognize changes that may make a higher profit.

Feeder cattle prices are derived from their side by side marketplace. 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 proceeds. As the expected price of finished animals goes up or the cost of gain goes down, feeder dogie prices will increment. The weight to be added is factored in with the expected toll of finished cattle. A i,200-pound finished steer weighs 2.xl times as much every bit a 500-pound feeder calf and 1.sixty times equally much equally a 750-pound yearling. Therefore, a $1-per-hundredweight increase in the expected selling price of a finished steer would crusade a buyer to bid $2.40 per hundredweight more than for a 500-pound feeder dogie or $1.60 more for a 750-pound steer.

The cost of finishing the dogie will also touch the price of the feeder. The price of putting a pound of gain on a calf depends on feed toll, non-feed costs such as interest, and the efficiency of the calf itself.

A feeder ownership a 500-pound calf and finishing it to 1,200 pounds is putting on 700 pounds of gain, or 1.xl times the original weight. Finishers buying 750-pound yearlings and finishing to i,200 pounds are putting on 0.64 times the original weight. Each $1 modify in the cost of gain 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 break-fifty-fifty purchase prices that could exist paid for a 550-pound steer given alternative fed-cattle prices and price of gain. Of grade, feeder calves produced in Georgia are likely to be transported to the feedlot states. Thus, a feedlot will besides have to discount the feeder price in Georgia by the cost of transporting the calves to the feedlot.

Tabular array 2. Prices that tin can be paid for a 550-pound feeder steer at alternative fed-cattle selling prices and cost of proceeds.
	Sales Price of Finished Cattle ($/Cwt.)
Cost of Proceeds ($/Cwt.)	$ 105.00	$ 115.00	$ 125.00	$ 135.00
$ 70.00	$ 149.55	$ 172.27	$ 195.00	$ 217.73
$ eighty.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 Beefiness AND Live CATTLE MARKETING
For years nigh live cattle (also called slaughter or fat cattle) were marketed on a pen-boilerplate basis. That is, feed yards were paid ane price for all of the cattle in the pen. However, over time that has changed. At present close to 60% of all slaughter cattle are sold on a carcass footing where each carcass is individually weighed and graded for quality (marbling) and yield (percentage of retail meat). Since at that place are unlike prices for different yield and quality grades, each carcass ends upward with an individual or customized cost. The internet effect is that price transmissions from the packer back to the moo-cow-calf producer are much clearer now than in the past.

Figure 3. Factors that touch 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 note that there are many things that touch the price of cattle and beefiness that moo-cow-calf producers cannot command. However, past being aware of these factors, cattlemen can have some idea of expected prices and plan accordingly.

The variables are shown past different size squares depicting the relative importance of each. For example, fed steer and heifer slaughter contributes the well-nigh to beefiness supplies, followed by commercial cow slaughter, not-fed steer and heifer slaughter, beefiness imports and exports, and bull and stag slaughter.

On the demand side, per capita disposable income, total 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 (farm-to-retail margin), volition also impact farm prices.

Feeder Calf Marketing Alternatives

Webster?s Dictionary defines "marketing" as the procedure or technique of promoting, selling and distributing a product or service. It is important to keep in mind what your product is. Ultimately, a feeder dogie producer's product is beefiness. Georgia feeder calf producers have 3 major marketing decisions: what to produce, where to market their production and when to cost their calves. While some or possibly all of these decisions are set for the producer, alternatives nearly probable exist. The selection of these alternatives volition have a dramatic impact on the profitability of the cattle functioning.

