Get documents about "10 Tax Calculator
Description
10 Tax Calculator document sample
Document Sample
Beef Cattle Situation &
Outlook
Curt Lacy
University of Georgia
Overview
Current Situation
2007 Price & Profit Outlook
Long-term Outlook
Things to Watch
OMAHA CORN PRICES
Weekly
$ Per Bu.
4.40
Since September corn prices
have more than doubled!! Avg.
3.90
2001-05
3.40
2.90 2006
2.40
1.90 2007
1.40
R
N
T
L
C
JU
AP
JA
O
G-P-02
01/19/07
MED. & LRG. #1 & 2 STEER CALF PRICES
500-600 Pounds, Georgia, Weekly
$ Per Cwt.
125
During the same time, calf prices
120 are down more than 20% Avg.
115 2000-04
110
105
2006
100
95
90
2007
85
80
R
N
T
L
C
JU
AP
JA
O
Livestock Marketing Information Center 01/18/07
2007 Prices and Profits
CATTLE ON FEED
US Total, Monthly
Mil. Head
12.5
Avg.
12.0 2000-
2004
11.5
2005
11.0
10.5 2006
10.0
9.5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Livestock Marketing Information Center C-N-10
10/20/06
Data Source: USDA/NASS
CATTLE PLACED WEIGHING
MORE THAN 700 POUNDS
Mil. Head 1,000 Plus Capacity Feedlots, U.S., Monthly
1.5
1.4 Avg.
1.3 2000-
04
1.2
1.1
2005
1.0
0.9
0.8
2006
0.7
0.6
0.5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Livestock Marketing Information Center C-N-08B
Data Source: USDA/NASS 10/20/06
CHOICE SLAUGHTER STEER PRICES
5 Market Weighted Average, Weekly
$ Per Cwt.
100
Avg.
95 2001-05
90
85 2006
80
75 2007
70
R
N
T
L
C
JU
AP
JA
O
Livestock Marketing Information Center
BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
160
155 Avg.
2001-05
150
145
140 2006
135
130
125 2007
120
R
N
T
L
C
JU
AP
JA
O
C-P-62
Livestock Marketing Information Center 01/18/07
Projected Prices for 2007
Period 500-600# 700-800# Fed Cattle
Steers Steers Nebraska
($/Cwt.) ($/Cwt.) ($/Cwt.)
Jan-Mar $96-$102 $85-$90 $86-$90
2007
Apr-Jun $95-$100 $82-$86 $87-$91
2007
Jul-Sep $92-$97 $86-$90 $83-$87
2007
Oct-Dec $90-95 $83-$88 $86-$90
2007
Projected Profits for 2007
Item South North
Georgia1 Georgia2
Expected Returns Over Variable $71.29 $28.40
Costs ($/cow)
Chance for positive returns 84% 66%
Returns to Land, Labor, Capital $120.60 $105.14
and Management ($/cow)
Breakeven Price ($/cwt.) $74.88 $76.87
1. Assumes 100 cows with 85% calf crop weighing 523 pounds marketed Aug-Sep
2. Assumes 50 cows with 85% calf crop weighing 499 pounds marketed Oct-Nov
Now What? Where can you
increase profits?
Increase Price
Consider risk management alternatives
Increase production
Increase conception rates
ECONOMICALLY add weight through backgrounding or stockering
programs
Decrease Variable Costs
What is your hay cost
Where do you store your hay?
Alternative feedstuffs?
Decrease Fixed Costs – Equipment & Females
Cull open cows
Cull unproductive cows
Increasing herd size lease cows instead of raising heifers
What Can You “Lock-in” Today?-
Futures Based Price Predictions
$110.00
$105.00
$100.00
$95.00
$90.00
$85.00
$80.00
l
r
r
07
07
n
ov
g
ay
b
b
ec
p
ct
ar
ar
Ju
p
p
Ju
u
Fe
Fe
Se
O
A
A
M
M
D
M
N
A
n
n
a
a
'J
'J
500-600# Steers 700-800# Steers Live Cattle
Basis calculations for GA Auction Markets & IA/So. MN Live Cattle Markets
Marketing Alternatives-Jan-Feb 2007
Background Stocker Custom Custom Custom feed
Stocker 450 550 550 feed 550 feed 650 750
Current weight 450 550 550 550 650 750
Current price $ 107.50 $ 91.00 $ 91.00 $ 91.00 $ 84.00 $ 77.00
Current value $ 483.75 $ 500.50 $ 500.50 $ 500.50 $ 546.00 $ 577.50
Expected weight 750 750 750 1200 1250 1250
Expected price $ 85.55 $ 86.66 $ 85.55 $ 86.27 $ 86.65 $ 90.67
Expected value $ 641.63 $ 649.95 $ 641.63 $ 1,035.24 $ 1,083.13 $ 1,133.38
Gross Margin $ 157.88 $ 149.45 $ 141.13 $ 534.74 $ 537.13 $ 555.88
B/E COG $ 52.63 $ 74.73 $ 70.56 $ 82.27 $ 89.52 $ 111.18
Evaluating the Economics of
Commodity Feeds
1. Determine the current feed cost ($/cow/day and $/cwt. of
calves marketed) including hay.
1. Days of feeding
2. Lbs./day
3. $/lbs.
2. Determine the ingredient cost of commodity or alternative
feed including hay.
1. Days of feeding
2. Lbs./day
3. $/lbs.
