M ARKETING NUTS AND BOLTS
S TEPS TO S UCCESSFUL
M ARKETING
1.
Current Market Conditions
2.
Marketing Nuts & Bolts
3.
Management Tools
4.
Marketing Plan Development
C URRENT M ARKET
C ONDITIONS
1

Cash Markets

Crops & Livestock

Use graphs and show cycles
M ARKETING N UTS AND B OLTS
2

Lingo

Commodity Markets


Contract Specs

Hedging

Options

Basis
Reports

WASDE; COF
M ANAGEMENT TOOLS
3

Livestock Insurance Programs

Feed Finder

Highlight current events
M ARKETING P LANS
4
1.
Know Market Tools
2.
Consider Market Opportunities
3.
Develop a Marketing Plan
4.
Monitor the Plan throughout the
Year.
Marketing Plan
Enterprise
Date
1. Production Level and RiskWrite down what you reasonably expect to market. Be reasonable about death loss and pounds of
animal marketed.
2. Financial SituationNote any major financial implications for the plan.
3. Price Targets-Translate financial goals into prices.
Use the breakeven price as a benchmark. Have targets of “needs” “wants” and “hopes”
4. Fundamental OutlookIdentify some known's of the market. What are seasonal patterns and trends.
5. Tools and StrategiesState when you will sell, how much you will sell and by what method.
6. Evaluation –Maintain a history of performance.
G AME O BJECTIVES

Determine a cost of production

Follow a marketing plan

Utilize tools such as forward
contracting, hedging, livestock
risk protection insurance
W HAT THOUGHT
GOES INTO
BACKGROUNDING ?
Marketing Plan
Enterprise
Backgrounding
Date October
1. Production Level and Risk*150 head of 500 lb. steers. Plan to market animals at 850 lbs. on March 15.
2. Financial Situation*Reviewed financial statements-cash flow is good
*Need to get help with financial analysis
3. Price Targets-Translate financial goals into prices.
*Breakeven $93 cwt is a need; Want-$100; Hope-$105
4. Fundamental Outlook*Volatility of economy
*Trade with foreign markets
*COOL regulations
*Expect feed and oil costs to rise again
5. Tools and Strategies1. Calculate LRP and consider locking in
2. Sell 1 feeder contract and offset when sell in cash market
3. Forward Contact 50% of calves if price is above $93.00
6. Evaluation –look how plan worked-what strategies do I need to change?
C OST
OF PRODUCTION
Calf Cost
$500
Interest
$15/head
Death Loss
$20/head
Vet
$10/head
Yardage
$45/head
Feed Cost
$210/head
Do You Know Your COP?
O CTOBER
Calf Weight 570 Cash Market $106.00
March Feeder Cattle Futures $98.52
March Corn Futures $ 4.08
Last week, cash fed cattle prices managed a slight gain, a notable
improvement over the previous few weeks. Live Cattle futures posted
their best week in quite some time. Feeder Cattle resumed their
upward move and finished the week with solid gains on Friday. Corn
futures also moved substantially higher this week. On Tuesday, USDA
released a revised WASDE report. The revised data made the October
report considerably more bullish for corn than had originally been the
case. The corn production estimate was revised down to 12.033 billion
bushels. The Choice cutout was reported at $142.21, up $0.69 from
last Friday. The Select cutout was $136.32, up $1.28 from last week.
N OVEMBER
Calf Weight 630 Cash Market $101.00
March Feeder Cattle Futures $95.92
March Corn Futures $3.97
Cash fed cattle were generally $2 to $4 higher. Prices ranged from around
$90 in Iowa Minnesota to $94 in the Southern Plains and Colorado. Live
Cattle futures moved lower this week as the market appeared to focus
exclusively on the general economy and the performance of the stock
market, which was, pretty lousy. Wholesale beef prices surged this week,
and supply side fundamentals are largely supportive of prices. Feeder
cattle futures contracts gave up quite a bit of ground this week. With Live
Cattle falling and corn more-or-less holding its own.
DECEMBER
Calf Weight 690 Cash Market $97.50
March Feeder Cattle Futures $93.23
March Corn Futures $3.808
Forward Price (deliver in Feb). $90.00
Trading ranged from active in the Northern Plains to inactive in
the Southern Plains this week. Cattle slaughter was pretty light
compared to last week, Feeder cattle futures largely went along
with Live Cattle this week, also posting big gains. Corn futures
started the week higher on rising oil futures and a falling dollar.
The Choice to Select spread is narrowing, likely due to lighter
retail demand for high priced Choice cuts.
J ANUARY
Calf Weight 750 Cash Market $98.75
March Feeder Cattle Futures $92.97
March Corn Futures $3.904
Forward Contract (deliver in Feb) $ 93.20
Live Cattle futures had a pretty rough week. Feeder cattle futures were pretty
quiet, receiving little direction from outside markets. Corn futures traded largely
on the influence of outside markets (equities and oil). consumers are opting for
less expensive roasts and hamburger at the retail meat counter. Packers will have
little incentive to pay up for Choice cattle when relatively more of the value of
the carcass is in the end meats. On Friday, USDA released the monthly Cattle on
Feed report. All of the numbers in the report were on the bullish side of prereport estimates.
F EBRUARY
Calf Weight 810
Cash Market $87.75
March Feeder Cattle Futures $94.47
March Corn Futures $3.632
Forward Contract (for March delivery) $93.75
Live Cattle finished the week on a weak note, largely reflecting concern
over cash price prospects. Weaker wholesale beef prices make another
strong cash market finish less likely this week. Feeder cattle futures
moved pretty much in tandem with Live Cattle this week. Early-week
gains were, for the most part, given back by the end of the week despite
the fact that corn slid slowly lower for about the whole week.
Uncertainty related to outside markets continues to weigh on all
commodities right now.
MARCH
Calf Weight 870Cash Market $87.75
March Feeder Cattle Futures $92.20
March Corn $3.53
H OW D ID YOU D O ?

Figure Total Cash
1.Calf weight x price x # of head= Total Cash.
2. Add up all Total Cash
3. Total Cash Divided by # of head sold= $’s per hd.

Futures contracts
1. Sold contracts - Bought contracts= (loss/gain)
2. Take (gain/loss) x 5.5cwt= amount per head

Subtract total Cash-Futures Gain/loss

Subtract Breakeven= Total Revenue per Hd.
ACTIVITY W RAP
UP

Cost of Production-Do you know
yours?

Basis-What did you learn?

Marketing plans-Did you use it?

Marketing Options-Do you use
those?