Factors Affecting Feeder Cattle Prices (understanding the link between genetics, management, marketing, and prices) ECON 337 Agricultural Marketing: 2:10 – 4:00; March 11, 2014 Lee Schulz – 515.294.3356 – [email protected]Department of Economics Iowa State University
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Factors Affecting Feeder Cattle Prices (understanding the link between genetics, management, marketing, and prices) ECON 337 Agricultural Marketing: 2:10.
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Factors Affecting Feeder Cattle Prices(understanding the link between genetics, management, marketing, and prices)
ECON 337 Agricultural Marketing: 2:10 – 4:00; March 11, 2014
Lee Schulz – 515.294.3356 – [email protected] of EconomicsIowa State University
Variables that are not statistically different from zero at the 90% confidence level.
Source: Holton Livestock Exchange, Inc. (Northeast Kansas)
-- Discount on heifers (vs. steers) fairly constant across sales ($5.50-$8.93)
-- Black/BWF consistently brought higher prices than other breeds/colors
Sex and breed impacts price…
Price difference between Angus and Other
$13.76
$13.04
$11.71
$16.25
$16.90
$21.33
$31.80
$32.63 $28.85
$9.53
$11.50
$8.84
$14.52
$15.37
$16.62
$26.56
$29.40
$13.42
0
5
10
15
20
25
30
35
Spr99
Spr00
Spr01
Spr02
Spr03
Spr04
Spr05
Spr06
Spr07
Spr08
Steers Heifers
Source: CAB “Where’s the Premium” study, 1999-2008
-- Target 500 pound calves in the fall and 700 pound feeders in the spring
-- Consistent premium on Angus-influence calves and premium has generally been trending up over this time period
Price difference between Angus and Other
$13.94
$19.26
$24.43
$16.33
$24.63
$21.12
$28.68
$26.76
$34.51
$11.02
$11.97
$13.90
$14.46
$17.30
$19.69
$17.04
$21.93 $16.21
0
5
10
15
20
25
30
35
Fall9
9
Fall0
0
Fall0
1
Fall0
2
Fall0
3
Fall0
4
Fall0
5
Fall0
6
Fall0
7
Fall0
8
An
gu
s p
rem
ium
, $/
hea
d
Steers Heifers
Breed impacts price…
300 400 500 600 700 800
Weight, lbs/head
-15
-10
-5
0
5
10
15
20
25
30
35
Pre
miu
m/d
isco
un
t, $
/cw
t
F-99
S-00
F-00
S-01
F-01
S-02
F-02
S-03
F-03
S-04
Effect of Weight on Price
Source: Holton Livestock Exchange, Inc. (Northeast Kansas)
Weight impacts price…
Weight impacts price…
“Low” CN: FC price ↓ more rapidly as weight ↑
Lightweight feeders worth more relative toheavy feeders because COG lower
Corn price impacts weight price relationship…
“Low” LC: FC price ↓ less rapidly as weight ↑
Lightweight feeders worth less relative toheavy feeders
Live cattle price impacts weight-price relationship…
Price vs lot size -- Fall sales
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
0 20 40 60 80 100
Lot size, number of head
Pre
miu
m/d
isco
un
t, $
/cw
t
Fall99 Fall00
Fall01 Fall02
Fall03 Fall04
Fall05 Fall06
Source: CAB “Where’s the Premium” study, 1999-2008
Lotsize impacts price…
Feeder Cattle Trait 2001 2002 2003
Frame Large Frame 0.174 -1.674 -3.524 Medium Frame Base Base Base Small Frame -13.642 N/A 3.154Muscling Heavy Muscled 1.986 2.035 -2.475 Moderately Muscled Base Base Base Thin Muscled -11.391 -7.224 N/ACondition Thin Flesh 2.731 -2.419 3.754 Average Flesh Base Base Base Fat Flesh -3.024 -3.327 1.025Health Healthy Base Base Base Not Healthy -5.789 -12.115 -7.82Uniformity Uniform Lot Base Base Base Uneven Lot -1.948 -3.154 -3.174
These three buttons take the user to tabs showing hedonic model results (i.e., tables we have already looked at).
These four buttons are linked to tabs that allow the user to examine how changing cattle traits impacts price. Partial budget tab also allows user to bring in costs in a simplified way.
Tab that allows three side-by-side comparisons
Impact that horns have on price…
Impact that sorting cattle into smaller (-) more uniform (+) groups has on price…
Partial budget to look at net returns of making a change that affects price…
Impact that a 45-day preconditioning has on price/returns…
Partial budget to look at net returns of making a change that affects price…