Thursday, February 14, 2008
Feeder Cattle Prices Whip-Lashed By Corn Prices
We often comment on how corn prices are whip lashing feeder cattle prices. The chart below shows the whip lash for 2007.
# posted by Dr. Harlan Hughes @ 2:07 PM 
CME Feeder Cattle Price Index
The CME Feeder Cattle Futures Settlement Prices are based on the CME Feeder Cattle Index. This index, in turn, is calculated on the 7-day moving average of cash salebarn sales in cattle country.
The dramatic down turn in the Feeder Cattle Index started in October 2007 and continued through Mid-January 2008. Preliminary analysis suggests that the feeder cattle price index has turned upward again in late January 2008.
I am expecting this index to peak in 2008 near grass time at $8-$10 under the 2007 peak but near the grass time level of 2007. What happens after that, depends of the weather scares in corn country.
# posted by Dr. Harlan Hughes @ 1:58 PM
Wednesday, February 13, 2008
Canadian Cattle Imports
This chart is Canadian live cattle imports -- both feeder cattle and slaughter cattle. Under utilized U.S. feedlots are very willing to feed Canadian cattle. It helps keep the feedlots fuller. Note the increase of Canadian cattle imported from May07 through Nov07. While not shown on this chart. Imports have remained very high into Feb08 and I see no reason for them to decrease any time soon.
As you think about Canadian imports, keep these import numbers in perspective. We produce around 27,000,000 feeder cattle in the U.S. So… 180,000 imports is really not that significant.
# posted by Dr. Harlan Hughes @ 1:54 PM
U.S. National Beef Cow Inventory
Back to the basics. This chart shows that the cattle cycle has been broken. All indications are that the U.S. cow herd is not going to grow for the rest of this decade. In fact, the nations cow herd could continue to slowly decrease through 2010.
The implications here is that we are projected to have a smaller calf crop for the rest of this decade. This implies that feedlots will not be able to find feeder calves to keep all lots full. Well financed feedlot will bid aggressively for feeder cattle. The benefactors of this aggressive bidding will be ranchers.
# posted by Dr. Harlan Hughes @ 1:50 PM
Kansas Slaughter Cattle Basis (Cash minus Futures)
Some of my IRM Cooperators are involved in finishing cattle so this should be of interest to those producers. This is the basis calculation (cash minus futures) prepared by Kansas State University for Kansas. This data is the average of the last 3 years. The basis for where you sell your cattle may vary a little from these but should follow this pattern. (I am working on getting some Eastern Wyoming/Western Nebraska basis data summarized.)
We know that there is generally a shortage of finished cattle around April -- some times also in March. We are out of old crop (2006) finished cattle and most new crop (2007) calves are not yet ready for the market.
This year I expect to see slaughter numbers really increase in June and July as more 2007 calves skipped winter wheat grazing went straight to the feedlot at weaning. I am not sure the market is really reflecting this yet.
Market prices tend to peak for the year in April when very few ranchers have finished cattle to market. The two groups of ranchers that can have finished cattle to market in April are (1) those that early weaned their 2007 calves and (2) those that calve Jan/Feb and wean in September.
For example, a producer selling his calf-feds in April 2008, should expect to sell his cattle $3 over the April futures prices. The projected basis range is from a +$2 to a +$4.75. Given the 12 Feb 08 Closing Apr08 contract of $94.77, this suggests a Kansas April 2008 slaughter cattle price of $97.77 -- not bad -- provided your breakeven price is lower; however, My PPP-MIS model for a "Winter Calving Cow Herd" has Jan/Feb born calves finishing in mid-Apr with a breakeven of $104/cwt.
Note the basis price goes negative around 1 July and stays negative for the rest of the year. When do you think most 2007 calves will be harvested? It is June, July, and August.
The ranchers that retains his calves, is rewarded if he is part of a production system that harvests his calves in April of each year.
# posted by Dr. Harlan Hughes @ 1:47 PM
Predicted Corn Carryover
Double Click the image to load a larger version into you computer for viewing and printing from you browser.
I advise ranchers that the best way to observe (and even predict) corn prices is to watch the Carryover projections. The lower the carryover, the higher the annual corn price. Ending stocks as a % of Total Usage is that carryover. Most analysts will use carryover as their predictor of annual corn prices. Researchers have even developed a statisitical historical relationship between carryover and corn prices.
Note that 2007/08 projected carry over is even lower than the 2006/07 carryover. Also note how low the 1995 carryover was when we had the last run-up in corn prices. This all suggests, at least to me, that corn prices are going to some higher in 2008. This all is even before we take the growing season weather into account.
I am suggesting corn prices will be in the high $4.00s range for 2008 -- up another dollar over 2007s.
# posted by Dr. Harlan Hughes @ 1:31 PM
March 2008 Feeder Cattle Futures Prices
The above chart is the daily March Feeder Cattle Prices from early September Through 12 Feb 2008. This chart shows the downward trend from Early Oct through Mid to late January. It also shows an upward trend since the low around 20th January. All indications are that prices may well trend upward into early summer. The desire for grass cattle may well be driving up these prices.
# posted by Dr. Harlan Hughes @ 12:26 PM
Tuesday, February 12, 2008
Long-Run Planning Prices for Emerging Biofuel Era
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Double click on chart to load an expanded version into your computer. You can then print it from your computer.
All indications are that the Cattle Cycle has been broken by the emerging biofuel era. USDA has published a new set of long-run planning prices that pertains to the biofuel era. I am now using these planning prices with ranchers around the country as we build their 2008 to 2010 business plans.
If you are needing or wanting help to build your 2008-2010 ranch business plans, please contact me at harlan.hughes@gte.net or 701-238-9607.
# posted by Dr. Harlan Hughes @ 12:31 PM
Beef Cow Profits
Double click on the small image to see the chart of Beef Cow Profits over the last several years with a projection for 2008. Indeed, we have had several years of very good profits per cow. The emerging biofuel era, however, is changing this.
My projections is realatively steady beef cow profits for the rest of this decade. Now is the time for ranchers to focus on redcuing their costs of producing a hundredweith of calf (UCOP).
If interested, contact Harlan Hughes (harlan.hughes@gte.net) or 701-238-9607 and I have a new IRMez Cost & Return System designed to help ranchers lower production costs during this emerging biofuel era.
