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Scott Clawson Area Ag Econ Specialist

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1 Scott Clawson Area Ag Econ Specialist
Coffee Shop:8/15/18 Scott Clawson Area Ag Econ Specialist

2 This has been making the rounds on social media this week, its of a truck delivering water in Australia. So we all think there could be more rain here, be thankful we are not seeing this.

3 What do we do about the calf market right now?
This is a good question, but at this time of year, we have a limited amount of options

4 There is no information out there that projects a big price run this fall …
Price runs are typically a result of new information introduced to the market. Or, the summation of many factors, ie when herd inventories, exports, demand, etc all build together to start some real momentum. Our best strategy is to hit for average, not look for homeruns every year. Homeruns are looking for 2014 Hitting for average: Play the seasonality Understand where we are in the cycle Understand the supply and demand issues

5 Combined OK Auction Prices 2000 - current M/L 1 Steers 450-500#
Mapped OK combined auction prices by year The blue vertical line marks the end of October Generally speaking, we see a flat to positive movement after we hit the seasonal low. 2018 calf crop is expected to be up 2% this year. We have an estimated 26.6 million head born in the first half of 2018 and another 9.9 million fall calves to be born.

6 Here is another way to look at it
Here is another way to look at it. This is specific from October to December with 2014 and 2015 removed.

7 If we continue with this same train of thought, we can map national auction receipts, these do not include any video auctions or direct sales. I have emphasized the 2018 line to make it more visible. We are a bit early to have august data which I would like to see. If you follow the current sale barn reports in Oklahoma, its been hard to really develop a feel because the sample size is so low. Yet, if you look at some of the national guys, they are starting to discuss some calf runs showing up in places. Also early reports for video auction calves for fall delivery have been promising. As we see the swell of calves hit the market this fall, we need an outlet. For those of us in EOK we need the boys west of 35 to have good grazing wheat. This will provide the demad to help offset the supply that we are bringing to town

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9 Again, we need to be hitting for average not waiting for 2014 to come around again.

10 Then select Basis Forecasting

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15 1.5#/day gain estimate Pasture situation Cow condition Hay prices
Feed prices Calf values calculated at three periods Now (blue) End of Oct (orange) Mid December (green) From 1-2 or now to late October, yellow rectangle, we see the $ value and VOG change from point a to b. If we have cows that are in bad condition and short hay supplies, this is what we are looking at to get rid of them. Those calves should be getting to a point that milk isn’t cutting it and they need some additional nutrients from somewhere. Bag it or grow it. This cost wont be as detrimental as going into breeding season with BCS 3 cows and a 75% conception rate in the spring. From 2-3 would illustrate moving out of the October marketing period into December. Red rectangle. This would capture the estimated move in seasonality with a $.10 addition for backgrounding. VOG looks pretty good. We should be able to add weight for a COG of $.80. Take away from this is that there is some value out there if we are willing to go get it instead of waiting for the market to bring it to us. We need to help change the mind set of being a price taker to marketer of our crop.

16 Coming this fall…

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