3. Determine any additional labor, fuel, repair or other costs.
4. Determine any additional facilities cost.
5. Add 2-4 to arrive at total cost for alternative feed
6. 5-1 = Net advantage for alternative feed
Alternative Feedstuffs Economics
Calculator
Excel spreadsheet Alternative Feedstuffs Economics Calculator
Users enter current or base feeding
scenario and alternative feeding
scenario
Users also enter cost info for
additional facilities or equipment
Net returns for the alternative feeding
scenario are calculated on per herd
and per cow basis
SUPPLY FACTORS
BEEF COWS THAT HAVE CALVED
JANUARY 1, 2006
(1000 Head)
293 VT 10 12
1451 937 390
NH 4
619 250 78 MA 8
1719 RI 1.5
472 108
763 CT 5
1053 152 NJ 9
1930 222 297
238 446 DE 4
335 204 747 MD 49
685 1560 2236 1128
700
384
2075 1110
190 460 919 213
536
696 592
1,050 to 5,480 (10)
Alaska 6.1 468 590 to 1,050 (10)
5475 290 to 590 (10)
Hawaii 87.4 80 to 290 (9)
0 to 80 (11)
US Total 33253 926
Livestock Marketing Information Center
C-N-15
Data Source: USDA/NASS 02/01/06
JANUARY 1 COW INVENTORY
U.S., Annual
Mil. Head
50
45
40 2006 = 33.3 Million Head
Beef
+1 Percent
35
30
25
20 2006 = 9.1 Million Head
+0.6 Percent Dairy
15
10
5
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
Livestock Marketing Information Center C-N-02
Data Source: USDA/NASS 01/30/06
HEIFERS HELD AS BEEF
COW REPLACEMENTS
Mil. Head
January 1, U.S.
9
8
7
+3.8 %
6
5
4
3
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
Livestock Marketing Information Center C-N-38
Data Source: USDA/NASS 01/30/06
Beef Cow Factory
January 1, U.S.
Mil. Head
63 +1.4%
53
43
33
23
13
3
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
Heifers Cows
C-N-38
01/28/05
Livestock Marketing Information Center
Data Source: USDA/NASS
Relationship between Feeder Cattle, Calves
and Corn Prices – DEMAND FOR FEEDERS
$140.00 $6.00
$120.00 $5.00
Fedder Price $/Cwt.
Corn Price $/Bu.
$100.00
$4.00
$80.00
$3.00
$60.00
$2.00
$40.00
$20.00 $1.00
$- $-
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
500-600# GA Steer Price 700-800# GA Steer Price Omaha Corn Price
Grain Prices and Beef Cattle
$0.10 change in price of corn changes
550# GA Steer $1.00/Cwt.
USDA projects the 2nd largest corn crop
ever – 10.7 billion bushels
However, corn usage up by 10.6% from
2005
Exports +2.5%
Feed -1.40%
Food, seed and industrial +18.75%
U.S. average corn price expected to be
$2.90-$3.30 for 2006/2007 marketing year
Expected to be even higher in 2007/2008
42
Ethanol Production
and Impacts of Grain
& Cattle Prices
Ethanol Production
20000
18000
16000
Million Gallons
14000
12000
10000
8000
6000
4000
2000
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Historical Production Projected
Source: Renewable Fuels Association/Cattle-Fax
Corn Utilized in Ethanol Production
2500
2000
Million Bushels
1500
1000
500
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Historical Production Projected
Source: USDA/ERS
Key Points on Ethanol and Cattle
$0.50 per gallon tax subsidy for
ethanol production increases demand
for corn and increases feed prices
1 bushel of corn yields about 2.7
gallons of ethanol
Each 1 billion gallons of ethanol will
consume 370 million bushels of corn
Increases in ethanol will require
additional 5-10 million acres of corn
Live Cattle Demand
$/Cwt.
Annual, Beef Production, 5-Area Live Cattle Price
95.00
90.00
05
85.00 Old Demand 04 06 New Demand
03
80.00 2007
90
93
75.00 9192
01
70.00 94 00
95 97 02
65.00 99
96
98
60.00
55.00
22.00 23.00 24.00 25.00 26.00 27.00 28.00
Beef Production, Mil. Pounds
Price Outlook
Forecast Prices for 2007-2009 Calves, Feeders,
and Fed Cattle
100
90
80
$/Cwt.
70
60
50
2007 2008 2009
500-600# 700-800# Fed Cattle
Source: USDA, LMIC and University of Georgia
Ownership Strategies at Different
Points in the Cattle Cycle
Price Phase Cow-Calf Stocker Finishing
of the Cattle
Cycle
Up Significant Moderate Moderate profits
profits profits
Downward Declining Significant Significant
transition profits losses losses
Down Significant Narrow/ Narrow/
losses negative negative
margins margins
Upward Improving Significant Significant
Transition profits profits profits
Big Picture Things to Consider
Impacts of Ethanol on Feed Costs
Source Verification Market
Natural/Organic Markets
National Animal ID
MCOOL
Political
Summary & Implications
Supply
The herd has expanded some but the drought has likely halted
growth for this year
It is likely that the drought will have longer term implications other
than cow numbers
Demand
Demand for beef remains strong
Higher corn prices will reduce demand for feeders
Exports will help
Profits
Most cow-calf producers should be able to cover out of pocket
expenses for next 2-4 years
Higher feed, fuel and fertilizer costs will squeeze profits
Lower prices for feeders may make retained ownership and heifer
retention more feasible
Know the RISKS!!!
Related docs