# posted by Dr. Harlan Hughes @ 12:17 PM
Tuesday, June 26, 2007
Revised Long-Run Beef Planning Prices
To printout the chart, double click on the chart icon and a larger version will load into your computer. You can use your browser's print command to print this larger chart.I combined USDA's Long-Run Cattle Planning Prices and my Long-Run Cattle Planning Prices in the new planning price chart presented here. The USDA Planning Prices were generated in response to the emerging biofuels era.
USDA projects that feeder cattle prices will adjust downward over the next 3 or 4 years trying to find the new equilbrium with the emerging biofuels era of increased corn prices. With corn prices projected to average higher in 2008, we could well see some feeder cattle price adjustments for the next 18-24 months.
They project that once that equilbrium is found around 2009 to 2010, beef cow producers will begin to expand the beef cow herd driving prices up for the first few years of the expansion. The expanded production will eventually pull beef prices back down by 2015 or so.
Feeder cattle prices are projected to make the biggest adjustment (compared to feeder calf prices) due to increased corn prices. Limited beef cow numbers, coupled with over capacity in the feedlot sector, is projected to add strength to feeder calf prices. Relatively high calf prices, coupled with lower costs of gain for growing feeders on forages, suggests that the industry will be able to adjust to the projected wide buy/sell margins between weaned calf and feeder cattle prices.
As has been traditionally done with retained ownership of calves, ranchers are projected to continue to subsidize growing feeders with the profits made from producing weaned calves. As done in the past, faulty accounting practices will prevent many beef cow producers from again realizing that they are subsidizing the growing and finishing phases in the emerging biofuel era.
# posted by Dr. Harlan Hughes @ 12:33 PM
Monday, June 25, 2007
Input form For Calculating Cost Of Raised Replacement Heifers
Double click on a page icon and a larger version of that page will load into your computer. Then, you can printout that page with your browser's print command. To print the next page, click the left arrow on your browser and return to the previous web page. Then repeat this whole process for the next page.There is an example completed input form, a blank input form for your use, and a detailed table of the heifer grower ration used in my heifer cost example. The example results are presented on the BEEF Magazine web page as my May 2007 Market Advisor.
Fall calf prices peaked In 2005, and the current beef-price cycle is expected to trend lower for a few years as the emerging biofuels era plays out. Thus, measuring and controlling heifer replacement costs over the next 3-4years is critical. Managing home-raised, replacement heifer numbers has much more impact on a rancher's unit cost of producing a hundredweight of calf (UCOP) than ranchers typically believe.
The quickest way to increase UCOP is to hold backadded replacement heifers. Conversely, the quickest way to lower UCOP is to reduce the heifer calves held back as replacements.
Where the cost of raising replacementheifers is concerned, cash accounting will lead most ranchers down a primrosepath. That's because cash accounting underestimates the true economic costs of raising replacement heifers. In fact, I project some ranchers will lose substantial money raising replacement heifers over the next few years and not even be aware of it. Ranchers are currently producing record high-cost replacement heifers destined to produce mid-priced calves for the rest of this decade and into the next- a recipe for financial stress. The cost of replacement heifers should be based on "economic costs"(opportunity costs), not "cash costs."
If you don't hold back replacement heifers, you have the "opportunity" to sell them at weaning. The feed used to raise replacementheifers could be sold, or fed to other animals. If you don't develop your own re-placement heifers, you can run more mature cows.
I have included an example input form used to calculate the cost of rasing replacement heifers. The actual calculations are published as my Market Advisor in the May 2007 BEEF Magazine.
I have included an example input form used to calculate the cost of rasing replacement heifers. The actual calculations are published as my Market Advisor in the May 2007 BEEF Magazine.
You can double click on the input form icons for the example and blank input forms and a larger version will load into your computer. You can use your browser's print command to print out the input forms. After print the first page, click the left arrow on your brower to return to previous web page and double click the next input form. Then, print it with your browser.
Send your completed input form, along with a check for $99, to harlan.hughes@gte.net and I will generate a heifer replacement cost for your herd and email it back to you. This service is available free to paid IRM clients and NCIS Risk Management Workshop Participants.
# posted by Dr. Harlan Hughes @ 11:30 AM
Tuesday, June 12, 2007
US Weekly Ave 550 Lb Steer Calf Prices For 5 Years
The general level of calf prices has really raised since 2002. Prices peaked in 2005 and in 2006. Fall prices went up in 2005 with the expectations that the re-entry into the Japanese market would begin in late 2005 and early 2006. Calf prices during the last part of 2005 were drive by market hype rather than market fundamentals. The Japanese market did open up in mid 2006 but at a snails pace. It still is operating at a snails pace.
Fall 2006 calf prices were driven down by the rapid increase in corn prices.
In spite of the high 2007 corn prices, 2007 calf prices are being driven by $100 slaughter cattle. Current slaughter cattle prices in the $90s is still driving calf prices. $100 cattle prices does a lot to relieve $4.00 corn prices!!
You can load a larger version of this chart into your computer by double clicking on the chart to the left. Then, you can print the larger chart from your computer.
# posted by Dr. Harlan Hughes @ 8:23 PM
Monday, June 11, 2007
Lives Cattle Prices
Here is a chart of 2007 slaughter cattle prices compared to 2006 and the last 5-year average.
Double click the graph and a larger verion will load on to your computer. You can then print the larger version if you so desire.
Double click the graph and a larger verion will load on to your computer. You can then print the larger version if you so desire.# posted by Dr. Harlan Hughes @ 9:05 AM
Thursday, May 10, 2007
Japanese Beef Exports Grow Ever So Slow
First it was all the speculation of beefexport resumption to Japan and US elections, and then several presidential meetings. Some trade to Japan started, and then itstopped. And then it started again, amounting to a sliver of what used to be a very lucrative market (see chart). Now US beef packers speak enthusiastically of resumed beef exports to S. Korea and some beef is indeed moving to that market, likely a measure of good faith following the conclusion of a last minute FTA agreement.
But if beef exports were part of the FTA negotiations, then what happensif the deal is scuttled by an increasingly resentful US congress. As the Economist magazine recently put it "(the FTA approval) ha seven longer odds. Mr. Bush has little political capital even within his own party. And Congress is controlled by the Democrats, many of whom are deeply opposed to new trade agreements, most of whom want to get tougher on China and few of whom want to give theWhite House a political victory."