Which Cattle to Produce

The cow-calf producer influences the marketability of his cattle the solar day he selects his breeding stock. While information technology is true that almost whatsoever type of cattle can be sold at a price, the Georgia cattle producer should exist raising the most profitable cattle. At that place are many factors that make up one's mind the value of a feeder calf. Some of these factors tin be influenced through an functioning?due south breeding and genetics program and others through proficient management practices. These factors include:

• Breed
• Colour
• Frame
• Muscling
• Condition/Mankind
• Weight
• Sex
• Background
• Horns
• Fill
• Personal Preference
• Vaccinations

Breed

The breed of the calf can influence prices independent of grade. Certain breeds or breed-types bring a higher price considering of perceptions past the order buyer as to how these breeds will perform in the feedlot. While these perceptions may or may not be right, they practice exist. One style to get around breed perceptions is to take advantage of breed clan-sponsored marketing programs. Crossbred calves take traditionally been in higher demand than purebred calves because of the advantage of hybrid vigor. However, in contempo years, that trend has been challenged. Calves with a loftier pct of dairy or Brahman influence are typically discounted through the auction barn.

Color

Calf color can also impact the determination of value because it can exist a inkling into the calf's breeding. According to a report done in Arkansas in 2005, there was a $13.07/Cwt. spread between selling prices of calves of various colors.

Tabular array 3. Toll adjustments for various breeds.
Calf Color	Average Selling Toll (Value/Cwt.)	Deviation From Overall Boilerplate (Value/Cwt.)
yellowish-white confront	$120.44	$two.34
yellow	$120.29	$2.19
black-white face	$120.03	$1.93
black	$119.24	$1.14
gray	$117.66	-$0.44
gray-white face	$116.79	-$1.31
white	$116.01	-$2.09
cerise-white face	$114.58	-$three.52
reddish	$113.92	-$4.18
spotted or striped	$107.37	-$ten.73
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Frame

The U.s.a. Section of Agriculture has official grades for feeder cattle based on frame size, thickness and thriftiness (overall health). Frame size refers to the brute'south skeletal size ? its top and trunk length ? in relation to its age. Frame size is related to the weight at which, under normal feeding and direction, an animal will produce a carcass of a given grade. Big-frame animals require a longer time in the feedlot to achieve a given form and will weigh more than than a small-frame animal would weigh at the same form. Animals are assigned to iii frame sizes - Large, Medium and Small. Table 4 describes the expected minimum live weights at which these calves would produce U.S. Pick carcasses.

Table four. Correlation betwixt frame size and finished slaughter weight.
Frame Size	Steers	Heifers
Big	1250	1150
Medium	1100-1250	1000-1150
Small	< 1100	< k
Source: USDA Agricultural Marketing Service, Livestock and Seed Program. United States Grades of Feeder Cattle. Effective date October i, 2000.

Muscling

Muscling is evaluated by looking at the thickness of the animal. Thickness in feeder cattle refers to development of the muscle system in relation to skeletal size and is the amount of muscling present in proportion to os and fat. Thicker-muscled animals will accept more than lean meat. The four thickness or muscling grades are No. ane, No. two, No. 3 and No. 4.

Muscling No. 1

No. 1. Feeder cattle that possess minimum qualifications for this grade usually brandish predominate beef convenance. 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 back and loin with moderate width betwixt the legs, both front and rear. Cattle evidence this thickness with a slightly thin covering of fatty; yet, cattle eligible for this grade may acquit varying degrees of fat.

Muscling No. 2

No. 2. Feeder cattle that possess minimum qualifications for this grade usually testify a high proportion for beefiness breeding and slight dairy breeding may be detected. They must exist thrifty and tend to be slightly thick throughout. They tend to be slightly thick and full in the forearm and gaskin, showing a rounded appearance through the back and loin with slight width betwixt the legs, both front and rear. Cattle show this thickness with a slightly sparse covering of fat; however, cattle eligible for this grade may carry varying degrees of fat.

Muscling No. 3

No. 3. Feeder cattle that possess minimum qualifications for this grade are thrifty and sparse through the forequarter and the middle part of the rounds. The forearm and gaskin are thin and the dorsum and loin have a sunken appearance. The legs are set close together, both front and rear. Cattle prove this narrowness with a lightly thin covering of fat; notwithstanding, cattle eligible for this grade may carry varying degrees of fat.

No. 4. Feeder cattle included in this grade 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 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 grow and fatten normally. In these standards, unthrifty animals are those that are non expected to perform usually in their present country due to such factors as illness, parasitism, severe emaciation or any condition that must be corrected before they could exist expected to perform normally. Unthrifty feeder cattle may have whatsoever combination of thickness and frame size.

