1. Optimizing Cost, Production and Marketing

6. Change in Beef Cow Operations & Numbers
From
Number operations with less than 99 cows declined 20%
The percentage of beef cows in operations with less than
99 cows declined from 52% to 46%
Number of operations with more than 100 cows increased 9%
The percentage of the beef cows in operations with a 100
head or more increased from 48.5% to 54%
Fifteen percent of the cows are in herds greater than 500
head as of 2006

7. Weekly Spot Corn Futures
Last winters high of $4.37 in late February
Last summer’s low of $3.09 in late July

10. 2006 Regional Cow Costs Region Cash Cash + Non- cash Northwest $399
$476
Southwest
$380
$453
Midwest
$366
$483
South Plains
$359
$430
Southeast
$328
$425
U.S.
Cash costs exclude depreciation, opportunity costs and returns to management

12. LOW Calf Breakeven $75 $148 Grazing & Feed Cost $139 $216
HIGH -
RETURN vs. LOW
RETURN PRODUCERS
LOW
Calf Breakeven
$75
$148
Grazing & Feed Cost
$139
$216
Annual Cow Cost
$343
$595
Difference $252 Per Cow
Source: Texas A&M, Southwest Cow
Calf SPA 1991
2005

13. HIGH- RETURN vs. LOW-RETURN PRODUCERS
HIGH LOW
Weaning Percent % 80%
Avg Weaning Wt lbs lbs
Lbs Weaned per
Exposed Cow lbs lbs
Net Return Per Cow $ $250

27. Does Pre-Conditioning Pay?
During , weaned
pre-conditioned calves brought
$5-$8/cwt ($35-$40/hd)
premium to bawlers!
Does Pre-Conditioning Pay?

29. + Stair Steps to Profitability Average Cattle = Average Price
Performance History (Feedlot/Carcass)
+$2 -
$5/cwt
Pre
Conditioned Weaned/Healthy
+$4
$8/cwt
Source & Age Verified
+$10
$25/hd
Natural Programs
Premium Programs +
Average Cattle = Average Price
Under Managed Cattle
Stair Steps to Profitability
+$3
$7/cwt

30. Role of Stocker Operator
Inventory shock absorber
Add low cost of gain
Warehouse cattle
Add value and improve quality

35. Where’s the Profit Avg. fed cattle price 1981-2006 $70. 78 Avg
Where’s the Profit Avg. fed cattle price $ Avg. fed cattle breakeven $70.06
In the long run, commodity business offer profit
opportunities only to those that have lower than
average costs of production, superior performance,
or better than average returns.

36. 2008 Outlook “Keep an Open-Mind in these Changing Times”
Cattle inventory growth stalled: Growth to remain slow
Beef production cycle continues: 2008 production up nearly 2%
Beef exports to grow during : Long-Term growth potential with access
Cattle and beef price to remain strong: Long-Term trend remains higher
More growth in outside capital invested in markets: “Commodity Funds”
Corn prices to remain elevated for several more years: “Fight for Food or Fuel”
Acreage battle in 2008 will be fierce: Corn stocks to use ratio to shrink
Weak dollar will continue to stimulate commodity exports
Industry consolidation will accelerate especially in the feeding industry
Packer market share battle: “One for the ages”
Beef branding and market differentiation will continue: “Opportunity”
The business environment is changing rapidly: Stay tuned!
“Keep an Open-Mind in these Changing Times”

37. Thank You for Attending