Bottom line: US beef will again move to Asian market.But it will likely be a long process, with little to no impact on current markets. But it makes for good conversation and one more bullet point when laying out market drivers.
source: CME Daily Email Newsletter 10 May 2007
Labels: Beef Export Charts May
# posted by Dr. Harlan Hughes @ 2:58 PM
Sunday, March 11, 2007
Make-Up Of Beef Exports
I thought you might be interested in the make-up of U.S. beef exports.
# posted by Dr. Harlan Hughes @ 11:57 AM
Tuesday, February 20, 2007
USDA Slaughter Cattle Planing Prices -- Feb07
Each month USDA prepares a set of Planning Prices for Agriculture. This table presents USDA's Feb Slaghter Cattle Planning Prices. It is interesting to note that these planning prices are several dollars below the current Futures Market Prices for the same time periods. This suggests, at least to me, that USDA is expecting slaughter cattle Futures Prices to weaken some throughout the 2007 year.
Double click the table and a larger version will load into your computer. Use your browser's print command to print the table.
# posted by Dr. Harlan Hughes @ 4:16 PM
Saturday, February 17, 2007
Long-Run 400-500 Lb Calf Prices
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I thought I would share a set of long-run steer calf prices that I generated recently. Over the years, I have used this slide to present the beef price cycles that have occurred since the early 1970s. I recommend that you go to the 3rd slide first, the middle slide second, and the top slide last.
The top slide presents an analysis of the "U" or "V" shaped beef price cycle of the last several cattle cycles. the key point here is to recognize that beef price cycle tend to go in either a "U" share curve or a "V" shaped curve. This suggests that the current beef price cycle (2005 through 2015) will also be either "U" or "v" shaped. I am unable to predict which it will be. The key point, however, is that I am predicting a downturn in calf prices for the rest of this decade.
The second slide presents the statistical trend line for these prices. I actually had never calculated this line before. What struck me the most, was how calf prices have generally trended upward with the beef price cycles quite clear above and below the trend line.
I argue that ranchers need to know if current prices are above or below the trend line. When current prices are above the trend line, it signals the good times for beef cow producers and when current prices are below the price line, it signals tough times for beef cow producers.
You can print the two charts by first double clicking on the figure and a larger version will load into your computer. Then, use your browser's print command to print the figure.
# posted by Dr. Harlan Hughes @ 7:18 PM
Friday, February 09, 2007
Map Of Existing & Potential Ethanol Plants
Here is map of existing and proposed ethanol plants in the U.S. Double click the map and a larger version will load into your computer. Use your browser's print command to print this map.
# posted by Dr. Harlan Hughes @ 4:32 PM
Wednesday, January 31, 2007
Net Ranch Income Blank Summary Table For Ranchers to Use
This is a blank Net Ranch Income Table posted here for ranchers to access. Click on the table picture and a larger version will load into your computer. Use your browser printer to print a copy of this blank table.
# posted by Dr. Harlan Hughes @ 9:50 PM
Net Cash Income Blank Table For Rancher Use
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This is a blank table for calculating Net Cash Income for ranchers. Click on the table picture and a larger version will load into your computer. You can use your browser's print command to print a copy of this table.
# posted by Dr. Harlan Hughes @ 9:47 PM
Source And Use Of Funds Summary Table (blank form)
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This is a blank Source And Use of Funds Table posted here for ranchers to access. Click on the table to load a larger version into your computer and then use your browser's print command to print a copy of this blank table.
# posted by Dr. Harlan Hughes @ 9:44 PM
Manageial Accounting From No 1
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This is the first of three Managerial Accounting Froms that I recommend ranchers to use in analyzing their ranch businesses. My March 2007 BEEF Magazine Market Advisor goes into detail about how to use and interpret this form. This article will not be published until March of 2007.
Clicking on the form image will load a larger version into your computer. Use your browser's print command to print this form page. Do the same for the next two posting of pages 2 and pages 3 of this set of Managerial Accounting Forms.
# posted by Dr. Harlan Hughes @ 3:31 PM
Managerial Accounting Form No 2
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Here is the Managerial Accounting Form No 2 needed to analysis your ranch buisness. Double click on the form and a larger version will load onto your screen. Then print the impage to get a copy of this form.
# posted by Dr. Harlan Hughes @ 3:28 PM
Managerial Accounting Form No 3
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Here is the Managerial Accounting Form needed to calculate Capital Adustments needed to calculate Net Ranch Income.
# posted by Dr. Harlan Hughes @ 3:23 PM
Monday, December 18, 2006
Figure 122: Harlan's Bio Picture
Here is a picture that you can use in your meeting promotion brochure of Harlan Hughes.
# posted by Dr. Harlan Hughes @ 12:05 PM
Sunday, December 17, 2006
Figure 121: Early 2006 Projected Bred Female Prices
As part of my 2006 drought strategies work, I projected the purchase price of replacement bred females to use in the re-stocking strategies. Remember, these are annual prices. For example, as of Dec 2006 bred replacement heifers are selling in the 1050 to 1200 range but the 2006 annual price is considerably higher.
The key point of this chart is that bred female prices are projected to trend downward the rest of this decade and may even extend a couple of years into the next decade. The one exception might be if a lot of ranchers decide to restock after the 2006 drought all in one year. I doubt that will happen as we will need rain and green grass in all of cow country to trigger a massive re-stocking in one year.
I am often asked about when ranchers should consider buying added heifers. I think it will be towards the end of this decade when weaned heifer calf prices are at the lowest.
# posted by Dr. Harlan Hughes @ 11:37 AM
Friday, December 01, 2006
Figure 120: Market Price Lines For Week 17 Nov 06
These two market price lines illustrate the Western Nebraska feeder calf and feeder cattle markets the week of 17 Nov 06. It is clear that the increased corn market has impacted feeder cattle prices more than feeder calf prices. I am suggesting that me might see corn prices now in the $3.00 per bushel area compared to the $2.00 or lower era of past few years.
# posted by Dr. Harlan Hughes @ 3:06 PM
Family Living Draw For North Dakota Famers & Ranchers
Farm Business Management Data for North Dakota clearly indicates Family Living Draw is increasing for farmers and ranchers. This chart suggests that Family Living Draw is increasing $1500 per year. This is equal to the typical net cash income generated from 15 beef cows. This, then, suggests that ranchers need to add 15 cows per year just to cover the added family living draw!