Several market studies have been conducted in the mid-South and Plains regions since 2000. While the verbal 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 case from a study conducted in Arkansas is shown below in Tabular array 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. three Muscling	-$32.41
No. iv Muscling	-$57.18
Large Frame	Base
Medium Frame	0.14
Small Frame	-$22.ten
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, cow-calf producers do good from the higher prices.

Preconditioning is not a new thought, but has received considerable attention in recent years with interest in value-added programs for cow-calf producers, beef quality balls programs and strategic alliances in the beef industry. There are various preconditioning programs with dissimilar names and management requirements. Almost programs crave a 45-twenty-four hours post-weaning stage with a sound nutritional program, specified beast health procedures, dehorning, castration of bull calves and bunk feeding. The purpose of preconditioning programs is to reduce stress from shipping calves at weaning, improve the immune system, and heave performance in postweaning production phases (i.e., stocker production and cattle feeding) and in carcass operation (i.e., higher grading carcasses with fewer defects).

I common question is whether or not preconditioning programs add sufficient value to feeder calves to offset the added toll. Common preconditioning programs cost cow-calf owners well-nigh $60/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 $60 (or their cost) per head to make pre-conditioning pay. It is important to call up that the additional revenue can come from reduced shrink and/or a higher toll. The master point is that those producers considering preconditioning should not focus but on receiving a higher price.

No matter the blazon of cattle produced, dehorned, well-managed, clean, healthy-looking calves volition ever bring top-dollar prices. A Kansas State University study of more than 140,000 caput of feeder calves sold at auctions showed that cattle that were not in good health, had concrete impairments or were muddy received large discounts. Dingy calves or calves with dead hair typically were discounted 2 percent, stale animals seven to 9 percent and sick animals more than 25 percent. Castrated calves may not bring premiums at sale markets since buyers don't accept time to confirm each calf equally he comes through the ring, but they volition bring premiums through other marketplace methods that allow for seller identification. Specific health practices may besides bring premium prices when the market allows for the recognition of such practices.

The addition of these management practices to a producer's operation means there is a need for acceptable 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 Marketplace

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 place outlets. No ane system fits every producer?s needs, so there volition keep to be many alternatives. The marketplace outlets bachelor to you will depend on the number and uniformity of cattle you have to sell at 1 time. This mostly is the primal ingredient in gaining college prices through different marketing methods. Figure 4 shows the price premiums that larger compatible groups of similar cattle could be expected to bring. This chart is based on survey information collected from Kansas auction markets.

The correct way to translate this chart would exist to compare the values reflected past the line to a base price for a single-head sale. For instance, if a single-head lot were expected to bring $125/Cwt., a semi-trailer load would exist expected to bring 5 pct, or $6.25, more. As the number of caput in the lot increases to more than than 100 head, the increase begins to decline, but information technology is nonetheless larger than the base of operations.

Essentially, the ability to form truckload lots (around 48,000 pounds) of uniform cattle volition mostly result in fifty-fifty college prices and open up marketing methods beyond the unmarried-head sale.

No matter your size herd, you tin can capture some of these benefits past having a defined, short breeding flavor so your calves volition be uniform in weight. Uniformity in cattle color and grade will be a product of your breeding herd. Lack of uniformity in cattle color can go a trouble if not properly planned in the crossbreeding arrangement.

Choose the Right Marketing Method

Some of Georgia's cattle market alternatives, forth 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 particular twenty-four hours of the week.

Sale Market place Advantages:

• The sale market tin provide competitive bidding.
• Nigh markets are open 48-l weeks out of the year.
• It is user-friendly.
• Information technology is open up to all sellers and buyers.
• There is prompt greenbacks payment.
• All types of livestock can exist marketed.
• Information technology provides a identify where cattle prices are adamant and known to all.
• It is supervised by the federal authorities.
• Information technology requires admittedly no market knowledge by the producer.
• It requires no minimum number of cattle.

