Summer Grazing Outlook 2006

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Summer Grazing Outlook2006

• Tim Petry
• Livestock Economist
• www.ag.ndsu.nodak.edu/aginfo/lsmkt/livestock.htm

04-10-06
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Will summer grazing be profitable in 2006?

• Buying cattle and renting pasture may not be
• Own cattle and cannot rent out pasture may be
• Carefully compute expected costs and returns!

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Situation

• All feeder cattle supplies are historically tight
• Lightweight cattle prices are strong
• Excellent demand where dry conditions have
  improved
• Heifers at auctions receiving price premiums for
  replacement (further reduces supply for grazing
  programs)
• Pasture rental rates are increasing

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Possible Price Risk

• Fed cattle prices will move seasonally lower in
  mid summer
• Corn price outlook? Higher
• Japanese and Korean border situation

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SF_LS766 Sioux Falls, SD
Thu Apr 6, 2006 USDA-ND Ag
Market News Stockmens Livestock Exchange Feeder
Cattle Weighted Average Report for 04/06/2006
Receipts 1468 Last Week 3437 Year Ago
1510 Too few feeder cattle 650 lbs and under
to develop trend. Feeder steers and heifers over
650 selling 3.00 to 4.00 lower. Steers made up
85 percent of the run heifers 15 percent.
Offerings over 600 lbs totaled 93 percent. Next
week wikk be the annual Blue Ribbon replacement
Heifer Special, 2000 to 3000 head
expected. Feeder Steers Medium and Large 1
Head Wt Range Avg Wt Price Range
Avg Price 12 705 705
107.50 107.50 24 790
790 94.50 94.50 21
835 835 92.50 92.50
190 872-875 873 88.50-89.85
89.05 129 941-948 944 85.50
85.50 15 1001 1001
82.50 82.50
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Livestock Marketing Information Center Data
Source USDA/NASS
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U.S. Drought Monitor
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Livestock Marketing Information Center
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Livestock Marketing Information Center
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Livestock Marketing Information Center
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What is a 550 lb. Steer Worth for Summer
Grazing?(4 mos, 2 lbs/day, 790 lb sales weight,
0 basis)/cwt
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Price Risk Management Tools

• Cash forward contract
• Video and internet auctions
• CME futures
• CME options
• LRP
• Which one or combination fits your marketing plan?

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N.D. Feeder Cattle BasisRule of Thumb

• E to W along I-94
• Highway 2 deduct 1 to 2
• 700 850 par -4 to 4
• 600 700 5
• 500 600 10
• 400 500 15
• 850 950 -5