# posted by Dr. Harlan Hughes @ 2:55 PM
Sunday, October 22, 2006
Figure 118: Beef Cow Slaughter Up In 2006
The 2006 drought has resulted in increased beef cow slaughter year to date. It looks like one drought strategy has been to sell cull cows early. If these cows were going to be culled any way, this does not imply that the growth in cattle numbers has stopped. If added cows are slaughtered in 2006, it would suggest that the growth in cattle numbers has slowed or even stopped. It is to early to determine for sure.
Tuesday, September 12, 2006
Figure 117: Creep Feeding Economics Calculator
This Creep Feeding Calculator was developed to get a quick eocnomic analysis of creep feeding 2006 calves during the 2006 drought. This is a typical run to provide some indication of the economics of creep feeding.
Click on the Talbe to enlarge and to print the Table.
Sunday, September 10, 2006
Figure 116: Breakeven Grass Cattle Calculator
This is spreadsheet breakeven calculator for grass cattle. It is designed to tell the user what price he can pay for grass cattle going on grass. You pick the selling price (I use futures) and you pick the desired profit level. The computer calculates the breakeven purchase price that is projected to earn your stated profit level.
Click on the table to enlarge and to print it.
Figure 115: Feeder Calf Price Line For Billings, Mt wk of 8 Sep 06
This Price Line relates Billings, Mt feeder steer prices to steer weights for the week of 8 Sep 2006. The slope of this price line at each weight is the market price slide. The curature of the line tells us that the price slide is not not linear as is often implied at video autions.
Figure 114:Table Of Billings Steer Calf Prices Wk Of 8 Sept 06
This is a user friendly table of Billings market priced for feeder calves. Prices are reported in 25 lb increments so that ranchers can find a price for the weight of their particular calves. Click on the table to receive an enlarged view and to print out the table.
Figure 113: 500 to 600 lb Feeder Prices At Billings Wk of 8 Sep 06
This is a chart of Feeder Calf prices at Billings, Mt for the week of 8 Sep 2006. Click on the chart to get an enlarge picture and to print the chart.
Figure 112: Billings Steer Calf Prices Wk of 8 Sep 06
This is a summary of feeder calf prices in Billings the week of 8 Sep 2006. Click on the picture to enlarge and print the chart.
Wednesday, August 09, 2006
Figure 111: S.D. Pasture Rents For 2005 and 2006
Clearly, pasture rental rates have increased in the last few years with the record calf prices. The source of this data was SDSU Ecoomics Section on the web. 
Figure 110: U.S. Choice-Select Spread
The U.S. Choice-Select spread is very wide in 2006. This suggests we are short of choice cattle. I wonder why we can not produce more choice cattle?
Figure 109: USDA's July All-Cattle Inventory 1976-2006
Figur 108: Aug06 Breakeven 550 Lb Feeder Calf To Be Finished
Thursday, July 13, 2006
Chart 107: North Dakota Beef Cow Benchmark Data (2005)
This is the best beef cow benchmark data that I have available. The herds are sorted intot he Low profit 20%, the average of all herds, and the 20% high profit herds.
Wednesday, July 12, 2006
Chart 106 Long-Run Calf Planning Prices (30 Jun 06)
This is my revised Long-Run Seer Calf Planning Prices. The Fall prices for 2006, 2007, and 2008 have been revised upward (30 Jun 06).
Chart 105 Fall06 Planning Prices (30Jun06)
I revised my Fall 2006 Planning Prices as of 30 Jun 2006. I am unable, at this time, to remove the duplicate table. I will keep working on this.
Tuesday, February 14, 2006
Chart 103: Annual Cattle Feeding Profits 1977 Thru 2005
This charts shows the competitiveness of the Cattle Feeding Sector. It is not uncommon to have March and April and Nov and Dec as the only months that money is made in cattle feeding.
Wednesday, December 21, 2005
Figure 103: Japanese Market Impact Adjustment On Planning Prices
This is the Chart That goes with the story on the price impact of the Japanese Border opening up located at www.beefeconomics.blogspot.com.
Friday, November 18, 2005
Figure 102: Table 2 For Gregg Hardy Article posted at www.beefeconomics.blogspot.com
Figure 101: Table 1 For Gregg Hardy Article At www.beefeconomics.blogspot.com
Figure 100: What Does The Future Hold?
This article is posted as www.beefeconomics.blogspot.com. This is the chart that goes with that article.
Friday, November 11, 2005
Figure 99:
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Figure 98:
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Thursday, November 10, 2005
Figure 97:
Current Long-Run Planning Prices For Slaughter Steers
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Thursday, November 03, 2005
Figure 96:
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Figure 95:
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Figure 94:
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Figure 93:
Tuesday, September 06, 2005
Figure 92: Harlan's Picture
Harlan Hughes, Professor Emeritus, North Dakota State University.
Friday, August 26, 2005
Beef cow slaughter as a percentage of the cow herd reached its lowest level since August of 1991 week before last when it touched on 0.120%. The percentage of the cow herd going to slaughter dropped markedly in late February when spring grass greened up in some parts of the country. So far in 2005, 4.54% of the beef cow herd has gone to slaughter. That compares to 4.97% last year and an average of 5.38% for 1999-2003. This year's cumulative beef cow slaughter as a percent of the breeding herd is the LOWEST figure in my data set which dates back to 1986.
Monday, August 15, 2005
Price Projections and Their Associated Management Implications -- A series of 4 Charts: As producers think about marketing their 2005 calves, I have a recommend procedure that I would like to have cattlemen go through to analyze their 2005 marketing alternatives. Start out with the local salebarn prices for last week. The prices for your local salebarn are posted on the internet by USDA AMS. This price line was for Western Central Nebraska and represented the sale price for about 2000 cattle the week of 29 July 05. 500 to 600 lb calves sold for $127 to $139 with an average of 550 lbs steer feeders at $133 per cwt.
Chart 2 in this series of 4: Basis is the economic concept that can be used to localize the Chicago Futures Prices back to a local market -- in this case, Western and Central Nebraska. The current cash price for each weight of feeder cattle was use to calculate a basis for each weight of feeder steer. The formula was Cash minus Futures. These basis values are used to calculate the planning prices presented in the next figure in this series.