Auction Market Disadvantages:

• The seller has little command of prices.
• It encourages multi-treatment, speculative-blazon trading.
• Overhead cost is loftier.
• 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 later a sale.
• Producers may find it hard to establish a reputation for selling high-quality, well-performing livestock.
• The grade and cost data can be hard to translate.
• Prices are uncertain.
• Disease spread is more probable.
• The number of buyers may be small, reducing competitiveness of bidding.

Even when marketing through auctions, prices for cattle are non compatible. However, you can have some influence on the price you get by communicating with your auction operator. Notice 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 alee of time what you will be bringing to marketplace. If you lot take a group of compatible calves to sell, enquire about the possibility of selling every bit a group.

Graded and Pooled Sales

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

Pooled Sale Advantages:

• Tin put large, economical lots of livestock together.
• Toll savings for buyers are passed along to sellers.
• Big numbers of livestock attract more buying competition.

Pooled Sale Disadvantages:

• Grading, sorting, weighing and penning before sale can be time-consuming and expensive.
• Private producers lose their identity.
• Many marketing facilities may non be designed for efficient processing for this system.
• Information technology's hard to get a large number of producers to agree on all terms of sale.

Tele-Auctions

A tele-sale is the use of a telephone conference call to allow separation of livestock, buyers and the sale process. Producers with truckload lots of cattle tin can be sold directly from the farm. Producers with fractional truckloads can exist matched with other producers "on newspaper" and sold together. The tele-sale 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 use videos in the marketing of cattle. Even so, many marketing agencies still use the telephone when taking bids for cattle.

Tele-Auction Advantages:

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

Tele-Sale Disadvantages:

• Requires prior producer commitment.
• Reduces marketing flexibility.
• Requires fractional 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 past satellite telecast while the cattle are sold. Other than that point, many of the considerations for tele-auctions as well apply to video auctions.

Digital recordings are often used in combination with tele-auctions. Video auctions were one time exclusively sponsored by national companies; still, in recent years many local auction markets as well 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 wellness risks.

Video Auction Advantages:

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

Video Auction Disadvantages:

• Marketing price tin can be by and large higher than tele-auction.
• Requires producer to have on-subcontract truckload (and preferably more) of uniform cattle.

Individual Treaty

DIRECT SELLING TO CONSUMERS:
Many producers look to amend their bottom line by marketing
directly to consumers. Directly-marketing tin can be a way to add
value and increase profits. Information technology also involves additional production
run a risk, expense and direction.

While a total discussion of direct marketing is beyond the telescopic of
this publication, producers interested in this possibility should
consider non merely the current value of the animals, simply besides
the additional production costs and chances for death loss. They
should also have a very practiced handle on their target market
and know what this marketplace will pay and compare that price to
the overall breakeven price.

Individual treaty selling of livestock was widely used in the early on 1920s when many country buyers operated throughout the state. Equally auctions became more than prevalent, producers shifted to auction selling. Individual treaty selling is a airtight-sale method; it is a private negotiation between seller and buyer. The price and terms of sale are unremarkably known just past the seller and buyer.

Sellers and producers of convenance 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 considering many buyers prefer to have their calves conditioned to their specifications and prefer to buy from sellers whose product practices meet their needs and demands.

Individual Treaty Advantages:

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

Individual Treaty Disadvantages:

• Requires excellent marketing knowledge by seller.
• There is no supervision by the federal authorities.
• Producer assumes risk of payment collection.
• May be piffling or no buyer competition.

Retained Buying

Retained ownership involves holding cattle longer than would normally be the case or to the next one or two stages of production. In other words, if you are a cow-dogie producer, you lot retain buying of your cattle through the stocker phase, and if you are a stocker operator, you retain ownership in the feedlot phase of production. In that location is as well the option to retain ownership all the mode from birth to harvest. There are many factors that should be considered before retaining buying of calves. Each gene should be evaluated past each producer for each situation. Calculation of break-even costs nether different retained buying alternatives will help the producer estimate profit potential.

Retained Buying Advantages:

• Receive a render for value-added direction and use of superior genetics.
• Receive data (carcass and feeding operation) back to exist utilized.