Table 3 in this series presents my price projections for critical makreting periods for the rest of 2005 and all of 2006. These are my current (as of 29 July 05) planning prices for 2005 and 2006 calves. I try to re-estimate these planning prices each month taking into account what market forces have changed since the last set of projections.
This Table No 4 in this series presents the management implications of the planning prices. The top half of the table is for Spring Born Calves and the bottom half of the table is for Summer Born Calves. Profit for a specific produciton/marketing alternative is determined by both the buy/sell margin on the original weight of the feeders and the Cost Of Grain (COG) on the lbs added in the feedlot or on pasture.
Jan 1, 2005 Beef Cow Numbers: Each year USDA releases the All-Cattle Inventory Numbers and one of those numbers is the number of beef cows by state.
Market Comments
source: CME Daily Livestock Newsletter 8-15-05
There were no surprises in USDA's monthly update of supply projections for 2005 and 2006. The chart to the left sum�marizes the relative supply situation of the four main meat species and the expected growth in 2005 and 2006.
If any�thing, the chart should be useful in understanding that despite much talk of daily increases or declines in production, overall beef, pork, and poultry meat production in 2005 and 2006 is expected to continue to increase across the board. Indeed, if we also add up the pounds of lamb, mutton, veal and other poultry produced, US red meat and poultry production in 2006 is now expected to exceed 90 billion pounds, a new all time record amount.
The chart also shows which areas of the meat industry are growing, and which ones are not. The fact that beef produc�tion is expected to increase 2.6% in 2005 and 3.1% in 2006 points to the need for quick resumption of exports. Current beef exports have increased compared to last year but still remain (for first six months) as much as 76% lower than the levels reached in 2003.
On the other hand, the growth in broiler pro�duction remains robust. Just as a quick aside, it is worth not�ing that since 1980, beef tonnage has increased by 3.5 billion pounds, pork tonnage by 4.2 billion and broiler tonnage by 24.3 billion pounds.
source: CME Daily Livestock Newsletter 8-15-05
There were no surprises in USDA's monthly update of supply projections for 2005 and 2006. The chart to the left sum�marizes the relative supply situation of the four main meat species and the expected growth in 2005 and 2006.
If any�thing, the chart should be useful in understanding that despite much talk of daily increases or declines in production, overall beef, pork, and poultry meat production in 2005 and 2006 is expected to continue to increase across the board. Indeed, if we also add up the pounds of lamb, mutton, veal and other poultry produced, US red meat and poultry production in 2006 is now expected to exceed 90 billion pounds, a new all time record amount.
The chart also shows which areas of the meat industry are growing, and which ones are not. The fact that beef produc�tion is expected to increase 2.6% in 2005 and 3.1% in 2006 points to the need for quick resumption of exports. Current beef exports have increased compared to last year but still remain (for first six months) as much as 76% lower than the levels reached in 2003.
On the other hand, the growth in broiler pro�duction remains robust. Just as a quick aside, it is worth not�ing that since 1980, beef tonnage has increased by 3.5 billion pounds, pork tonnage by 4.2 billion and broiler tonnage by 24.3 billion pounds.
Friday, March 25, 2005
Fall 2005 Planning Prices: I thought I had these prices posted as part of the "Yearlings On Grass Section" below but the chart is now missing. I have elected to publish it here as I can not move it down the page. This chart presents my latest Fall 2005 Planning Prices for all weights Of feeder steers. I tend to update this table (and many others) each quarter. 
2004 Yearlings On Grass In 2005- In the "Yearlings On Grass Section below," I thought I had my economic projections but I now see that the chart is missing. I am posting this one to take its place. Unfortunately, I can not move this chart down to that group of charts.
Long-Run Cattle Feeding Profits: I have clients that are retaining their calf crops and trying to hit the typical April seasonal high market price. Tyically, they are early weaning their calves and going to the feedlot early as a management strategy for hitting the Seasonal April high. One has to now wornder, however, that as more and more cattlemen aim for the April seasonal high, could it be that the seasonal high is moving to March? I think so. While this chart does not take premiums into account, one has to ask if retaining calves targeted for the April market is the most profitable marketing strategy.
Monday, March 14, 2005
Economics Of Running Steers On Grass in 2005
Spring Planning Prices: I am getting a lot of questions about running yearling on grass in 2005. This interest is triggered by the high profits generated from running yearling on grass in 2003 and to a less extent the relatively good profits generated with yearlings on grass in 2004.
I doubt that grass yearlings will be as profitable in 2005. This is becuase the price going on grass in the Spring of 2005 in going to be quite high. Never-the-less, I am posting my planning prices and a yearling-on-grass budget to this web site for review by ranchers.
Let's discuss your yearlings on grass plans. My cell phone is 701-238-9607 or via email harlan.hughes@gte.net. I prefer the email option. Harlan Hughes; Western Edge Consulting; Laramie, Wy 82070.
I doubt that grass yearlings will be as profitable in 2005. This is becuase the price going on grass in the Spring of 2005 in going to be quite high. Never-the-less, I am posting my planning prices and a yearling-on-grass budget to this web site for review by ranchers.
Let's discuss your yearlings on grass plans. My cell phone is 701-238-9607 or via email harlan.hughes@gte.net. I prefer the email option. Harlan Hughes; Western Edge Consulting; Laramie, Wy 82070.
September 2005 Planning Prices: Depending on when you plan on selling your steers off grass in 2005, you might want to price your yearlings off grass with these Sept05 Planning Prices. If you keep your steers on grass longer, you might want to the Fall05 Planning prices in the next chart in this series.
Fall05 Planning Prices: Depending on when you plan on selling your 2005 yearlings off grass, you might want to use these Fall05 Planning Prices to price your grass yearlings. Basically, this set of planning prices is for Oct 2005.
Yearlings-On-Grass Budget
If you combine the 2005 Spring Planning Prices and the Fall05 Planning Prices into a budget for 2005 grass yearlings, you get the budget summarized in column 4 in the attached table.
There appears to be some profit potention in yearlings or grass in 2005.
There appears to be some profit potention in yearlings or grass in 2005.
Thursday, February 03, 2005
Current (3 Feb 05) Cattle Feeding Budgets: (1) Feeding 550 Lb Feeders as calf-feds, (2) Finishing 800 Lb Feeders, and (3) Finishing Steers Off Grass Aug 04.
Tuesday, February 01, 2005
Short-Run Planning Prices As Of 1 Feb 2005
2005 Planning Prices For Feeder Calves 500-600 Lbs.
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Saturday, January 15, 2005
Economic Efficiency Of 2004 IRM Herds
In today's economic climate, high production is a necessary condition for making a profit with a beef cow herd; but, high production is not a sufficient condition ensuring that you make a profit. Economic efficiency is the sufficient condition for high profits. Today, that high production has to be obtained with both high production efficiency and high economic efficiency.
The above table illustrates three measures of economic efficiency applied to my last six IRM Herds analyzed. All of these herds were analyzed for the production of their 2004 calves. Non of these herds had herd performance records.
The three economic efficiency measures are:
Earned net income: defined as gross income per cow minus total production costs per cow.
Unit Cost Of producing A Hundredweight Of Calf: defined as the ratio of the beef cow herds total production costs divided by the total pounds of calf produced.
Costs To Produce A Dollar Of Gross Income: defined as the total production costs per cow divided by the gross income per cow. The remaining profit margin, after costs of production are subtracted out, is the earned returns to unpaid family and operator labor, management, and equity capital invested in the beef cow herd.
The above table illustrates three measures of economic efficiency applied to my last six IRM Herds analyzed. All of these herds were analyzed for the production of their 2004 calves. Non of these herds had herd performance records.
The three economic efficiency measures are:
Earned net income: defined as gross income per cow minus total production costs per cow.
Unit Cost Of producing A Hundredweight Of Calf: defined as the ratio of the beef cow herds total production costs divided by the total pounds of calf produced.
Costs To Produce A Dollar Of Gross Income: defined as the total production costs per cow divided by the gross income per cow. The remaining profit margin, after costs of production are subtracted out, is the earned returns to unpaid family and operator labor, management, and equity capital invested in the beef cow herd.
Production Efficiency Of 2004 IRM Herds
The first condition that a high-profit herd has to meet is having high production efficiency. Figure 1 presents some key production measures for my last 6 IRM herds analyzed. Non of these herds had herd performance records.
Of the 6 average production efficiency measures summarized above, only the average calf death loss of 5% met my suggested benchmark guidelines developed from North Dakota's CHAPS producers. I am hard pressed to understand why ranchers are so resistant to herd performance records. My strongest recommendation that I can give to these producers is to start a formal herd performance system that measures these production efficiency factors. You can not manage what you do not measure.
Calf Death Loss : calculated as percent of live calves born. Goal 5% or less.
Average weaning weight: Average weaning weight of all calves weaned. Goal should be above 500 lbs.
Days Cows on Calves: Average number of days calves were on the cows. Suggests that birth dates need to be recorded for each and every calf born. Suggest around 200 days.
Percent Calf Crop: Live calves weaned divided by number of females exposed to the bulls. Goal at 90% or better.
Weight Per Day Of Age: Weaning weight divided by age of calf in days. Is a good measure of the growthiness of the calves. Goal should be 2.8 and above.
Lbs Weaned Per Female Exposed: Total pounds of calf weaned divided by the number of females exposed to the bulls. Goal should be 500 + pounds.
Of the 6 average production efficiency measures summarized above, only the average calf death loss of 5% met my suggested benchmark guidelines developed from North Dakota's CHAPS producers. I am hard pressed to understand why ranchers are so resistant to herd performance records. My strongest recommendation that I can give to these producers is to start a formal herd performance system that measures these production efficiency factors. You can not manage what you do not measure.
Calf Death Loss : calculated as percent of live calves born. Goal 5% or less.
Average weaning weight: Average weaning weight of all calves weaned. Goal should be above 500 lbs.
Days Cows on Calves: Average number of days calves were on the cows. Suggests that birth dates need to be recorded for each and every calf born. Suggest around 200 days.
Percent Calf Crop: Live calves weaned divided by number of females exposed to the bulls. Goal at 90% or better.
Weight Per Day Of Age: Weaning weight divided by age of calf in days. Is a good measure of the growthiness of the calves. Goal should be 2.8 and above.
Lbs Weaned Per Female Exposed: Total pounds of calf weaned divided by the number of females exposed to the bulls. Goal should be 500 + pounds.
IRM Economic Benchmarks For 2004
One of the most powerful management tools available to ranchers is the benchmarking his herd's Economic Facts against the average Economic Facts of a set of benchmark herds. This table presents my last six IRM Cost & Return Analyses and the benchmark averages for these six herds. None of these herds had Herd Performance Records.
When you benchmark your herd, you first look for your herd's strengths designated by those Economic Facts where your herd beats the average of the benchmark herds.
Second, you look for those Economic Facts where your herd is beat by the average of the benchmark herds. This, then, identifies some weaknesses in your herd's production and these become your bottleneck(s) to profits. Your management goal is to remove these bottlenecks one at a time. As each bottleneck is removed, your herd's profit goes up.
Then, next year we conduct another IRM Cost & Return Analysis of your herd, and again benchmark your herd against a set of new benchmarks always looking for bottlenecks to profitability. Once again, as one or more bottlenecks are removed, profit again goes up.
This is an annual and continuos process.
When you benchmark your herd, you first look for your herd's strengths designated by those Economic Facts where your herd beats the average of the benchmark herds.
Second, you look for those Economic Facts where your herd is beat by the average of the benchmark herds. This, then, identifies some weaknesses in your herd's production and these become your bottleneck(s) to profits. Your management goal is to remove these bottlenecks one at a time. As each bottleneck is removed, your herd's profit goes up.
Then, next year we conduct another IRM Cost & Return Analysis of your herd, and again benchmark your herd against a set of new benchmarks always looking for bottlenecks to profitability. Once again, as one or more bottlenecks are removed, profit again goes up.
This is an annual and continuos process.
IRM Production Benchmarks for 2004
One of the most powerful management tools available to ranchers is the benchmarking his herd's production facts against the average production facts of a set of benchmark herds. This table presents my last six IRM Cost & Return Analyses and the benchmark averages for these six herds. None of these herds had Herd Performance Records.
When you benchmark your herd, you first look for your herd's strengths designated by those Production Facts where your herd beats the average of the benchmark herds.