Retained Ownership Disadvantages:

• Increased risk associated with market conditions, cattle performance and production.
• Postponement of acquirement.
• Additional time, labor and interest costs.
• Requires some cognition of performance capabilities of calves.

Branded Beefiness Programs

Branded beef programs guarantee a consumer a set up of standards (e.thousand., lean, natural, organic, breed-specific, grain-fed, grass-fed, tender, etc.). In general, branded beef programs can be broken into three categories: breed-specific branded programs cull cattle from a specific brood or brood type; company-specific programs choose beefiness from all breeds just include other criteria in terms of grade, marbling, size, types of feed used and/or restrictions on the utilise of pesticides, antibiotics and hormones; and shop-branded beef, which is exactly every bit the proper name describes. Some grocery store chains are now branding their own beef products. Well-nigh programs tin can be further classified into one of three groups: lite/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 establish a reputation.

Branded Beef Disadvantages:

• Requires producer to switch from "selling" to "marketing" cattle.
• Skilful record keeping arrangement must be established.
• May require additional input costs to run across program requirements.
• Potential performance and morbidity (losses from wellness bug) from producing natural/organic cattle.

When to Marketplace

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

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 year. By using 100 percent as the average for the twelvemonth, interested cattlemen can make some inferences about the way prices typically carry. For case, from 2007-2011, prices for 500-600 pound steers and bulls sold in March were 6 percent college than the yearly average. On the other mitt, prices for the same calves in Nov were 8 per centum below the annual average.

It is important to note that the indices alter for different weight classes. For instance, prices for 500-600 pound calves tend to acme in the spring and then decline the balance of the year. Conversely, prices for 700-800 pound feeders tend to gradually increase throughout the yr and peak in July and August. In both instances, prices tend to be lowest in the fall.

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

The actual toll received past most dogie producers for their calves will be determined when they sell their cattle at a specific market. This need not be the example for producers who have near-truckload lots of cattle to sell at ane time. These producers can set a price earlier they will really sell their cattle by using the feeder cattle futures market. Past using the feeder cattle options market, producers besides can set a minimum toll they will have for their cattle before the actual sell date. Both the feeder cattle futures and option contracts are traded on the Chicago Mercantile exchange. Past trading a l,000-pound contract, a cattle producer in Georgia can prepare the price for equally much as a year in accelerate of the time he or she really sells cattle.

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

Feeder Cattle Market Alternatives Summary

Most Georgia cattle producers have several alternatives for when, where and how they marketplace their cattle. Consider each of these alternatives separately in calorie-free 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 non necessarily piece of work for some other. However, there can be no doubt that proper attention to a marketing programme can pay peachy dividends.

Keeping Up with the Market place

Successfully implementing a cattle marketing program will crave the producer to go along tabs on the market, particularly when a market decision is at hand.

The post-obit is a list of toll and important supply reports that may exist useful.

Price Reports by Phone

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

Published Toll Reports

Most price reports are at present available online or via e-post subscription. Even so, the Georgia Department of Agriculture's Livestock Market place News office in Thomasville, Ga., still 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 Counselor website at www.secattleadvisor.com. Specific market reports can be obtained via due east-mail subscription through USDA's Agriculture Market News at http://usda.mannlib.cornell.edu/MannUsda/homepage.do

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

References

Schulz, Lee, D. Dhuyvetter, K. 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 Beefiness Moo-cow-calf Budgets." Agricultural and Applied Economics Department. Available online at www.secattleadvisor.com.

U.S. Department of Agriculture-Agronomical Market Service (AMS). "Georgia Weekly Auction Report, TV_ LS145" (diverse weeks).

U.Southward. Department of Agriculture, Livestock and Seed Program. "Us Grades of Feeder Cattle." Effective date October i, 2000.

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

For more information on beef cattle marketing and economic science, visit the Southeast Cattle Counselor 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 Dec 08, 2010
Published with Major Revisions on Jul 30, 2012
Published with Total Review on Jan 30, 2017

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

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