Second, you look for those Production Facts where your herd is beat by the average of the benchmark herds. This, then, identifies some weaknesses in your herd's production and these become your bottleneck(s) to profits. Your management goal is to remove these bottlenecks one at a time. As each bottleneck is removed, your herd's profit goes up.
Then, next year we conduct another IRM Cost & Return Analysis of your herd, and again benchmark your herd against the rest always looking for bottlenecks to profitability. Once again, one or more bottlenecks are removed and profit again goes up.
When you benchmark your herd, you first look for your herd's strengths designated by those Production Facts where your herd beats the average of the benchmark herds.
Second, you look for those Production Facts where your herd is beat by the average of the benchmark herds. This, then, identifies some weaknesses in your herd's production and these become your bottleneck(s) to profits. Your management goal is to remove these bottlenecks one at a time. As each bottleneck is removed, your herd's profit goes up.
Then, next year we conduct another IRM Cost & Return Analysis of your herd, and again benchmark your herd against the rest always looking for bottlenecks to profitability. Once again, one or more bottlenecks are removed and profit again goes up.
Saturday, December 04, 2004
Long-Run Slaughter Cattle Planning Prices
Below are my projected long-run slaughter steer planning prices for the current cattle cycle. This chart in past of a 3-chart series on long-run planning price that have been posted to this web site.
It is recommend that you pull off all three charts and study them as you build your ranch business plan for 2005 and beyond.
For those of you that have went through drought and are now contemplating re-population of your beef cow herd, it is absolutely critical that you study these planning prices as you launch your re-population program.
I am projecting that many re-population programs will end up being done with expensive replacement females leading to becoming a high-cost producer.
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It is recommend that you pull off all three charts and study them as you build your ranch business plan for 2005 and beyond.
For those of you that have went through drought and are now contemplating re-population of your beef cow herd, it is absolutely critical that you study these planning prices as you launch your re-population program.
I am projecting that many re-population programs will end up being done with expensive replacement females leading to becoming a high-cost producer.
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Thursday, December 02, 2004
Feeder Cattle Long-Run Planning Prices
Feeder cattle prices are projected to follow a similar pattern to the feeder calf price but generally do not change quite as much as you go through the beef price cycle. The feeder cattle beef price cycle is projected to go from 1996 through 2013. These projections suggest that we have also reached a new plateau for feeder cattle prices for the rest of decade.
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VIII. Long-Run Planning Prices
Over the last few years I have distributed my "Classic Cattle Cycles Profit Strategies" Computer CD Video to ranchers and beef specialists. This CD Video goes into detail on 5 different strategies to make the cattle cycle work for you. This CD Video covers my Cattle Cycle Seminar during the 1990s. This Video was based on my late 2001 and early 2002 cattle cycle projections. In this Video, the current beef price cycle was projected to go from 1996 through 2008.
Clearly, the current beef price cycle has now been extended. A lot has happen in the last 2 years, including a five- year drought in the Western U.S., two BSE announcements, and the U.S. and Canadian borders closed to beef exports.
The new beef price cycle chart presented here updates my price cycle projections as of late 2004. Basically, the extended drought has extended the current beef price cycle from 1996 to 2012/2013. We are only now (with 2004 heifer calves) starting to rebuild the nations beef cow herd. This build up was delayed by the pro-longed national drought.
I encourage ranchers to take this chart and apply my Classic Cattle Cycle CD's suggested strategies to this current cattle cycle projection. This new beef price cycle suggests several good years for beef cow producers.
I hope each of you adopt those management strategies that take advantage of these good time; but.. many of you are going to miss this great opportunity. This is not the time for "management as usual." Many ranchers are going to leave a lot of money on the table in these good times. I am going to do all I can to help ranchers take every dollar possible from the table during these good times.
If you do not have my "Classic Cattle Cycle CD Video that plays in your computer, you can order one from me ($20 plus 4.95 shipping and handlinig) by emailing me at harlan.hughes@gte.net and asking for a copy of the "Classic Cattle Cycle CD Video." I know of no other seminar that I have given that will make you any more money than my "Classic Cattle Cycle Seminar" presented on my computer CD Video.
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Clearly, the current beef price cycle has now been extended. A lot has happen in the last 2 years, including a five- year drought in the Western U.S., two BSE announcements, and the U.S. and Canadian borders closed to beef exports.
The new beef price cycle chart presented here updates my price cycle projections as of late 2004. Basically, the extended drought has extended the current beef price cycle from 1996 to 2012/2013. We are only now (with 2004 heifer calves) starting to rebuild the nations beef cow herd. This build up was delayed by the pro-longed national drought.
I encourage ranchers to take this chart and apply my Classic Cattle Cycle CD's suggested strategies to this current cattle cycle projection. This new beef price cycle suggests several good years for beef cow producers.
I hope each of you adopt those management strategies that take advantage of these good time; but.. many of you are going to miss this great opportunity. This is not the time for "management as usual." Many ranchers are going to leave a lot of money on the table in these good times. I am going to do all I can to help ranchers take every dollar possible from the table during these good times.
If you do not have my "Classic Cattle Cycle CD Video that plays in your computer, you can order one from me ($20 plus 4.95 shipping and handlinig) by emailing me at harlan.hughes@gte.net and asking for a copy of the "Classic Cattle Cycle CD Video." I know of no other seminar that I have given that will make you any more money than my "Classic Cattle Cycle Seminar" presented on my computer CD Video.
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Sunday, November 14, 2004
VII. Goals For High Profit Beef Cow-Calf Producers --I am frequently asked what should be the goals for a high-profit beef cow herd. This table presents a set of goals estabolished from North Dakota's CHAPS herds. Basically, this is what the high-profit herds are doing. I think these ND performance factors should be quite applicable to most other regions of the U.S. and Canada.
Saturday, November 06, 2004
VI. Forecasted 2004 Canadian Beef Exports To The U.S.
"As 2004 gets closer to winding down, we can more accurately forecast what the final Canadian beef export numbers to the U.S. might look like.
Based on current trends, total beef exports in 2004 should be up 30% over 2003 to 513.000 tonnes on a carcass weight basis. This total would be down about 15% from 2002 but very similar to beef export levels of 2000.
Value of exports will total near $1.9 billion compared to $1.46 billion in 2003 and $2.22 billion in 2002. At present. US destined exports represent 73% of the total while Mexico is malting up 20-21 %. Most of the remaining portion is made up or trade to Macau. Moldova, and the EU."
Source: CanFax Newsletter 5 Nov 2004
"As 2004 gets closer to winding down, we can more accurately forecast what the final Canadian beef export numbers to the U.S. might look like.
Based on current trends, total beef exports in 2004 should be up 30% over 2003 to 513.000 tonnes on a carcass weight basis. This total would be down about 15% from 2002 but very similar to beef export levels of 2000.
Value of exports will total near $1.9 billion compared to $1.46 billion in 2003 and $2.22 billion in 2002. At present. US destined exports represent 73% of the total while Mexico is malting up 20-21 %. Most of the remaining portion is made up or trade to Macau. Moldova, and the EU."
Source: CanFax Newsletter 5 Nov 2004
Saturday, October 23, 2004
NORTH DAKOTA'S CHAPS CALVING DISTRIBUTION TABLE-- This is a very powerful herd summary table that can tell you a lot about the performance of your beef cow herd. This particular herd calved 164 females with a herd average weaning weight of 567 pounds. Other views of this table in this series emphasize the results by 21-day calving intervals and by age of dams. This is the most powerful table that can be constructed from your herd performance data. I wish more ranchers would generate this table. This is a regular table generated by North Dakota's Cow Herd Performance Analysis System (CHAPS). For more information see www.chaps2000.com.
The Columns of this Calving Distribution Table shows the beef cow herd's performance by 21-day calving intervals. You can clearly see the impact of having more and more females calving in the 1st or 2nd 21-day interval has on average weaning weight. With multiple years of this table, you can see if the average calving interval for each age of females in greater than 365 days. Typically, the average calving interval of a herd is greater than 365 days. One key to increased pounds to sell at weaning is to move females' calving dates forward one 21-day calving interval. If a female calving in the 4th 21-day interval is moved up to the 3rd 21-day interval, this rancher can expect a 114 lb increase in lbs to sell. If a female calving in a 3rd 21-day calving interval is moved up one calving interval, this rancher can expect an additional 45 lbs to sell. If a 2nd interval female is moved up, this rancher can expect to have 68 more pounds to sell. These increased pounds to sell are very signficant in today' high calf prices!
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North Dakota's CHAPS Calving Distribution Table Emphasizing Beef Cow Herd Sorted By Age Of Dam --. Note which age of females produced the heaviest calves. Generally, we find the females 5, 6, and 7 years of age produce the heaviest calves. Females 2, 3 and 4 years old tend to produce lighter weight calves. Females above 8 years of age tend to produce lighter calves. When prices are high, like now, ranch herds should have high numbers of 4, 5, 6 year old females so that they have the most pounds of calf to sell when prices are high. Most drought reduced herds, will be expanding with 2 and 3 year old females during the high prices of the next three years. Unfortunately, when calf prices are high, these repopulating drought-induced herds will have more low producing 2 and 3 year old females. This is not optimal for maximum profits but is a direct result of selected drought management strategies. The biggest economic costs of drought is not during the depopulation phase but is the missed profit opportunity experienced during the repopulation phase of the cattle cycle which typically corresponds to high calf price years. Clearly, when you have young cows, high producing aged cows, and older cows during the cattle cycle make a mid difference in the total profitability over a complete cattle cycle.
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Monday, September 20, 2004
IV. ECONOMIC VALUE OF A BRED HEIFER -- The economic value of a bred heifer needs to be based on the net income (net value added) of all the calves that heifer produces while in your herd. The yellow line presents my projected net income for Northern Plains ranchers for 2004 through 2012. The green line is my projected net cash flows for a typical Northern Plains beef cow herd. These projections are based on Nothern Plains 1999-2003 five-year averages.
The Economic Value Of bred heifer is the sum of net incomes generated by every calf she produces while in your herd discounted back to todays dollars. This chart illustrates my projected net incomes for years 2004- 2012. The base is the 5-year net income average for Northern Plains beef cow herds 1999-2003. Some good time are projected for beef cow producers over the next few years. But... the good times will not last for ever. I want every rancher to take advantage of the current good times in prepartion for when net incomes turn downward.
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This chart presents my long-run net cash flow projections for Northern Plains beef cow producers. The base here is the 1999-2003 Northern Plains Farm Business Management Summaries. Net Cash Flow is projected record high over the next three years. I want to do everything I can to help ranchers take advantage of these good time as these good times will not go on for ever.
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This is the final table presenting the "Calculated Economic Value Of Preg-Checked Heifer" during Fall 2004. Note the economic value of a hiefer varies with the number of life-time calves produced. Column 4 presents a typical case where the heifer has 7 consecutive calves in her life-time. Column 5 presents a special case where the heifer has one calf and then is open as a 3-year old. After that, this female has 5 more calves.
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Thursday, September 16, 2004
III. PLANNING PRICES --Each Year I Prepare A Set Of Long-Run Planning Prices For Beef Producers. The Table (picture below) Gives History From 1985 Through 2003 And Projections For 2004 Through 2013. This Table Is Based On Northern Plains Historical Prices, FAPPRI's Long-Run Prices, And My Professional Judgement. I Feel That These Long-Run Prices Are Generally Applicable To All Regions Of The U.S.
Long-Run Beef Price Cycles -- Going From 1985 to Projections for 2013. Two Complete Beef Price Cycles Are Presented. One Is The Past Cycle From 1985 To 1996. The Other is the Current Beef Price Cycle From 1996 to 2013. Years 2004 Through 2013 Are Projected By Western Edge Consulting With A Foundation Relating Back To FAPRI's Early 2004 Baseline Book, pg 35.
Projeced Short-Run Planning Prices For Ranchers -- Projected with Western Edge Consulting's Production/Marketing Simulator -- a Futures Based Price Projection Model. Projected 15 Sep 2004.
Projected Long-Run Planning Prices For Ranchers -- Projeced with Western Edge Consulting's Production/Marketing Simulator. Price Foundation is FAPRI's Early 2004 Baseline Book, page 35. Questions, email harlan.hughes@gte.net.
Friday, September 03, 2004
II. Beef Cow Profits In Northern Plains -- 1990 thru 2005 Projections
I. Earned Profits From High-Return, Low-Return, and Average Beef Cow Producers -- Source: Cattle-Fax
